The Effect of Geoarbitrage on Kelowna’s Real Estate Market

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In Kelowna, we’re being exploited. You read that right. How is this happening? Well, there is this little concept called geoarbitrage, popularized by Tim Ferris, that explains how you can leverage the disparity between two different markets in order to create a financial gain.

Obviously, this is what China and other countries have been doing to the Vancouver real estate market for the last 20 years - driving property values up to the point where four walls and a roof sell for $1.2 million in places like Richmond and White Rock.

What does this mean for us? There are a massive number of people living in the lower mainland who’ve owned real estate for multiple decades who bought their properties for maybe $150,000 or $200,000 and have seen those same properties increase in worth to anywhere from $1.2 to $1.5 million due to the pressure on their real estate market and international demand.

Now these same people who’ve always been interested in Kelowna are getting on the MLS and seeing palatial homes for $600,000 or $700,000 sitting on vineyards, or golf courses, or overlooking a beautiful lake. Of course they’re going to cash in their chips and come here. They won’t just buy a house, they’ll also buy an investment property to fund their retirement. It makes sense - you would do it too.

Now, think about the massive size of the population of Vancouver. If one out of every 1,000 people in the lower mainland gets the memo that their house is worth a ton of money and there’s a disparity between the market there and the market in Kelowna, and they can not only upgrade their house and lifestyle but also put a half million dollars in the bank, you know they’ll be coming.

So what are we going to do? Are we going to get upset that they’re driving our prices up? No! This is the world as it is, not how we want it to be. Getting on the right side of this equation means arming yourself with a bunch of real estate. If you want to benefit from a boom, you have to own the stuff. So what I’m saying is buy cash flow property. The market is wonderful for that. Then when the market goes crazy and prices go up, you can sell your own Kelowna real estate and perform your own geoarbitrage on any market you like. Whatever you want to do, you can take advantage and leverage the disparity between the markets here and wherever it is you’d like to go.

To reiterate, we are being exploited, but that’s a good thing. If you have any questions about what your home might be worth or want to see a list of properties that might provide cash flow, by all means call me or shoot me an email.

What Pricing Your Home Correctly Can Save You

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I just came out of a really cool meeting with the team and we were throwing different ideas around about pricing a home aggressively to sell quickly and for the most amount of money in this market.

A really neat stat that we figured out that I want to share with you is that homes being sold inside the first 30 days of being listed (which is becoming more common) are garnering over 99% of their asking price. When it comes to negotiation, sellers are in the driver’s seat. It’s a seller’s market, and a home selling in the first 30 days - if it’s new and fresh - is going to sell for full price, and maybe more.

How does that contrast to a home on the opposite end of the spectrum? What we’ve found is that homes either sell in the first 30 days or after 90 days. The reason for this is that it typically takes the seller 90 days to agree to a price reduction. I’ve looked at all the sales that have happened in the last couple months for homes that lasted 90+ days on market and found that these negotiations had a much different story to tell. Namely, people whose homes sat on the market for that period or longer got only 95.9% of their list price. That’s not 95.9% of the price they started at, but rather the reduced price that they got.

The reason for this difference is the negotiation position the seller had when they started. Even though they reduced the price, they’re still an old listing. This gives the buyer an element of control. Isn’t that interesting? Price the home properly, and you net an additional 3%. With average home prices now close to $600,000, just that difference in coming out strong versus have a pie-in-the-sky number can save you $20,000 in the negotiations

I hope you guys found this tip helpful. If you have any more questions, just call me or shoot me an email.

How we helped Stacie and Darren Read by providing a fast, speedy service.

"I am in the process of buying one and I just sold one.  They provide a fast, speedy service.  I had a quick sale on my home, it was only on the market for six days.  Excellent people to work with!  They are very kind and willing to what they have to do to get it done."
      Stacie Read, Home Seller and Buyer

What Can You Expect from the Kelowna Real Estate Market?

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Selling your Kelowna home? Get a free home evaluation

We just came off a banner month in March, as our team completed 46 transactions! We’re fairly exhausted but we know that we have even busier days ahead of us as we delve into the spring and summer markets. However, I have some real estate stats to share with you as we move into the spring and summer.

• Single family homes sales have risen by 21% in Q1 2016 to Q1 2015.
• Home values have increased by 9.5% from $521k to $571k.
• 514 condos have sold this year, which is a 21% increase from last year.
• Condos have appreciated in value by 7%.
• It’s taking 66 days to sell a house and 75 days to sell a condo.
• Inventory has fallen since last year, and we only have three months of inventory. 

Another thing you should know is that homes that are priced well and in good condition are selling quickly and they’re usually getting more than one offer. If you’re selling, this is your chance to have a quick and profitable sale!

If you’re thinking about buying, we have a special search for listings that have not yet hit the market, or for homes that have been sitting on the market for a bit. 

In just the last seven days, we have seen 191 sales. Overall, our market is looking very good for the next twelve to eighteen months. If you have any more questions or concerns, please don’t hesitate to contact us!

How We Helped Kevin & Angie by Being Professional and Knowledgeable

"My husband and I had the pleasure of working with Krista this past summer. Krista is very professional & knowledgeable. Always patient and the type of person who if she didn’t happen to know the answer to our question, she would happily find it out for you. It was nice to work with someone who never made us feel we were too picky. She genuinely wanted us to be happy. We would whole-heartily recommend Krista to anyone looking for the 'right' realtor to help in purchasing or selling  property here in beautiful Okanagan."

- Kevin & Angie, Home Buyers

Client Reviews Krista Marble, Realtor, Vantage West

• "Native Kelownian who is very knowledgeable about the energy and culture of individual neighbourhood pockets. 

• Highly professional in all interactions: timely, organized, and prompt. 

• Provided us guidance and assistance in all aspects of the real estate search, from a full initial explanation of the business philosophy of Vantage West, right down to a lovely card and gift once we had taken possession of our home. 

• Due to Krista’s expertise, the process of searching for, making an offer, inspecting, and taking possession of our home was extremely smooth. 

• Krista was highly personal and approachable in all interactions. She truly embodies the Vantage West spirit, valuing relational interactions over strictly financial dealings."

-Leanda Monro, Home Buyer

How We Helped Walter by Staying in Constant Contact

“I hired Jared to sell my home. I chose Jared, above other agents that I interviewed, to be my agent. Jared’s style of working as an agent impressed me very much. It has been a pleasure working with Jared, he kept me constantly informed on all transactions during the sale as well as after the completion of the sale. He was always willing, and without hesitation, to help in settling disputes that arose with the buyer even after the sale of my home was completed. He also worked hard in negotiating the best price for my home. I would strongly recommend Jared to any one requiring a Real Estate Agent."

Satisfied Client,

Walter Opalko

How Will Rising Interest Affect Prices in Kelowna?

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Selling your Kelowna home? Get a free home evaluation

I received a question from a client about what might happen with interest rates this year. This is a great question, and I think everyone needs to know the answer.

I do believe that the prime rate will be relatively unaffected in 2016. A lot of our Canadian growth is derived from the energy sector, which has been struggling lately.

However, the banks will be slowly ratcheting up their mortgage interest rates. You can expect to pay 3% on a 5-year loan. Many of the discounted rates that were available in the past are no longer being offered.

We've seen demand remain strong even with these slight increases. I don't expect the lending rate to increase much further, because our economy relies on cheap borrowing.

Ultimately, I see mortgage rates staying very close to where they are. This will not affect your affordability very much. However, if you're buying, I recommend that you do so quite soon before rates increase any further.

If you have any further questions, please don't hesitate to contact me. I look forward to hearing from you!

Kelowna Real Estate Market Predictions for 2016

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Selling your Kelowna home? Get a free home evaluation

The media is going nuts about what is happening in our local real estate market. You've probably heard many different things, but today I want to let you know that our market is very strong. Here are a few reasons why:

I've taken a graphic from Secrets of the Canadian Real Estate Cycle and what you will see is Kelowna becoming the number 2 job market in Canada. When more jobs are available, more people come to town, and when more people come to town, they buy and sell more homes.

Typically, people will rent to start out, and that is why we have 0 vacancies available. Rent prices are rising, by as much as 20%, so this will force people to buy homes.

Demand has been increasing, and we have very little inventory available. This means that prices are going to be rising. Last year, we saw an 8% increase in home values. However, I believe in 2016 we could see as much as an 8-10% increase in home values.

That means that 2016 could be a record-setting year in real estate!

If you've been looking to buy or sell, please don't hesitate to contact me.

How We Helped Dan and Nicole by Having Multiple Showings

"We sold our home, which was the goal. We had more than one showing a day, so I thought that was phenomenal- far exceeding anything we've had with any other realtor in the past in other houses I've sold, so I'd say we're quite happy! They provided someone to do the staging and that had a big impact on sell-ability of our home and providing that service was quite helpful. The mover he suggested was awesome as well!"

- Dan & Nicole, Home Sellers