Kelowna home sales in review - 2000 to 2010

Kelowna home sales last year were strong in the first half of the year.  The pace of residential sales slowed as the year progressed but over all, residential sales were down slightly from 2009 by 9.25%.  In spite of Kelowna's total home sales being as low to the early 2000's totals it's average house price grew 8.27%, just a titch under it's 2008 peak.  A number of factors may have contributed Kelowna's changing 2010 market conditions......

 "New stricter federally mandated mortgage lending guidelines and higher borrowing costs, espeically for short term and variable mortngage products prompted some households to put their home-buying plans on hold."  "Added to this were misconceptions about the application of the HST to resale housing.  Initially, many would-be homebuyers incorrectly thought the HST would be applicable to the purchase price of a resale home.  This, of course, was not the case."

2011?

Interest rates are expected to hike further as the economy improves. While still at historical lows, any hike in interest rates have big effects on mortgage rates. If interest rates are raised too quickly, this will further dampen real estate prices. On the other hand, if the government decides to lower the rates once again, as unlikely as this may seem, then home sales might surge slightly.

Government and institutional lending policies will also affect real estate prices. As banks and governmental policies become increasingly strict, more people will be turned down for mortgages. At the very least these potential home buyers will need to choose from more modest homes if their mortgage is declined.

In 2011, Canada will experience an overall decline of 0.9% in home prices. Not all provinces will feel the effects of fluctuating real estate prices equally. Some provinces will have a more profound move in housing prices than others.

While real estate prices might remain fairly stable, buying activity is expected to slow down significantly. The Canadian Real Estate Association expects a 7.3% decline in home sales. This means that homeowners in a panic to sell may have to drop their prices substantially in order to liquidate. Others may need to wait longer than in previous years to sell.

The drop-off in home sales comes from an anticipated slowing of economic growth along with a reduction in consumer spending. Less free floating capital means fewer large purchases.  Ample inventory levels, steady demand, and moderate growth, both in terms of sales and prices, will characterize the market in 2011.

Is it a Good Time to Buy a Home in Kelowna?

Timing the market perfectly is a difficult task. Often it is easier to look at one’s income and decide if the stability of personal finances are adequate to acquire a house for the long term. If not, there is no shame in renting or leasing until circumstances permit such a purchase. But trying to perfectly time a house purchase with the market is like trying to buy a stock at its lowest point before a rebound – very difficult indeed.

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