Sales of residential homes in the South Okanagan decreased by 24 per cent in the second quarter of 2020, compared to the same period in 2019, however, sales are on the rise again.
A new report by the South Okanagan Real Estate Board highlights this positive housing market growth, which occurred in the month of June.
In total there were 407 residential transactions in the second quarter of 2020, equaling a 24 per cent decline compared to 2019. Townhome sales decreased by 51 per cent while the sale of single-family homes dropped by 26 per cent during that period.
Sales rebound in June
However, the real estate board saw a rebound of sales in June, with 213 residential sales, a 27 per cent increase compared to the same period in 2019.
“With the COVID-19 pandemic approaching four months, most businesses have reopened and economic activity is on the rise. The South Okanagan tourism industry is rebounding as travellers look for safer holiday alternatives,” reads the report by the real estate board.
This influx of visitors, the board explained, is giving households the confidence to move ahead with their real estate decisions.
Limited inventory, prices increase
The South Okanagan region is, however, experiencing a limited inventory of homes for sale. There were 585 single-family homes for sale in the region in June 2020, a two per cent decline compared to May, and a 28 per cent increase compared to 2019.
Just 15 single-family homes have been delivered to the market so far this year, and 102 remain under construction.
Average home prices have increased by 15 per cent since second quarter in 2019. The average selling price for a single-family home in this region during the second quarter this year was $622,451. Townhouses and apartments increased in price by four per cent.
Prices by region
Summerland topped the charts with the highest average single-family home sale price, at $857,754, a 10 per cent increase since 2019. The Kaleden/Okanagan Falls region was close behind at $841,600, a 67 per cent increase since last year.
Naramata was third with the average single-family home selling for $777,500.
Keremeos, Oliver, Osoyoos and Penticton all average within the 500 to 600-thousand-dollar range.
Housing prices are lowest in Princeton, with the average single-family home selling for $365,393, an 18 per cent increase since last year.
Osoyoos was the only market in the South Okanagan where homes decreased in value, by 18 per cent.
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|Economic overview and housing market analysis. [South Okanagan Real Estate Board]|
Outlook for the future
Rising home prices and changes to public policies in terms of loans (higher minimum qualified credit score), the board explained, has led to dampened affordability in the South Okanagan.
In addition to a higher minimum qualified credit score, changes to Canada Mortgage Housing Corporation’s policies include a minimum $133,154 household income to qualify for an insured mortgage in this region, compared to $106,199 pre-COVID-19.
The board predicts that the pandemic will likely accelerate the trend of families moving away from highly dense and costly jurisdictions, such as the Lower Mainland.
Buyers who were expecting severe declines in princes due to the pandemic will likely ‘pull the trigger’ on a purchase as market declines failed to materialize, explained the board. Additionally, interest rates near historical lows, they predict will help re-activate the market going forward.
“While there are reasons to be cautiously optimistic, there remains a considerable amount of uncertainty going forward,” said the board. “Household incomes have held up reasonably well as governments have injected billions into the economy and financial institutions have allowed for payment deferrals, yet, these stimuli are expected to be temporary.”
The board predicts that a potential second wave of COVID-19 could impact the pace of the market’s recovery, and further weaken the housing market. \