On the heels of what can only be called a very bullish CMHC report issued a few weeks ago, I remain a little more realistic on what we can expect from our market in the next few years.

 

What clearly is still a Buyers market, will remain that way for some time to come in my humble opinion. That is not a bad thing. Over the past several months I have spoken to more than a few people who are tired of a roller coaster ride in the stock markets and have seen their savings diminish in the financial markets with little or no predictability, whereas a sound investment in real estate may have provided cash returns for the next few years before asset appreciation starts to have an effect on their money.

 

In looking briefly at the stats provided by OMREB, in summary I am seeing that the average days on market for a single family home are the same as they were in 2009 which was a far cry from 2007/2008. A current look at listing inventory shows us that comparing Octobers stats for the past few years would indicate that we are carrying more inventory than 2009 and 2010 and the volume of sales are far below 2009 and on par with 2010 (October vs October).

 

Interestingly, the median sales price has remained static over the past few years, which is why the title suggests “Real Estate Stability”... although I would suggest there is still a disconnect between Sellers expectations and Buyers expectations as I review original sales price vs actual sales price ratios.

 

This leaves me conflicted after reading the CMHC report that indicated we can expect more sales next year and increasing prices. In the long run, I could not agree more. Kelowna is an amazing place to live and our economic development office has been doing a great job of telling our story and creating diversification in our economy... however, the world is still very broken. As I traveled around the world a few weeks ago, the shocking thing to me was how negatively impacted bush people were by the global economy. The cost of their food had increased beyond their ability to buy it and they were the target of thieves and fraudsters who are no doubt forced to look at an illegal profession to provide for their families.

 

The world over, the story is the same (largely with the exception of Canada) of Governments, with the support of the financial sector overspending beyond their ability to repay. The story is beginning to sound like a broken record and one wonders how much of the record we were not able to hear before it broke. I suspect, we will see countries such as Spain and Ireland follow suit with Greece and Italy in announcing their inability to support their economies. I don’t believe that is negative... we need to know the truth and deal with it rather than keep handing out crutches for these countries to limp along on.

 

A further analysis of CMHC’s report indicates that the average value of a home in BC is almost twice the average value of a home in Alberta. One has to also wonder why they bother producing such a confusing report when, if the Vancouver environs were removed from the report, our average housing values would be almost identical and we would not have a confused Buyer walking into town with the perception that Kelowna is over valued!

 

Regardless of my personal beliefs with regards to a very confusing report from CMHC, I certainly do see increasingly stability in the marketplace but with the challenge of a very low number of transactions historically. That, I believe will begin to change next year, and I have maintained that viewpoint for nearly two years now. I have also maintained that I do not see significant movement in pricing and the variance between original list price and sale price in the Board stats would likely support that.

 

The upside is, it is still an amazing time to buy real estate if you have the ability to do so. Prices offer incredible value when offered together with historically low interest rates. Kelowna’s economy is optimistic that we are on an upswing and Canada remains a safe, secure and stable place to visit or retire... I am optimistic that a corner is slowly being turned... but not as much as CMHC!