Image Credit: CFJC Today

By Adam Donnelly

REAL ESTATE

Low inventory, increasing demand drive Kamloops home prices higher

Dec 4, 2020 | 5:06 PM

KAMLOOPS — It appears the real estate market in the city has recovered from the initial slowdown brought on by the COVID-19 pandemic. Last month, 262 homes were bought and sold in the city, a 40 per cent increase from the same month in 2019. At the same time, the average home price has also increased by around 10 per cent from 2019, up to $486,000.

With the sales surge, the average home price continues to creep closer to that half-million-dollar mark. CFJC Today spoke with a number of experts on the cause of the surge, and the potential for the real estate market to remain hot into 2021.

“A lack of inventory is a huge part,” Jestine Hinch, with RE/MAX Real Estate Kamloops, explains. “We’ve been low on inventory all year long, and I think when COVID restrictions lifted a bit the first time around, we definitely saw a lot of local demand. We also saw a huge influx again of out-of-town buyers.”

Hinch says buyers from the Lower Mainland or Toronto have bought up available stock at a fraction of the price that they sold their homes. At the same time, local folks are hesitant to put their homes on the market.

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“A lot of local people who are thinking, ‘Maybe I’d make a move,’ they have nowhere to go,” Hinch says. “There’s no inventory and it’s kind of like a vicious circle.”

As prices have gone up, the cost of borrowing has gone down. Mortgage rates as low as less than one percent, a fact which TRU Economics Professor Laura Lamb sees as helping drive the real estate market.

“For those with a secure job, it’s actually a very good time to buy,” Lamb says.

While many sectors of the economy aren’t as strong as they’ve been historically, Lamb believes those rates could go up as the story around COVID-19 develops.

“As we get more confidence in the economy — and we’re wearing more confidence with the onset of vaccinations — we will see some of those rates start to increase,” Lamb suggests, “because those rates are based on what you expect the economy to do in the future.”

Mortgage Broker Steve Bucher says there’s a distinct lack of rental stock in the city, which means rental rates are higher. He’s also seeing more family members help out with down payments.

“If you’re renting a home and paying a high rent, you’d rather be an owner,” Bucher says. “So you’re bringing your parents in, you’re bringing your grandparents in. We’re seeing more people on the mortgages than ever.”

Those ever-increasing home prices are making it more difficult for single-income buyers to afford a detached home. Bucher suggests this could lead to an increase in densification in the city, to address the increased need.

“If you don’t make that $120,000-per-year family income, you’re not able to go to that $400,000-to-$500,000 mark for a house,” Bucher says. “You might be pushed into a townhouse or an apartment, but what you really want is property, maybe a suite in the basement. But those houses just keep rising in price, up and up and up and up.”

This means owning your own home in Kamloops will only continue to be more difficult and more expensive as we work towards recovery from the pandemic.