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How low will the Kelowna real estate market go?
How low will it go?
By Steve MacNaull From www.kelownadailycourier.ca
Wednesday, December 31, 2008
Everyone‘s still talking about house prices.
However, unlike the past seven years when we gushed about escalating home values, the chatter in 2008 turned to price plunges.
The ups and downs have been well documented, not just in the local media‘ but nationwide and internationally as Kelowna gained fame as a hot destination and then quickly cooled.
There was elation in April when the average house price hit an all-time high of $550,000.
But in just seven months, the average went into freefall and currently sits at $461,000, representing a cut of $89,000 or 16 per cent.
Canada Mortgage and Housing Corp. analyst Paul Fabri predicts the average will further erode to $426,000 by the end of 2009.
So that means $124,000 or 23 per cent will have been chopped off the all-time high average before it starts to climb back up in 2010.
But let‘s put this all in perspective.
While a 23 per cent price drop in a year and a half is dramatic, it‘s not as dramatic as some of the 25 per cent annual increases in the ultra-boom years 2003-2007.
Those kind of increases meant people who already owned homes were equity rich, realtors were raking in the commissions and Kelowna‘s status as a prime place to live, work, play and invest was secured.
But as much as Kelowna remains sought-after and our economy resilient, it could not stave off the forces of global financial meltdown.
Oil-rich Albertans suddenly weren‘t as flush, and they stopped buying vacation homes at inflated prices in the Okanagan.
Locals, previously heady with home equity, were no longer moving up to bigger, better and more expensive places.
“The market just halted,” said Okanagan Mainline Real Estate Board director Brenda Moshansky.
“Not only did the average price go down, but sales have taken quite a hit.”
Statistics from the board show that in November 149 properties in the Central Okanagan changed hands on the Multiple Listing Service, down 59 per cent from the 363 sold in November last year.
“This is not good for consumer confidence, and it‘s not good for realtors,” said Moshansky.
“But, to put it in perspective, the current market is similar to the market we had in 2001 – and that was considered good.”
Moshansky forecasts some recovery next year as the economy improves, fewer homes are listed for sale and selling prices slowly creep back up.
QUICKFACTS
Kelowna‘s average house price is based on the average selling price of all the single-family fully detached homes sold on the Multiple Listing Service.
1997: $155,450
1998: $176,905
1999: $186,762
2000: $183,443
2001: $200,337
2002: $219,797
2003: $262,085
2004: $287,351
2005: $355,380
2006: $425,263
2007: $497,322
April 2008: $550,000
Nov. 2008: $461,000
End of 2009 forecast: $426,000
Copyright © Monday, January 19, 2009 All material contained herein is copyrighted by The Okanagan Valley Group of Newspapers, a division of Continental Newspapers Canada Ltd. All Rights Reserved.
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