Tuesday, December 13, 2011
2011 KELOWNA RENTAL MARKET REPORT
Is it worth tying your home up for the next 3-5 years?
Trying to decide if you should list your property for sale now or try to rent it for 3-5 years (or more) until the market improves? The answer to which direction to go is not an easy one. Many prospective Sellers are finding that they are having to weigh their losses. In this market many sellers are finding they are selling for less then they paid. This is a shame to say the least. They believe that they may be better of renting their property for a year or so until the market 'turns around.' Well they may have to wait longer then they think. We are forecasting at least 3 years until we see things really stabilize and then 5 or more years until the market starts to trend upwards…but we have no crystal ball so it could be even worse. Also you have to take into consideration that the home could take some very expensive abuse from the tenents over the years the property is rented. Scratched hardwood, stained carpets, damage to walls, counters, cupboards, yards….etc. Most renters do not treat your home as if it were their own…some do and that is even worse! Another point to keep in mind is that the real estate market is flooded with homes for sale. Now that does not help you as a seller of course but it also means there are a ton of rentals out there too. This also translates to lower rental prices. As an example: in a condo which used to be rentable for $1,400.00 month we now see rental prices below $1,000.00. A quote from the CMHC: "The Kelowna area apartment vacancy rate is expected to move higher in 2012." (For a copy of the full report please read the attached document.) So what does this mean for those buyers who are on the fence; Rent or List??? Well it means they have to crunch some numbers. If the mortgage payment is $2000 a month and the home can only be rented for $1,500 a month that is a shortfall of $18,000 over three years of rentals…not including property taxes, durations of vacancy or any maintenance that may need to be done on the home. So would you rather take a $20,000 loss today or a $20,000 loss after the pains of being a landlord over the next 3 years? Big decision but sometimes there is value in getting the property off your back and cutting your losses before they drag you down. If you would like to meet to review your options and discuss what your home could possibly sell for on todays market please contact me today.