July 26, 2021 Peachland Market Update
We are in the height of summer, with fully booked hotels, motels, BnB’s & other vacation rentals that are now fetching premium prices for nightly rates. Anyone for $450/night for a 3- star motel?! This past Saturday in Kelowna there were lineups for most downtown restaurants that went well past 8 pm. So many across BC and Alberta have been waiting for a holiday and time with loved ones this summer after travel restrictions relaxed. And in our area, we have smoke from wildfires during a hot dry summer. Beaches and cafés are packed. What about real estate activity?
For the first time this year we see the median price decline slightly by 2%. June vs. May. We see the number of home sales in June increase slightly over May. But in July so far, we are counting 244 single family home sales for July. It is quieter, inventory is low, still less than half of what it was this time last year, and it feels quiet, and the market is slowing down.
Actually, over the last 10 years – what we have right now for market acitivity is what we would consider normal number of sales. Not the Covid induced spring craziness we just had for market activity. The home buying frenzy
Is it really slowing down? Or just taking a summer break? There are still buyers looking but very low inventory, and some new home listings are still reaching higher and higher in price. Time will tell what the fall brings after the summer holiday/wildfire season. Covid with the Delta variant remains a wild card for the fall season. Rising positive case numbers in Kelowna with a crowded tourism season are causing some restaurants to temporarily close. Masks mandate for indoors is back.
We are also seeing two other phenomena – home closings being delayed because the Buyer cannot secure fire insurance from traditional providers, pushing the closing date out via ‘force
majeure’ or sending Buyers scrambling to online portals like TD Insurance and Sonnet.ca for their insurance.
Secondly, move in dates for some new homes are being delayed because builders are waiting for materials to finish the home. The building industry for sure can’t build homes fast enough to satisfy demand, and now material shortages are exacerbating completion dates. New construction has not been able to keep up with the demand for new homes for some time now.
New single family homes under construction increased 41% versus second quarter last year. The average time to complete a home currently stands at 10.8 months. Many projects have robust advance sales. But rapidly rising construction prices is giving buyers pause to reconsider resale homes.
The strength of the market is attracting many developers to the area from both Alberta and the Lower Mainland, the phone is ringing with developers inquiring around for any suitable development property that can be subdivided and rezoned.
Summary
The market is still strong but moderating, inventory still quite low. Prices quite high.
I expect the sales numbers coming out in the next few months will show a market that is moderating somewhat for sales activity and perhaps the median price easing a bit.