August sales of single family residential homes dropped by 19% (down 21 single family residential units to 89) compared to August last year (110 units) and down 26 units from last month’s 115 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 now 9% from 734 last year to 668 this year. Now with a federal election upon us, we will likely see continued reduced activity in the real estate market.
Sales - The total sales for the 12 months ending August 2015 was at 955, down 3.4% from the 989 for the 12 months ending August 2014. The recovering market seems to be momentarily flat, although this is still the 2nd highest volume of sales in the last 8 years since 2008. This is the first month in 2015 that sales show a decrease over last year, another factor that shows a stalling recovery that will likely be further exacerbated by the upcoming fall election.
Inventory - The average monthly inventory of single family homes dropped 7% to 542 for the last 12 months ending in August 2015, again, the lowest average inventory we have seen in the last 7 years. Inventory has not been this low since 2008, at 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 are edging more slowly due to slower sales though we are seeing continued (but weakening) slight upward pressure on average median prices. At $349,152, average median prices for the last 12 months ending in August 2015 edged up slightly by 2% from 12 months ending in August 2014 and up 5% from 2013 when we reached the lowest average median price of the last 8 years. If more Buyers enter the market and the inventory tightens, 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 14.3% over the 12 month period ending August 2015, is still the highest in the last 8 years. At the end of August 2015, the inventory edged up to 7 months of available homes on the market, slightly higher than the last 3 prior months. This is still considered a Seller’s market and will continue to put upward pressure on prices as Buyers compete for the available homes.
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.