The average single family home in Kelowna, year to date, sold for $489,354. The above home MLS® 10073300 was sold by Century 21 Assurance Realty, for $490,000, so it's pretty close to the average Kelowna home.
Has my home increased in value?
The short answer to the question above is: "Maybe, maybe not." It depends which market segment your property falls into.
Can you trust statistics? Mark Twain popularized the expression: "There are three kinds of lies; Lies, Damned Lies and Statistics". When judging statistics on their own, without context, it's important to keep this sage advice in mind.
Average house prices way up from last year: February's average single family home price in the Central Okanagan was $554,729, eclipsing the previous high average price of $552,830, set in the month of April 2008, at the height of the Okanagan real estate boom. (This average does not include lakeshore houses or homes on acreages). This was 33.4% higher than the average price of $415,845 for February 2013. Did this mean that home prices in the Central Okanagan increased by 1/3 since last year?
To answer that question we have to see how this "average" price was arrived at. There were some very significant differences between the houses sold in April 2008 and the houses sold in February 2014, as well as the houses sold in February 2013.
In 2008 there were 241 houses sold in April, with 10 houses sold for more than $1 million, with the highest price at $2,300,000) while in February 2014 there were only 109 sales, 8 of which were over $1 million, with the highest price at 3,746,000. This one house, alone, skewed the average price by approximately $30,000 while the most expensive house sold in April 2008 only changed the average by $7,000. Just by taking out the houses over $1 million, the average price in February 2014 was reduced by $86,000, while the same exercise in 2008 reduced the average to by $48,000. Obviously, the "average" house sold in February 2014 was not the same type of house as the "average" house sold in 2008.
March average prices down $95K from February: I did a quick check on statistics for the Central Okanagan for the first 20 days of March. Surprise! The average of 121 single family homes sold to date is $459,095, over $95,000 lower than last month. The numbers are still significantly higher than last year, when the average price was $421,701, but again there were three homes sold for more than $1,000,000, compared to one last year, and seven homes sold for more than $700,000 compared to two last year.
Reality: A tale of two (or more) markets.
To create a more accurate study of the market, I did two other comparisons, comparing older smaller houses with 3-4 bedrooms and 2-3 bathrooms from 1500-2500 sq. ft. built before 1985 and newer medium/large homes, with 3-5 bedrooms and 3-4 bathrooms, from 2500-3500 sq. ft., built after 2005 sold in the past three months and the previous 9 months. The results are interesting!
Older Homes: The average price of the older homes is up about 3% for this period, although I suspect that many of the really "low hanging fruit" are gone from last year. The average price increased from $371,000 to $382,000. It was around $370,000 the previous year. I think anyone owning an older home in Kelowna, priced under $400,000, can expect to get between 3-4% more than last year, as inventories are much lower. The current inventory represents about 3.5-4 months' market absorption. A balanced market is considered to be 5-7 months' inventory, which shows that this lower end of the market has moved towards a sellers' market.
Newer Homes: For the newer homes, the results are much different. The average sale price of the homes built after 2005 is about the same as last year, with an average price of around $560,000, up around 0.3% from last year and down about 3% from the previous year. The inventories in this range still represent around 9-10 months' average sales, so it remains a buyers' market.
Luxury Homes: This is one segment of the market where sales are way up! There have been 26 homes sold for over $1 million, so far this year, compared to 10 homes in the same period in 2013 and 5 homes in 2012. Of these 26 homes, 12 were lakefront homes, including 3 waterfront acreages. There were also 3 more acreages, not on the lake and 13 single family homes not on the lake or acreage properties. It is difficult to tell whether this market segment is increasing in value, or not, as the samples are too small to draw any real conclusions. However, it does point to the fact that people who buy luxury homes appear to have renewed confidence in the Central Okanagan market, and I think we can see this trend continuing.
It also means that average home prices may keep rising, without the value of any particular home increasing, just as has happened in our current market statistics.