Overall, Spring/Summer (April-to-August) Multiple-Listing-Service (MLS) residential transactions in the Okanagan Mainline Real Estate Board’s (OMREB) Trading Area fell -16% from 2017 to 2018 (from 4,021 to 3,363).
Adjacently, the representation of First-Time buyers in the OMREB trading area fell to 15% in 2018 from a previous 19% in 2017. By the same measure, Downsizers saw a marginal drop of -1 percentage point in their representation, while Subsequent buyers (move-up buyers) and those buying for Recreational-or-Investment purposes both saw representational increases.
Translating these composition changes into actual transaction numbers shows that the 2018 Spring/Summer market saw -260 (-34%) fewer First-Time buyers when compared to the previous year’s, as well as -195 (-22%) fewer Downsizers, -154 (-10%) fewer Subsequent buyers, and -49 (-6%) fewer buyers purchasing for Recreational-or-Investment purposes.
Corresponding with all of the above, purchases by Lone-Parents and Singles were down -37% and -20% respectively from 2017-to-2018, while purchases by Couples and Empty Nesters fell -16% and -8% respectively.
In general, the fact that First-time buyers and/or Single-income purchasers saw the greatest declines in market presence in 2018 was a reasonable expectation given that the Stress Test came into full effect for all mortgages at the beginning of the year. Essentially, the lower your household income is the more you will be adversely affected by the mortgage rate crowding out effects and purchasing power losses the Stress Test was designed to impose on the market.
What is a bit surprising about these numbers is how well the OMERB MLS market for Recreational-or-Investment properties fared in 2018 amidst the impending (now final) introduction of a speculation tax in the City of West Kelowna and City of Kelowna. This tax has been criticized as being a “Cabin Tax,” as it applies large annual penalties on recreational property owners who don’t wish to rent their properties out for 6-or-more months out of the year.
While the true affect of the speculation tax on the Central Okanagan area’s real estate market might still be awaiting the days when Speculation Tax bills are actually received and realized by recreational property owners, it is nice to see some evidence suggesting that the market has been able to somewhat withstand the Tax to-date.
Note: This analysis does not take into account any lost sales and or cancelled contracts for recreational properties that may have occurred outside of the MLS market for homes (e.g. pre-consturction homes sold exclusively through sales centers).
OMREB Home Buyer Trends by Buyer Type
OMREB Home Buyer Trends by Buyer’s Family Status