By Sebastian Kanally, Times Chronicle
The housing market here in the South Okanagan has slowed from the frenzied pace of the last two pandemic stricken years and people are left wondering if we are finally going to see a sustained cooling.
“Things are slow, very slow,” Allan Taylor, realtor with eXp Realty said about the current state of the market.
The Canadian Real Estate Association numbers are out for the entire Okanagan and in November 2022 “there was a 48.4 per cent decrease in sales compared to November 2021.” This is in addition to a decrease of 15.6 per cent compared to last month.
The numbers in the South Okanagan are not that much better, sitting 42.6 per cent lower than the previous year. Those are “crazy numbers’’ and a “dramatic drop,” said Taylor.
This cooling comes at the end of a year of aggressive interest rate hikes. The Bank of Canada raised interest rates seven times in 2022 resulting in some people paying hundreds, and in some cases, thousands more on their loans per month.
Osoyoos in November was down 76.9 per cent in sales compared to last November. Taylor does think we will see the market correct itself soon, while also noting that “the market is subject to a number of factors and there is a lot of guessing going on right now.”
Taylor commented on the logic of the market when he said: “Traditionally when a market drops off like this you will find sellers chasing the market down, they are basically following the market as opposed to jumping into it. I think you are going to see sellers coming back into the market with some adjustment in pricing.”
Ken Davreux, realtor with Century 21 Premier Properties, anticipates that in March and April we will see some more activity and that may be a better time for buyers to try and time the market. He noted that “our market doesn’t respond as quickly or the same as markets like Vancouver or Toronto.” It can take up to six months to see how the economy as a whole and the housing market here respond to the rate hikes.
Osoyoos and Oliver have their own unique characteristics within the Okanagan when it comes to housing. Realtor Pamela Hass with Royal Lepage – Desert Oasis Realty in Osoyoos said: “You want to live here, but so does everyone else.” Noting that as a desirable place to live she doesn’t see the prices going down much anytime soon.
Davreux said in contrast to this that “we are seeing price reductions, but we are still seeing multiple offers.” Thus, things haven’t really changed all that much. Insisting that we are trending towards a buyers market, but we are not there yet.
Since the interest rates have risen substantially it has slowed the market a bit by scaring some people off, but this does not seem to be as big of a problem in Oliver and Osoyoos as it may impact the larger metropolitan areas.
Speaking about Osoyoos, Davreux said: “From a buyers standpoint, a lot of our buyers are older people that are paying cash.”
Hass echoed a similar point in saying many people that buy here “are not mortgaging . . . the interest rate hikes don’t impact too much here for those reasons, it does a bit, but not much.”
The tough market out there is really taking a toll on younger home buyers, particularly first time home buyers. When asked about young buyers Hass, Davreux, and Taylor all agreed that they feel bad for young buyers here.
“Yeah, I feel sorry for younger buyers. It’s very difficult . . . there is not the income to sustain the housing, unless you come with money.” Hass said.
Taylor and Hass both explained that it would be very difficult to come in as a young buyer and buy a single detached family home. You need to build equity in the market, by getting into a condo, then a townhouse, then a detached home. Or something along these lines. You can’t expect to get into the market with everything checked off of your list as a first time buyer.
If young people are going to be that unrealistic about the situation then they are going to be pushed elsewhere, such as Alberta where homes cost a lot less.
Oliver does have a slightly different market than Osoyoos with a different demographic.
Hass said about the demand, “Oliver is just as high as Osoyoos pretty much, the valley in all. It’s all a desirable place to live.”
While Taylor noted that “Oliver has a little lesser benchmark price, that would mean there are more properties at a lower price range, and therefore more interest rate factors.”
So where does that leave us entering 2023? And is there any way to make the market more inviting?
Davreux talked about the BC Real Estate Association anticipating “two more hikes, and that will be it.” This leads him to question the point of the two per cent qualifier, also known as a ‘stress test’ that the government built into mortgage approvals. “If we are at the peak” then it is just preventing people from getting into the market.”
He added: “I think that is something the government has to take a serious look at, if not now then in the very near future . . . it will be nice for that to disappear . . .” He said that the qualifier disappearing was his Christmas wish.
New rules that came into effect Jan. 1 restrict any “non-Canadians” from purchasing any residential property through Dec. 31 2024.
But this is unlikely to help the housing market and affordability situation since this addresses a very low percentage of deals, particularly in Oliver and Osoyoos.
