Construction is buzzing and units are selling at one of the newest residential developments in Penticton, B.C., called The Ridge.
“There’s a really steady flow of lot sales with some peaks and valleys,” said Dan Wilson at RE/MAX Penticton Realty, responsible for marketing the new development.
Sales are steady, much like the current Okanagan real estate climate.
New numbers from the South Okanagan Real Estate Board show total sales in the South Okanagan are up by 12 per cent in October compared to the same month last year.
However, year-to-date sales slipped by 10 per cent compared to the same period in 2018, according to board president Dori Lionello.
“I think we are coming into a normalized market,” she told Global News on Wednesday.
The real estate market is stabilizing from the housing frenzy many experienced in 2016-17.
While there is less volatility, Lionello said the market is recovering from the shock of the new mortgage stress test, despite near-record-low interest rates.
The news rules, which were implemented in two phases between 2016 and 2018, established stricter standards for federally-regulated lenders to vet Canadians applying for a mortgage.
The regulations are an attempt to rein in household debt loads by vetting borrowers against interest rates higher than the mortgage rates offered by their banks.
“That took the purchasing power of the average buyer, say in the $500,000 price range,” Lionello said. “It affected them by about $100,000 in their purchasing power.”
The stress test effectively imposes a lower cap on the maximum mortgage amount a given borrower can obtain, which has forced some prospective buyers to settle for less expensive homes or to postpone purchases in order to save for a bigger down payment.
“It has really impacted the purchasing power, which does affect our market,” Lionello said. “When you don’t have as many buyers able to purchase that home that they want, it puts pressure on prices.”
While prices are edging downwards in some communities like Keremeos and Oliver, home prices are relatively flat in Penticton.
The average single-family home sold for $590,000 last month, up half a per cent compared to October 2018.
“You have to be more realistic with your price,” she said. “You can’t stretch as much anymore; we’re just kind of recovering from a really big shock.”
Royal LePage realtor and Penicton city councillor Julius Bloomfield believes Penticton could get a boost from Vancouver’s gains.
“The uptick in the Vancouver market, we are seeing a lift there, and we haven’t seen the effect here yet but I think that will come,” he said on Wednesday.
Wilson said demand is increasing for new construction. Only 19 of the 53 lots at The Ridge are still on the market.
“Instead of leveling off, we are ramping up,” Wilson said.