September sales of single family residential homes continue to decline dropping by 8.7% (down 8 single
family residential units to 84) compared to September last year (92 units) and down 5 units from last month’s 89 units. The North Okanagan real estate market although healthy, continues to stagnate while we are seeing some 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 9% from 826 last year to 752 this year. With the federal election in it’s final week, we will likely see continued reduced activity in the real estate market followed by a possible rebound after the election.
Sales - The total sales for the 12 months ending September 2015 was at 947, down 6% from the 1008 for the 12 months ending September 2014. The recovering market seems 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 second month in 2015 that sales showed a decrease over last year, another factor that shows a stalling recovery that will likely continue until after this month’s federal election.
Inventory - The average monthly inventory of single family homes dropped 5% to 545 for the last 12 months ending in September 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
Prices - Prices continue to edge up more slowly due to slower sales though we are seeing continued (but weakening) slight upward pressure on average median prices. At $349,089, average median prices for the last 12 months ending in September 2015 edged up slightly by 1.7% from 12 months ending in September 2014 and up 4.9% from 2012 when we reached the lowest average median price of the last 8 years. If more Buyers enter the market and the inventory continues to tighten, we will see more upward pressure on prices, otherwise expect stagnation to continue and prices may even drop slightly.
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 14.12% over the 12 month period ending September 2015 dropped below last year’s figure for the first time this year. At the end of September 2015, the inventory remained at 7 months of available homes on the market, the same as last month. This is still considered a balanced market and favouring neither Buyers or Sellers.
Real estate markets tend to slow down during the period leading up to an election. For example, during Edmonton’s provincial election in May 2015, Edmonton real estate experienced the lowest sales in 20 years. In the next month after the election, sales rebounded and prices even edged up. We can expect to see something similar in our market until October 19 and then expect business as usual after that.
At this point we still expect that the market over the next 6 to 18 months will be characterized by slightly increasing sales and lower inventory moving more strongly towards a market that favours Sellers with more competition from Buyers and slowly rising prices. Prices will rise when consumer confidence gains momentum and brings with it more Buyers putting downward pressure on available inventory.