October sales of single family residential homes continue to decline dropping by 24.4% (down 22 single family residential units to 68) compared to October last year (90 units) and down 16 units from last month’s 84 units. The North Okanagan real estate market although healthy, continues to stagnate while we continue to see much better numbers in the Shuswap to the north and Central Okanagan to the south. Year to date sales in the North Okanagan continue to trend down 10.5% from 916 last year to 820 this year. BUT WAIT! With the federal election now over, November is showing a stunning rebound!
Sales - The total sales for the 12 months ending October 2015 was at 925, down 8.7% from the 1013 for the 12 months ending October 2014. The recovering market appeared to be taking a break, although this is still the 2nd highest volume of sales in the last 8 years since 2008. This is the third month in 2015 that sales showed a decrease over last year, another factor that showed a stalling recovery. However, now that last month’s federal election is behind us, sales in the first week of November have rebounded an amazing 150% to 25 single family home sales from 10 for the same week last year. It will be interesting to see how sales go for the rest of the month and the rest of the year.
Inventory - The average monthly inventory of single family homes dropped only 3% to 548 for the last 12 months ending in October 2015, now the lowest average inventory we have seen in the last 8 years. Inventory has not been this low since 2007, before the start of the recession triggered by the US banking crisis. With more Buyers out there looking for reasonably priced homes Sellers can finally make that move.
Prices - Prices continue to edge up and we are seeing continued upward pressure on average median prices. At $352,964, average median prices for the last 12 months ending in October 2015 rose 2.5% from 12 months ending in October 2014 and up 6% from 2013 when we reached the lowest average median price of the last 9 years. If more Buyers enter the market and the inventory continues to tighten, we will see more upward pressure on prices.
Absorption Rate - The rate at which our inventory is being absorbed by sales dropped slightly again compared to last month. The average absorption rate of 13.64% over the 12 month period ending October 2015 dropped below last year’s figure for the second time this year. At the end of October 2015, the inventory remained at 8 months of available homes on the market, up one from last month. This is still considered a balanced market and favouring neither Buyers or Sellers.
As predicted, the real estate market slowed down during the period leading up to the federal election the same way that it did during Alberta’s provincial election in May 2015 when Edmonton real estate experienced the lowest sales in 20 years followed the next month by a rebound in sales and rising prices. Our real estate market in North Okanagan appears to reacting in the same way as we see the 150% increase in sales for the first week in November. Let’s see what happens next!
At this point we still expect that the market over the next 6 to 18 months will be characterized by increasing sales and lower inventory moving more strongly towards a market that favours Sellers with more competition from Buyers and rising prices. Prices will rise when consumer confidence gains momentum and brings with it more Buyers putting downward pressure on available inventory.