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Number of foreclosures rising in Central Okanagan
It's a sign of the economic times, say local realtors.
Since 2008 — the peak of the local property market — the number of residential property sales sold through foreclosure in the Central Okanagan has risen sharply, jumping to 165 last year from just 11 three years ago. Currently there are 173 foreclosure properties listed for sale in the Central Okanagan.
But unlike many economically hard hit cities in the United States, where foreclosures currently account for as much as 40 per cent of residential property sales in some cities, here the rate is much lower at just 4.9 per cent of sales.
(The B.C. Real Estate Board did not have comparative figures for foreclosures from other areas of the province.)
"It's definitely a number we are starting to take notice of," said Kelowna realtor and Okanagan Mainline Real Estate Board director Kent Jorgenson.
But he said he did not feel it is currently affecting the local property market in an adverse way because of differences between the U.S. and Canadian legal systems.
Unlike in the United States, banks i Canada have a greater responsibility to the people who are being foreclosed on to try and get much for the property as possible, not just pay off the amount owed to the bank. Because of that, most foreclosure properties are listed at current market values.
All foreclosure properties have to be appraised and the realtor involved in the sale writes a report stating how much the property can realistically be expected to fetch. It is then up to a judge to accept any sale offer for the property.
As a result, banks dealing with foreclosures here list properties at market value and, in many cases, the selling price is "bid up" even after initial offers are made and accepted by the bank because unlike conventional sales, no foreclosure sale is final until the court approves it and other, higher, offers can be made right up until then.
Still, Jorgenson conceded, the current real estate market is not the hotbed of activity it was three years ago, prior current economic downturn.
The number of properties selling these days in the Central Okanagan is down, prices are down and properties are taking longer to sell, according to figures released by the Okanagan Mainline Real Estate Board.
"We are now going into the fourth year of a real estate slowdown," said Jorgenson. "And equity in many people's homes is diminishing."
But he does not agree with some realtors who feel it is mainly real estate speculators who are getting burned by the high number of foreclosures. Jorgenson said it appears the tough times are affecting home owners across the board.
Because prices jumped so quickly here, and went to high prior to 2008, many people who bought in the last few years have lost equity in their properties.
Jorgenson said what he will watch for is to see if the number of properties foreclosed on continues to rise and starts to account for an even bigger percentage of the residential sales.
In 2010, the total number of properties in foreclosure listed for sale was 135, a number that accounted for 4.1 per cent of all residential sales here that year.
Last month, 44 new listings that went on the market were foreclosure properties, according to OMREB, 22 single family houses, 20 strata units, and tow lots.
Of the 173 currently on the market, 80 are single family houses and 87 are strata properties.
"In the end, I think it's more reflective of the overall economic picture right now," said local ReMax realtor.