Captial News Article
Blog by | May 12th, 2008
Kelowna's real estate market is slowing down a little more. The Canadian Mortgage and Housing Corporation released a report outlining that housing starts fell from 349 units in April 2007 to 249 units this Aprils due largely to fewer multi family starts. But, not only are there fewer starts, there's also less demand than there was in the past. Market Analyst Paul Fabri pointed out, however, that news needs to be put in context as previous years showed record breaking profits and demand. So, instead of expecting double digit profits, scale back expectations to around 8 to 10 per cent. And the amount of time before a property gets taken off the market could also stretch out. Reasons behind the slow down relate to a global economy. "First I will say, I think we will see demand ease somewhat, for a number of reasons," Fabri said. "The first reason is that while the B.C. economy is doing well, some sectors - mainly the forest product sector - are having some difficulties and will continue to have them. Also, the hight Canadian dollar is having some impact on tourism." As tourism and forestry stagnate, Kelowna will experience slower economic growth. Another factor feeding into the slowdown is a decline of consumer confidence. "Given the bad news out of the United States in terms of their economy and housing markets and the volatile financial markets - that's having an impact on consumer confidence," he said, adding while it's not that grim in B.C., confidence is lower than it had been previously. "I think consumers are being a little more cautious - I don't want to overstate that, but I think it's there." Kelowna real estate is also becoming less appealing as a resort destination when compared to areas in the U.S. that are in the throes of a housing crisis. Their decline is making for some cheap real estate. "Given that housing demand in the States is very weak right now, there's a lot of product for sale there and prices are declining," he said. Add that to the fact that the Canadian dollar is hovering near par with the American dollar, it's an ideal time for Canadians to shop across the border for resort properties. "So our resort markets are facing stronger competition from American resort markets. And the final factor in this changing market, is the Albertans. We may see a few less Alberta buyers this year," he said. "Keep in mind many people from Alberta who were buying second residences in Kelowna relied in growth in equity in their properties in Alberta to finance their home here and because they saw such big price increases in 2004, 2005 and 2006 - the values of their homes went up significantly." Then that changed. A lot of buyers borrowed against that equity to buy a home in the Okanagan, but they aren't seeing that same price growth over the last year. Their prices have flattened out. "So that says to me, we will see a few less buyers," he said. "But we have to put all of that into context. I see the moderation in demand that we are seeing here within the context of a strong market overall."