R E A LT Y I N C .
Vantage THE
REPORT
MID YEAR
EDITION
Thrive THIS IS WHAT IT LOOKS LIKE TO
We believe in the importance of families, building and improving communities, and in serving others. To that end we embrace the values of teamwork, creating joy in every situation, the mastery of our craft, placing our clients first, and creating stellar experiences for all. That’s who we are. And it’s what you can count on every time we do business, and life, together.
2017 OKANAGAN VANTAGE REPORT • 2
A Few Words From Our Founder Welcome to the 3rd edition of the Vantage Report, Kelowna’s most comprehensive real estate market report. In January, we analyzed the current market conditions and examined 15 different neighborhoods. This time around, we’ve decided on a slightly different layout – The Vantage Report ‘light’ if you will. We’ve compressed the most pertinent information into an easily digestible format that can be read on the fly while you enjoy our beautiful Kelowna summer! In this edition, we’ll show you new data on resale homes and new construction, using updated figures from our friends at KNEW Realty Research. Plus, we’ve acted on your feedback and created a digital version that is more mobile friendly. As always, our goal is to be a trusted resource for all things real estate in Kelowna. We hope you enjoy this summer’s 2018 Vantage Report!
Data Source: Photo from Vantage West Realty Inc. 2017 OKANAGAN VANTAGE REPORT • 3
O K A N A G A N VA N T A G E R E P O R T • M I D - Y E A R • 2 0 1 8
RANKINGS
WONDERING HOW YOUR COMMUNITY STACKS UP AGAINST THE REST?
over month, and concurrently there has
While the market wide growth in average single family home prices has seen a
and decreased demand have begun to shift
10.1% increase, the below chart breaks it down community by community!
the market to a more balanced condition than
been a sharp increase in both resale and new construction listings. The increased supply
we’ve seen in quite some time. As the current
2017
2018
%Chg (yr)
Westbank
$ 522,029
$ 722,375
38.4%
University District
$ 708,625
$ 892,675
26%
Downtown
$629,240
$ 787,810
25.2%
N Glenmore/Glenmore
$ 618,488
$ 755,379
22.1%
SE Kelowna/Crawford
$ 970,846
$ 1,154,994
19%
Lakeview Heights
$ 819,651
$ 941,741
14.9%
Rutland
$ 508,911
$ 564,962
11%
Shannon Lake/Smith Creek
$ 624,216
$ 692,046
10.9%
Glenrosa
$ 490,482
$ 534,828
9%
The Mission
$ 992,251
$ 1,080,956
8.9%
Dilworth
$ 802,904
$ 854,186
6.4%
Peachland
$ 624,331
$ 660,322
5.8%
Lake Country
$ 753,493
$787,237
4.5%
West Kelowna
$ 657,211
$ 628,235
-4.4%
Black Mountain
$ 742,161
$ 699,474
-5.8%
Community
absorption rate no longer indicates a seller’s market, buyers have far more choice than they have had for the past three years. Undoubtedly, many Kelowna buyers can manage the hurdles placed before them. Those looking for homes, who can manage the changes in borrowing policies, new taxes, rate hikes, and the affordability issues that have come with three years of steady growth; are benefiting from a more level playing field. These consumers have ensured that there is still solid demand for homes in the Okanagan
Data Source: OMREB - Average single family home sale price data, Q1/Q2 2017, Q1/Q2 2018.
W
e’ve had an action packed 2018 where we’ve dealt with a
barrage of detrimental government policies. Three significant
changes buyers and sellers have had to deal with this year have
had significant consequences. One of the biggest challenges the
market faced was the new OSFI stress test which came into effect on January 1st. These new rules reduced the borrowing power of the average Canadian by about 20% which has had adverse effects on home prices. Back in August 2017, the B.C. government implemented a foreign buyers tax which levied a stiff 20% penalty on home purchases for non-Canadian residents and most recently, a 50 basis point rate hike hit Canadian homeowners and would-be buyers. Collectively these actions put a damper on the robust seller’s market we’ve seen
region despite some major roadblocks. Although current government policies, politics and interest rates have conspired to slow down the market, actual market drivers
BUYER’S HAVE HAD FAR MORE CHOICE THAN THEY HAVE HAD FOR THE PAST 3 YEARS. remain positive. Gross domestic product, a strong job market, solid population growth and Kelowna’s demographics all point to good times ahead for real estate. In the wake of this massive collision between positive market drivers and the collective negative market influencer’s, we can describe the resulting climate as mellowed or subdued. Perhaps this was the intent of political do-gooders all along. However, I suspect that might be giving them a little too much credit. See page 12 for a forward-thinking article on where the market goes from here!
in recent years. Unlike 2017, sales this year have been down consistently month 2018 OKANAGAN VANTAGE REPORT • 4
NEW PRODUCTS. NEW OPPORTUNITIES
UNABSORBED NEW HOUSING UNITS ( Never Lived In)
Townhome & Apt. Condo
1000
Rental Housing
100
2000
Still Coming to Market in Summer 2018
200
Single Family & Semi-Detached
300
3000
Currently Pre-Selling
Single Family & Semi-Detached
400
Townhome & Apt. Condo
500
NUMBER OF NEW HOUSING UNITS UNDER CONSTRUCTION
$355,457 $419,550
300
$582,978 $669,312
Semi-Detached
$574,326 $687,758
100
Single Family (Move In Ready Only)
$1,141,269 $1,131,410
0
$500,000
$1,000,000
$1,500,000
20 18
20 17
20 16
20 15
20 14
20 12
20 13
400
Townhome
$0
20 11
PRE-SALE MULTI-FAMILY UNITS AVAILABLE FOR SALE
419
Available Units
Lowrise-Midrise Condo
09
08 20
$569,915 $798,555 Sold Units
Tower Condo (Excluding Pent Houses)
20
20 18
20 17
20 16
20 15
20 13
20 14
20 12
20 11
09
20 10
08 20
20
AVERAGE PRE-SALE PRICING FOR PROJECTS CURRENTLY MARKETING THROUGH SALE CENTERS
20 10
0
0
261
200
160
178
175 81
LOWRISE CONDO
TOWER
TOWNHOME
Data Source for above charts: Knew Realty Research Multi-Family Development Design Tool Q2 2018.
Data Source: Photo from Vantage West Realty Inc. 2017 OKANAGAN VANTAGE REPORT • 5
YEAR TO DATE SALES 3005 2422
-21% Y/Y CHANGE
2017
ALL HOMES SOLD BY TYPE
31% CONDO
15%
339 1177
TOWNHOME
53%
339
SINGLE FAM
2018
LISTING INVENTORY
AVERAGE TRANSACTION VALUE $565K
2413
$515K 2100
2729
+10% Y/Y CHANGE
2016
2017
2018
SINGLE FAMILY HOME SALES 1424 1177
-19%
2017
2018
AVERAGE SFH PRICE $695K
$769K
Y/Y CHANGE
2017
2018
1243 1021
Y/Y CHANGE
2017
STRATA PROPERTY SALES
-20%
2018
AVERAGE STRATA PRICE $381K
$397K
Y/Y CHANGE
2017
2018
2018 OKANAGAN VANTAGE REPORT • 6
+10%
+4%
Y/Y CHANGE
2017
2018
2017 OKANAGAN VANTAGE REPORT • 6
S TATS
O K A N A G A N VA N T A G E R E P O R T • M I D - Y E A R • 2 0 1 8
AVERAGE PRICE / SQ FT $313
$289
+8%
PROPERTIES OVER $1 M 161
-7%
150
Y/Y CHANGE
2017
2018
Y/Y CHANGE
2017
2018
JUNE SALES
LOT SALES 233
857
-49%
788 535 114
Y/Y CHANGE
2016
2017
2018
AVERAGE SFH PRICE
2017
2018
AVERAGE SQ FOOTAGE
PER SQ FT $297
$323
+8%
1782
+1%
1805
Y/Y CHANGE
2017
2018
Y/Y CHANGE
2017
AVERAGE SFH PRICE
2018
STRATA AVERAGE SQ FT
PER SQ FT $297
$323
+8%
1280
-4%
1229
Y/Y CHANGE
2017
2018
Y/Y CHANGE
2017
2018
Data Source: OMREB - Q1/Q2 2018.
2017 OKANAGAN 2018 OKANAGAN VANTAGE VANTAGE REPORT REPORT • 7 • 7
O K A N A G A N VA N T A G E R E P O R T • M I D - Y E A R • 2 0 1 8
I N V E S TO R U P DAT E
Market Rents - 2018 Q2 S I N G L E F A M I LY Category
1 Bedroom
2 Bedroom
3 Bedroom
4 Bedroom
Luxury
$ 1,600
$ 2,000
$ 2,700
$ 3,000
Average
$ 1,400
$ 1,750
$ 2,300
$ 2,600
Basic
$ 1,200
$ 1,600
$ 2,000
$ 2,300
1 Bedroom
2 Bedroom
3 Bedroom
4 Bedroom
Luxury
$ 1,400
$ 2,000
$ 2,100
$ 2,700
Average
$ 1,200
$ 1,500
$ 1,900
$ 2,300
Basic
$ 1,050
$ 1,350
$ 1,750
$ 1,950
1 Bedroom
2 Bedroom
3 Bedroom
4 Bedroom
Luxury
$ 1,500
$ 1,800
$ 2,400
$ 2,550
Average
$ 1,250
$ 1,500
$ 1,900
$ 2,200
Basic
$ 1,100
$ 1,300
$ 1,750
$ 1,950
1 Bedroom
2 Bedroom
3 Bedroom
4 Bedroom
Luxury
$ 1,350
$ 1,550
$ 1,700
$ 1,900
Average
$ 1,100
$ 1,375
$ 1,550
$ 1,700
Basic
$ 1,000
$ 1,300
$ 1,400
$ 1,600
CONDO/TOWNHOME Category
PA R T I A L H O M E - M A I N Category
PA R T I A L H O M E - S U I T E Category
Add 10% for downtown | Add 20% for executive (Lower Mission,Wilden, Dilworth) | Subtract 10% for Glenrosa/Lake Country
CONTINUED HOUSING SHORTAGE KEEPS RENTAL PRICES HIGH.. Elected officials may have had noble intentions, but their
to remain renters. These borrowing roadblocks have resulted in
policies have done everything but improve housing affordabil-
continued housing shortages and kept rental prices high. Many
ity. A year ago, it looked as though thousands of purpose-built
of our investor clientele are seeking opportunities in other
rentals in the pipeline would increase the vacancy rate and
markets such as Vernon and Kamloops where prices are still
put downward pressure on rents. However, new regulations,
relatively affordable; rents are strong and economic fundamen-
taxes, and interest rate hikes caused many would-be buyers to
tals point to healthy growth over the next ten years.
2018 OKANAGAN VANTAGE REPORT • 8
Data Source: Vantage West Realty Property Management - Average Rental Rates Q2 2018.
R E A LT Y I N C .
GOOD FORTUNE NOT CUTTING INTO YOUR BOTTOM LINE IS THE KEY TO
in property management
WE’RE SMART ABOUT PROPERTY MANAGEMENT > Utilizing the most cutting edge tenant screening procedures available in the market. > Turn your average performing rentals into great cash flow properties with our rent to own program.
T HE SMART T EAM CO URTN EY DES HAYES
Managing Broker Licensed Realtor & Property Manager courtney@vantagewestrealty.com Phone: 250-863-8707
LIN DSAY AN DERS O N Licensed Property Manager lindsay@vantagewestrealty.com Phone: 250-869-6449
> Receive a Semi Annual Investment Analysis on your real estate portfolio with a certified investment advisor. > Free Analysis on properties you currently own – Full Pro Forma, Financial Projections, Sale analysis and more. REAL ESTATE SALES: Access to our sales division for guaranteed sale on any properties you wish to sell.
> Inhouse Maintenance and Renovations Crew. > Experts in maximizing rents without creating vacancy. > Specializing in Residential, Single family and Multi-Family. > Gold REIN 2015, Multi Family 2016, and Top Player 2016 award winners following REIN principals.
BY INVESTORS FOR INVESTORS
> Experience stress free, hands off real estate ownership and receive investment consulting and coaching from Kelowna’s Premier Real Estate consultant, AJ Hazzi. > Could your property be professionally managed without it cutting into your bottom line? Ask us about our “Owner Net Guarantee”. > For a free spreadsheet on local market value rents for Kelowna in 2017 – email Vantage West: info@propertymanagementkelowna.com > Covering the entire valley from Penticton to Sicamous.
PHONE 250-868-3151 EMAIL INFO@PROPERTYMANAGEMENTKELOWNA.COM WEB WWW.PROPERTYMANAGEMENTKELOWNA.COM TRADEMARKS ARE OWNED OR CONTROLLED BY THE CANADIAN REAL ESTATE ASSOCIATION (CREA) AND IDENTIFY REAL ESTATE PROFESSIONALS WHO ARE MEMBERS OF CREA (REALTOR®) AND/OR THE QUALITY OF SERVICES THEY PROVIDE (MLS®).
2018 OKANAGAN VANTAGE REPORT • 9
MILLENNIAL’S MORE APT TO BE LANDLORDS LEIDA TYMCHUK LICENSED WITH CIBC MOBILE MORTGAGE ADVISOR
A
If you think being a landlord isn’t worth the trouble, think again. A new CIBC poll of Canadian homeowners finds that those who own a separate rental
property, earn on average $2,189 per month - 50% more than their monthly costs. Further, those who earn income by renting out space in their home reduce their housing costs by as much as 70%. “High housing costs and the growing appetite for additional revenue streams make renting out space a popular choice, especially among younger Canadians,” says Jamie Golombek, Managing Director, Tax and Estate Planning, CIBC Financial Planning and
IS IT ‘WORTH THE HEADACHE’ TO RENT OUT SPACE IN YOUR HOME OR OWN AN INCOME PROPERTY? A NEW CIBC POLL FINDS IT CAN BE.
LEIDA TYMCHUK, MOBILE MORTGAGE ADVISOR
Advice. “While most homeowners believe the tax benefits alone make an income property a worthwhile investment, it’s critical to understand how it fits into your overall financial plan, and be mindful of all of the tax implications of going this route so you can make the most of the venture.” In a new report, So, you wanna be a landlord: Tax considerations for rental properties, Mr. Golombek and Debbie Pearl-Weinberg, Executive Director, Tax & Estate Planning, CIBC Financial Planning and Advice, address some of the tax considerations for homeowners currently earning or planning to earn rental income.
KEY POLL FINDINGS: > Almost two-thirds (64%) of current landlords
The poll findings reveal that Canadians aged 18-34 are more apt to be landlords than any other age group. Almost half (47%) of millennial homeowners are already landlords (30%) or plan to be (17%), compared to only 29% of homeowners aged 35-54 and 12% of those aged 55+. “Younger Canadians are more open to sharing their space because they see it as financially advantageous,” says Scott McGillivray renowned real estate investor, contractor and television personality. “There’s definitely a shift in attitudes and a growing interest in income properties, in part driven by a desire to offset high housing costs, but also because it can be a smart way to create extra income and build wealth.” While landlords who own a separate income property can deduct both capital expenses (e.g. renovations, real estate commissions) over time and current expenses (e.g. insurance, interest) immediately, those who share their primary residence with a tenant can deduct only a portion of their expenses, which relate specifically to the rental area.
own one or more investment properties used
“It’s well worth your time up front to consult with a team of experts including your financial
exclusively for rental income
advisor, lawyer and Realtor to be clear about the perks and perils before jumping in,” he
> $2,189 is the average amount they earn in
adds.
income each month > 72% of all homeowners believe investing in real estate is an excellent way to earn supplemental income > 37% of homeowners say they’d opt for a home with a source of rental income if buying a home today
2018 OKANAGAN VANTAGE REPORT • 10
Leida Tymchuk Office: 1-866-822-6943 Mobile: 250-899-0963 Email: leida.tymchuk@cibc.com Data Source: CIBC - Consumer Research and Advice
2017 OKANAGAN VANTAGE REPORT • 10
LUXURY MARKET
O K A N A G A N VA N T A G E R E P O R T • M I D - Y E A R • 2 0 1 8
LU X U RY H O M E SA L E S BY T Y P E Lakeshore (14.4%) Acreage (1.3%) Condo (2.6%)
Executive (79.1%)
22
TOTA L H O M E SA L E S OV E R $ 1 M I L L I O N
157
147
148
42 4 121 2016
Townhouse (2.6%)
2017
2018
Data Represents Jan 1st - June 15th of Each Year
Data Source: OMREB - Luxury Sales Q1/Q2 2016, Q1/Q2 2017, Q1/Q2 2018.
H I G H E S T YE A R TO DAT E S A L E:
Sale Price: $7,298,000
|
Location: Westbank Centre
Luxury Market Remains Strong Despite economic influencer’s conspiring against us, luxury homes have performed reasonably well. Historically, oil-rich Albertan buyers or cashed up Vancouverites have driven demand for our higher-end property. However, the newly proposed speculation tax, as well as the foreign buyer tax plus the softening luxury market in Vancouver, has squashed much of this activity. Now it’s local professionals who have taken the reigns and are buying and building Kelowna’s million dollar plus executive homes. Developments like Highpointe Terraces will be almost completely sold out in only a year. The demand for property in this exclusive neighborhood is a testament that our knowledge-based economy is going strong.
Data Source: Photo from Vantage West Realty Inc. 2017 OKANAGAN VANTAGE REPORT • 11
WHERE WE’RE GOING
WHERE WE ARE (OUR EDUCATED OPINION)
prices dip five percent, the would-be savings are more than gobbled up by a half percent increase in interest rates. Moreover, any significant drop in housing prices is highly unlikely as the economy, inward migration and demographics have all aligned to create a growth market. This multitude of market influencer’s will prevent a real estate crash. For the time being though, we will continue to see an increase in housing supply and softer demand as the market continues to balance out. In some sectors, particularly high-end properties, it will become a buyers market. That said, buyers compressed into lower price brackets due to changes in lending will continue to drive demand for property at lower price points. For this reason, entry-level homes under $600,000 should remain strong. For most sellers in this market, a good piece of advice would be to have realistic expectations on what price you will get for your home. Increased inventory
Data Source: Vantage West Realty Inc.
is forcing those looking to sell to compete with their neighbours to impress the limited and
THE SKY ISN’T FALLING & WE WON’T SEE A DEVASTATING CORRECTION LIKE THE ONE WE SAW IN 2009.
A
somewhat skeptical buyers who are looking for a deal. Trends in the market 18 months ago caused me to predict that prices would soften. I believe the shift in supply and demand is just now
When you talk to most people these days, the prevailing attitude is that our real estate market has shifted from greed to fear. Sellers and developers are fearful that they have missed out on the top of the market. No matter what way you look at it, there is risk involved. If you take
your property off the market or refuse to budge on price, you may kick yourself a few months down the road when more homes come on the market to compete with yours. However, there’s always the hope that the market will suddenly turn into last years and you’ll have a chance to realize an amazing sale price. A crystal ball during these times would be helpful, but it’s almost impossible to time things perfectly. The concerns of sellers are warranted, and buyers are fearful too. Those looking for property are often scared that they’re going to make a mistake and buy at the peak. However, those waiting to buy and hoping that prices will fall would be well advised to consider other factors. In the current market, the potential cost of delaying a purchase, namely interest rate hikes, is often overlooked. Even if housing
2018 OKANAGAN VANTAGE REPORT • 12
beginning and the market will likely move even more in the coming months. How long will it last? No one knows for sure as many factors come into play. Not the least of which, is what will happen with our provincial government in October. If our elected officials decide to scrap detrimental policies, the market could rebound aggressively. However, if those in power decide to continue down the same path, we’re likely to head into a slump phase of the market. Remember though, regardless of government policies, market volatility is natural. It’s important to remember that with our strong local economy, the sky isn’t falling and we won’t see a devastating correction like the one we saw in 2009.
R E A LT Y I N C .
IT TAKES
FIVE EXPERTS TO
MAXIMIZE your Kelowna real estate investments
THE DREAM TEAM OUR FOUR PROS AND YOU. PURCHASING A PROPERTY outside your area can be daunting, not having a team of professionals you trust is what holds you back from taking advantage of the opportunity that exists right now in Kelowna. This Group of Investor focused service providers is helping regular people, take that next step in securing their financial freedom. THE DIFFERENCE between a typical real estate agent or mortgage broker that likely owns little to no real estate themselves, and a professional that not only specializes in dealing with investment property but walks the walk by building their own portfolio cannot be over stated. Savvy Investors are engaging the right Realtors, Mortgage Brokers, Property Managers and Accountants with an inside knowledge of real estate investment. In a competitive market, finding and analyzing a deal can be the most challenging part. Once you’ve found it, you need to find the right mortgage product, the right structure to mitigate tax and possibly most important, a property manager that doesn’t just protect your investment but helps you actually measure your ROI and suggest ways to improve it over time.
LINDSAY ANDERSON Licensed Property Manager lindsay@vantagewestrealty.com Phone: 250-869-6449
GREGG ALFONSO Law Corporation Alfonso Law Corporation alfonso@lawcorp.com Phone 250-868-6789
LEIDA TYMCHUK Mobile Mortgage Advisor Licensed with CIBC leida.tymchuk@cibc.com Phone: 250-899-0963
AJ HAZZI Founder, Associate Broker Gold REIN Member & Top Player 2015 Vantage West Realty Inc. info@ajhazzi.com Phone: 250-864-6433
EACH ONE OF THESE PROFESSIONALS understands what you are trying to do, and knows what you need to succeed. With this group you can save yourself loads of time and confidently snag your piece of the Okanagan Valley.
PHONE 250-717-3133 EMAIL INFO@VANTAGEWESTREALTY.COM WEB KELOWNADREAMTEAM.COM 2017 OKANAGAN VANTAGE REPORT • 13 TRADEMARKS ARE OWNED OR CONTROLLED BY THE CANADIAN REAL ESTATE ASSOCIATION (CREA) AND IDENTIFY REAL ESTATE PROFESSIONALS WHO ARE MEMBERS OF CREA (REALTOR®) AND/OR THE QUALITY OF SERVICES THEY PROVIDE (MLS®).
Vantage THE
REPORT
VANTAGE WEST REALTY INC. Suite 100-1060 MANHATTAN DR, KELOWNA, BC V1Y 9X9
PHONE 250-800-2312
EMAIL VANTAGEREPORT@VANTAGEWESTREALTY.COM
WEB VANTAGEWESTREALTY.COM