If you’re a first or second time buyer thinking of buying a home in Kelowna over the next few months you might be in for a little surprise. Not a big one because I’m sure you’ve done plenty of research but probably a little one. You will notice a lot of "For Sale" signs throughout the city, 1,655 of them to be exact, so it appears that the world is yours. Slicing and dicing the numbers paints a different picture. Most first or second time buyers in this community look for housing priced under $500,000 which eliminates just under a thousand homes from their search bringing the number of available homes to 681. Still a reasonable number of homes to pick and choose from but once you go into the house you’re going to find out that these are the same homes everyone else is looking at which creates a little more urgency which we haven’t seen for a while. “Let me think about it for a few days” isn’t a great strategy because there’s a pretty good chance someone else looked at the same house, as well as the others you’ve already seen, and is already two or three days into their “thinking about it” process. We’re not in a market where you have to write an offer on the hood of a car in the driveway but you can’t go on vacation and expect that home to still be for sale.
At a rate of 106 Kelowna residential sales per month under $500,000 for the past 6 months (and this includes the slowest months of the year) we have just over 6 months of inventory available. This segment is just a good long weekend away from being a balanced market which is the healthiest of all markets. Balanced markets mean sellers who price their homes accurately will generate showings and offers while overpriced homes get passed over. Home buyers who find an affordable home in a neighbourhood they like aren’t going to get anywhere with low-ball type offers and waiting for a price reduction from the asking price isn’t a prudent strategy today. Let’s hope this continues for a long time because now that first timers are kicking into high gear it reverberates through the rest of the housing market bringing long overdue confidence into the rest of the housing sector.
Let’s go over the basic rule for first time buyers. Get pre-approved for a mortgage. Most know this by now but it’s critical to know how much a lender will lend you and you can then determine how comfortable you are with the monthly payments. This part of the process should be done before you start looking at homes because it eliminates disappointment if you have to reset your house search criteria.
Things are still tough for those among us trying to sell their high priced homes. There are 974 homes for sale over $500,000 and we’ve generated 333 sales over the past 6 months. We’re a long way from a balanced market with 17 months of supply but with prices climbing there’s reason for some optimism here too. There have been 261 homes sold so far this year over $500,000 compared to 161 this time last year. That’s a huge increase over 2013 but the stubborn problem of too many other homes for sale remains for these folks.
Thanks for reading and I hope to see you next weekend if you happen to be on the open house circuit.
If you are thinking of entering the Kelowna real Estate market this year ask for my “Free First Time Buyer Package” and list of the Best Buys Andrew Smith.
After a slow January where it looked like it might be a same-old, same-old sort of year we have certainly changed that now that first quarter results are in. There were 458 residential sales for the first quarter this year compared to 414 for Q1 in 2013. This is an 11% increase in volume so if you’re driving around and think you see a lot more SOLD signs than you did last year, you do.
Prices are up also. The first quarter average was $539,000 compared to $444,000 for Q1 2013. Let’s not get too excited about this number because it’s largely due to 24 homes selling over $1 million this year compared to only 10 last year which is playing havoc with averages. What I’m trying to say is a regular single family home in a typical residential area hasn’t changed much. A typical bi-level home in Rutland, Glenmore or Glenrosa is selling for $354,000 this year compared to $333,000 this time last year. Yes, it’s still good news all around but we aren’t experiencing double digit growth like the math suggests. Even the high-end homeowner isn’t really experiencing as much growth as the data says. Someone who bought a home for 1.8 million in 2008 might have tried unsuccessfully to sell for $1.7 million last year. This year after getting tired of no showings drops his price to $1.6 and secures an offer for $1.5 making the market appear healthier than it really is by increasing the overall average sale price. Nevertheless, it is good to see so many sold signs out there and with so much open house traffic these days I don’t see any signs of things slowing down.
Condominiums are selling at a higher rate than last year too. 303 sales so far this year compared to 251 last year. Prices are up ever so marginally with the average jumping from $283,000 to $284,000.
Entering into the Kelowna Condo or Home market on the internet is a dark and scary place sometimes and there’s no shortage of people out there preaching the virtues of renting a home instead of owning. It’s a timeless argument really that no one ever really wins. When first time purchasers put an offer on a house it seems they all have a handful of friends, family members or co-workers who are able to scare them into believing they’ve made a huge mistake investing in a home. They cite annual property taxes, maintenance, renovations, property transfer taxes, the lack of mobility and the good old danger of home values declining. Throw in Canada Mortgage and Housing fees and the potential for increased interest rates and it isn’t difficult for a well-intentioned friend to convince you to stay renting forever.
The math can work both ways supporting the renting or buying argument. In speaking with Mark Price from Mark Price Mortgages he has heard the following scenario many times:
“Last week I sat down with a couple who had been renting for 13 years. When we calculated that the past 13 years, they had basically paid their landlord's mortgage. We estimated they had paid over $130,000 in rent in the past 13 years just by calculating $800.00 per month for 5 years plus $900.00 per month for the next 5 years and $1000.00 per month for the last 3 years.”
In 2001 the average house price was $130,000. If they had purchased then, their home would be worth approximately $330,000 in today’s market so aside from the $200,000 from increase in value they would have had about another $60,000 in equity. By renting for 13 years they have 0 equity; if they had bought 13 years ago they would have upwards of $260,000 in equity.
We always tend to look back at what we could have done and do not appreciate that what you buy today could be your forced savings for tomorrow.
There are many first time buyer opportunities in the Kelowna market right now. Presently there are 289 condos with 2 bedrooms listed between $100-$300,000; 96 townhomes listed between $200-$400,000 and 253 single family homes listed between $200-$400,000. A $250,000 purchase would equal a mortgage payment of approximately $1160.00
If you are paying rent and tired of not seeing a return for your money call Andrew Smith 250-979-8066 for The 1st Time Buyers Program or a for FREE copy of my “First Time Home Buyers Ebook.” http://www.okanaganbc.com/1st-time-home-buyer/
You may not be ready to buy right now but it is a good time to start planning. Andrew has over 22 years experience helping people plan to buy their first home
I found myself at the Vernon courthouse with a client trying to secure a home in Armstrong. My neighbour wanted to see a particular home that was in foreclosure near his mom’s house and asked me to show it to him. Armstrong is a little outside my comfort zone but I go to the IPE every year.….how hard could this be? If he secured the house maybe I could get free parking for the Armstrong Fair.
The Vernon courthouse is a beautiful building. If it’s not on a heritage registry it ought to be. Built a hundred years ago it’s loaded with oak and marble throughout and worth at least driving by the next time you’re through Vernon. The mood in this particular courtroom was folksier than what I’m used to in Kelowna. Everyone else seemed to know each other and they were asking about each other’s families making for a pretty good vibe despite the undercurrent of knowing that people are about to lose their houses. When one person asked for a two week extension prior to relinquishing keys because of a work related injury no one hesitated granting it. I think we all felt a little terrible.
The rules of securing a foreclosure in Vernon are the same as they are anywhere in BC. If you’re a buyer and have already agreed on terms with the bank you just hope no other interested buyer shows up wanting the same house. In our particular situation, the house we were interested in already had an agreed to offer from someone else of $175,000 with an original asking price of $225,000 before a price reduction to $199,000. There weren’t any other interested parties so it was just the two of us and the original buyer was allowed to resubmit a new offer. What to do? The first house the judge dealt with had four offers and ended up selling almost $30,000 above the original price. We decided the night before that our upper limit would be $200,000, meaning if someone else wanted it for $201,000 we weren’t going to lose any sleep. We wrote $189,100 as a price and crossed our fingers. To make a long story short, my buyer walked away with a house and pretty big smile on his face.
There are only 41 residential homes in foreclosure right now in Kelowna and even fewer condominiums (29). A lot of Realtors may shy from the work involved in buying a foreclosure but there are still good deals to be found with patience and persistence. It is good to work with an agent with courtroom experience and who knows how to work with unexpected events in the courtroom.
Send me your questions about Kelowna Real Estate or Foreclosures.
For a Kelowna Foreclosures and the top listing picks call Andrew Smith 250-979-8066 or Kelowna at http://www.okanaganbc.com/kelowna-foreclosures/ Over 22 years experience helping people achieve their dream of home ownership.
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