Okanagan real estate market volatility cools down

The impact of climate change has entered the conversation people have when deciding whether to buy a home.

And that is a good thing, says the executive vice-president of RE/MAX Canada, who is based out of Kelowna.

Elton Ash says the impact of climate change is already being felt by homeowners through displacement due to catastrophic events, higher insurance rates and compromised livability.

“Real estate tends to always be about interest rates and housing affordability, but you also have to a more holistic approach, especially in B.C. with what we have seen the last few years with forest fires, atmospheric river conditions and the flooding in Merritt and the Sumas Prairie,” said Ash.

“A Leger survey found 49 per cent of Canadians today worry about the fires and flooding and other weather-related events…so consumers are becoming more aware of those issues and considering things such as past history, floodplain issues and infrastructure adaptation.”

Ash said real estate agents also need to adapt to those changes, to help steer clients through those property education concerns.

“We have to work with both buyers and sellers working through these issues that are not obviously visible…it is something the entire real estate industry is working on, not just us, but we are trying to be leaders in the industry as a brand.”

The climate change report is the second of five planned presentations this year, collaborating with relevant area experts launched by RE/MAX Canada related to economic policy decisions, climate change and the future of work.

The climate change report featured input from Kathryn Bakos, director of climate finance and science at the Intact Centre on Climate Adaptation, and Mike Moffatt, director of policy and innovation at Smart Prosperity Institute.

The key takeaways from the report are recognizing an immediate need to fund and invest in the restoration and modernization of Canada’s green infrastructure such as wetlands, grasslands and brown infrastructure, including sewage systems; and to protect real estate from the disruption of climate change with new levels of transparency in buying and selling homes in assessing a property’s climatic risk.

“It is a whole lot cheaper taking prevention steps to climate change rather than reacting,” Ash said.

Climate change aside, Ash acknowledges that a recent spike in interest rates continues to dominate real estate industry conversation, saying buyers and sellers need to retain a little perspective.

Coming out of COVID, the Okanagan real estate market entered a red-hot boom phase, with multiple offers being dropped on single-family homes within two days of hitting the market, and the low inventory causing a dramatic hike in housing prices.

Ash explained the current trend is seeing the inventory increase as sales fall off due to interest rate hikes and the mortgage approval stress test measures already in place.

“You will see a 10 to 15 per cent drop (in prices) from what we have seen in the last two years but for those of us who have owned a house through that period, the price has still gone up 35 per cent, so it is a relative thing,” Ash said.

He sees a return to a more balanced real estate market, although skewed somewhat regionally by the influx of people from across Canada wanting to live, work and retire from the Okanagan lifestyle.

Another interest rate hike is likely coming for September, according to Ash, but he sees long-term interest rates levelling off at the 5-6 per cent range, saying interest rates being below inflation levels is not a long-term reality.

Ash reiterated a position of his industry that Canada is experiencing a housing shortage that governments at all three levels have not adequately addressed in recent decades.

“Housing is in short supply at a time when immigration is opening up again where we will see 1.2 million coming to Canada in the next three years, Canada remains an attractive country in the world to live and we continue to have a soundness to our overall economic base,” he said.

READ MORE: Real estate sales skyrocket in the Okanagan

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Okanagan real estate market volatility cools down