Hot 2017 Central Okanagan real estate market predicted to cool this year

The Okanagan Mainline Real Estate Board has released its 2017 real estate numbers for the Central Okanagan.

The number shows the average price for a single-family home has risen almost 13 per cent since December of 2016, but the number of houses sold is down by almost 17 per cent.

“It’s Econ 101,” Elton Ash, vice-president of RE/MAX Western Canada said. “The law of supply and demand.”

“The problem is there’s not a lot of supply and that’s affecting inventory. When there are fewer homes to sell, that puts upward pressure on pricing.”

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But real estate agents also say the market is starting to cool off.

One reason could be the new mortgage “stress-test” that banks are now implementing.

READ MORE: Here’s how much house you’ll be able to buy with the new mortgage stress test 

Buyers must now qualify for an interest rate equal to the Bank of Canada’s five-year rate, or a contractual rate, plus two percentage points.

“Because it’s affecting the higher-equity buyer, which is a strong segment of the Kelowna market,” Ash said. “A home that they may have mortgaged in the $900,000 range – they may now be looking at the $750,000 price range.”

Another reason for the cool down is Kelowna’s tendency to play “follow the leader” with the powerful Vancouver market – and that’s not necessarily a bad thing, according to some real estate experts.

“What we’re predicting is more of a single-digit price increase for 2018. Overall, much healthier,” Ash said.