Kelowna’s Real Estate Market amidst Covid 19?

How is Coronavirus affecting Kelowna’s Real Estate Market?

March 26 2020

As I am sure most people expect, the market has slowed significantly. We are still having a few showing requests, and the market is still moving.

Since it’s too soon to see the impact on sales numbers, I reached out to our office manager at RE/MAX Kelowna for some recent stats. Comparing the same week, March 15-March 24 in 2019 vs 2020, 66% fewer offers were written compared to 2019. Not really surprising with most people staying home.  Looking across all offices, there were 251 new listings during that week in 2019, and 307 in 2020 = 20% more new listings during that same week this year.

What will happen to PRICES?
As we all know “Supply and Demand, Regulates the Price”, so if we have more supply coming on, and 2/3 less sales, prices should adjust accordingly, right? Technically yes, but these also aren’t normal market conditions.  The markets around the world are already dubbing this “The Great Pause”.  That could very well be what happens over the coming weeks. We do feel there will be an adjustment to prices, but this hasn’t happend yet.

Resonance, (a Vancouver based market research and economic development advising firm), agrees in their “Future of Covid 19” article, but they also forecast this will have a quick recovery as “the underlying fundamentals of our economy were quite strong until just a few weeks ago”.

Will there be inflation? 
Accordingly to Ozzie Jurock’s latest post, a well known economist out of Vancouver, he thinks we will have inflation coming. Real estate has historically done extremely well with inflation, with house values going up as everything inflates.

Pent up demand
Some are saying as we ease out of this “pause”, we may have pent up demand, such as:

  • First time buyers who can’t wait to get out of their parents’ basements
  • Retirees who want to downsize because they’re tired of cleaning their house
  • People who are re-prioritizing what’s important to them. Big House and cash poor, or small house and travel rich?
  • Low interest rates make borrowing affordable and attractive

Looking forward

Areas of Concern
  • We are worried about job loss, especially those that have purchased presale condos that continue to be under construction to keep timelines.
  • Commercial real estate (office and retail specifically)
  • The prices could decrease before recovery begins
Areas of Optimism
  • The government has excellent programs in place, even for the self employed
  • Interest rates are lower and mortgage deferral is available, helping people keep their homes
  • Government bailouts will be big
  • Good purchasing opportunities to come in the next 12 months
  • The lower end of the market should stay fairly secure

Summary

Yes, the market has slowed tremendously. Sales are down approximately 2/3 right now and will likely stay slow until we see an end to the pandemic. We are hoping for a speedy recovery.

Positive News?

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