The year in real estate basically followed what was predicted in December 2017.
When we compare the first 11 months of this year to last year, the yearly average median price rose seven to 10 per cent, depending on the zone. Absorption dropped to 15 to 25 per cent, and inventory rose. These are all indications of a market that is in a soft correction.
The most important statistic to watch is the absorption. This stat is described as the percentage of total residential inventory that sells on a monthly basis. Therefore, if there are 1,000 houses on the market in December and 100 of them sell in December, the absorption for that month is 10 per cent.
The reason this stat is so important is that it is a statistical representation of the two main driving forces in the market: supply and demand. The average absorption in all three zones for 2018 is between 18 and 20 per cent. If we look back to the period between 2008 and 2013, we were into the single digits for absorption. That is still much lower than we have now.
What this means is that we are still in a good market and we will remain in a good, balanced market for 2019. It doesn’t look like a good market because we compare it to 2016 and 2017. However, these years were not normal years. They were boom years.
Buyers are going to love 2019. There will be more inventory to look at, and they will not be competing with other buyers as much. In 2019 prices will be flat or rise slightly. Absorption will inch down to an average of about 11 to 14 per cent, and inventory will continue to rise.
The reason we will remain relatively strong is that as Alberta and the Lower Mainland continue to correct. They will continue to push people into the interior of B.C. In 2009 the average percentage of our total buyers from the Lower Mainland was between nine and 12 per cent. This year that figure is 15 to 20 per cent. This trend will continue. We are also seeing more developers looking at Okanagan-Shuswap than we have in years.
The sky is not falling. The sky is a nice, clear and blue with a couple of scattered clouds.
Bill Hubbard is a real estate broker and the owner and broker of a four-office real estate firm in the Okanagan-Shuswap. He has been in real estate for 28 years and has been an owner and broker in Vernon for 20 years. At almost 60 years old he is just as passionate about real estate as the day he started.
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