Photo: The Canadian Press
You just have to take a look at property listings across the Okanagan to see how hot the market is right now.
Those who can spend are devouring properties at record levels and prices, with many paying above price.
Earlier this year, the cost of buying a single family home in Central Okanagan rose by $ 100,000 in just 60 days. That’s in stark contrast to a $ 100,000 increase in the past 12 months.
That has also had an impact on the rental market, where the average two-bedroom supply at Castanet reached $ 2,000 per month.
Why is this boom now taking place amid a global pandemic?
Brendon Ogmundson, chief economist at the BC Real Estate Association, believes much of the boom can be attributed to the pandemic.
“This time last year we saw offers really go down due to social distancing. People took their offers off the market. At a time when we usually have the most new offers, we had none,” said Ogmundson
“Right now there is just over a month and a half of inventory available, which is extremely low. Such a low ratio will lead to a rapid price increase.
“Homes are not available, and when they are, they are not available for a long time. If you are from the lower mainland and have sold at a pretty high price, you can move into the Okanagan and win lots of deals with that extra money . “
While migration to the country has collapsed due to the pandemic, migration between and within the provinces remains high.
Ogmundson says it is these groups that seem to be helping to drive prices up.
An older population that has accelerated their retirement plans due to the pandemic and a younger age group that can now work remotely.
“If we look at the numbers of where buyers are from, a lot of that is coming from the lower mainland. I think part of that is being able to work remotely and people can stretch their dollars a lot further.
“There are far more single-family homes in the Okanagan than in the Vancouver area, and they are a little cheaper.”
Ogmundson says we continue to see people migrating Alberta in search of work.
Various other factors are also driving prices up, the most important of which is record-low interest rates.
The impact on employment and savings was also a factor
“Since the pandemic, employment in the high-wage sector has increased by 10 percent. Your job may have changed, but you haven’t felt it as much as low-wage workers.
“And the savings in 2020 were exceptional. In 2020 alone, Canadian households saved more than the last six years combined, $ 200 billion.”
Ogmundson says there is a lot of money being spent on real estate right now.
The good news for buyers, says Ogmundson, is that the current trend is unsustainable.
“There are already some signs that things are cooling down a bit, but if I say we’re cooling down we will break previous records and marginally beat previous records.”
Ogmundson expects the market to return to some normalcy in the second half of the year, but adds that sales should remain very strong due to low interest rates.
“There will be a natural burnout of the markets,” he says. “Once we hit an affordability threshold that we have now, we always see things slow down on their own.”
He expects price growth to stabilize in the range of two to three percent, although this could take several months.
