As we look to 2021, I think a lot of people are excited to see 2020 in their rear-view mirror — the year that became a meme in and of itself for being wildly unpredictable and apocalyptic.
The real estate market, however, started out strong, fell off a cliff during the first lockdown in the spring, then rallied back incredibly and finished a record year in many sectors. 2020 will be remembered by realtors fondly, I can assure you of that.
Luxury sales went through the roof as people fortified in anticipation of the next lockdown, and total sales jumped over 70% year over year.
Now well into the fourth quarter, things are slowing as per the seasonal norm as the snow starts to fall. The question on everyone’s mind is, what does 2021 have in store for us?
I was fairly bearish on the post-COVID market six months ago. I expected to see demand fall off once the bottleneck of buyers displaced from the spring lockdown had done their thing.
The market proved me wrong and continued to pick up steam. What hadn’t been predicted was the behavioural shift brought about by COVID-19 that would play right into the Kelowna real estate market’s hands.
Suddenly, workers became untethered from their offices, which caused many to completely rethink where they called home.
People who endured consecutive months in smaller living quarters began questioning their urban existence, and began the search for greener pastures. Buyers sought elbow room, a yard, ample space for home offices, gyms and at-home classrooms.
Many homeowners living in the Lower Mainland made the decision to seek out a less populated area close by that offered relative affordability and the same four season lifestyle they were used to.
Kelowna became a focal point for so many seeking a change.
These behavioural shifts set in motion by a global pandemic will have a lasting impact on the buying decisions and will continue to funnel people into the Okanagan, so I see the demand remaining strong through 2021 and beyond.
This combined with record-low mortgage rates should generate enough sales activity to hold our inventory levels down in seller’s market territory in 2021.
The overall sales volume for the past two months was nearly $1 billion, this is unprecedented for our market when compared to last year at $470 million.
This represents a lot of proceeds that find their way back into the local economy. There are dozens of ancillary businesses that benefit either directly or indirectly from this. Service providers, contractors, local retailers, you name it.
This is good news.
Now, if you’re a buyer, you may not hear this as good news. If you have been on the sidelines for even just three months. you have watched the average single family home in Kelowna jump by nearly $40,000 and over $70,000 if you’ve been on the sidelines since before the pandemic.
Now, it's not all full steam ahead, the market will face some head winds. As single-family homes had the largest price jump, the entry-level property has been pushed out of reach for many first-time buyers.
This combined with a strict lending environment will keep many would-be homeowners on the sidelines in 2021.
The other challenge we face is a small business economy that is a little battered and bruised after lock downs and social distancing protocols put into effect. The impact on our local job market is still unknown, but this will likely play out in 2021.
This brings us to the potential foreclosure issue that may be brewing — 3.7 million borrowers in Canada are still in government and private-sector mortgage forbearance programs. That’s about seven per cent of all active mortgages, according to Black Knight, a mortgage technology and data firm.
Barring further government support, experts there predict serious delinquencies could be on the horizon.
Having said that, I doubt we will see many foreclosures, however, as people have gained so much equity that they would just sell their property prior to the buyer getting conduct of sale.
In conclusion, my prediction for 2021 is a robust year in Kelowna real estate with some excellent growth opportunities in the higher-end single-family homes, recreational property and agricultural land.
A very strong rental market with low vacancy indicates that positive cash-flow will still exist for investors and homeowners can look forward to another year with single-digit property appreciation.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.