From Kelowna to Kamloops to Vancouver to Victoria, the British Columbia real estate market has been on fire. But this is easy to accomplish when ostensibly the entire Canadian real estate market is trending at record highs. Sales activity is booming, prices have never been higher, supply is shrinking, and demand is fierce – both in the province and throughout the country. There are many factors to explain what is occurring throughout the Great White North.
But has the Canadian housing market reached its zenith? When focusing on specific areas of the country, this would be the definitive conclusion, particularly as new factors come into play.
The Kelowna real estate market is one of these Canadian housing sectors that seemingly peaked. But once you scratch beneath the surface, you learn that Kelowna and the broader Central Okanagan are going through a temporary slowdown after more than a year of meteoric growth. The term “slowdown” might be a bit of an overstatement, considering that prices are the highest they have ever been.
With fewer listings and strengthening demand, the developments in Kelowna continue to point a housing market on the up. What happened during the tail-end of the typically busy spring buying season? Let’s take a look at what the numbers highlight.
A Look at the New Development in the Kelowna Real Estate Market
According to the Association of Interior Realtors, residential sales in the Kelowna real estate market, which is concentrated in Central Okanagan, tumbled 13.78 per cent month-over-month in May to 1,482 units.
On the pricing front, the benchmark selling price for a single-family home in Kelowna surged to an all-time high of $901,600 in May, up 2.45 per cent from April. A townhouse and condominium unit in Kelowna is going for $621,800 and $455,400, respectively.
While sales activity has eased, prices continue to climb. So, what is driving activity in this small but stong British Columbia real estate market? It all comes down to a common problem that is seen throughout the Canadian real estate market: limited supply.
Homebuyers are taking their time to purchase property, with the number of days to sell standing at 24. However, when assessing the annualised rate of inventory in May, prospects are fighting over shrinking housing stocks.
- Single-Family Home: -53%
- Townhomes: -58.8%
- Condos: -44.9%
Listings have also leveled off from the same time a year ago, Okanagan Mainline Real Estate Board (OMREB) data show:
- Single-Family -46% (716)
- Townhomes: -59% (163)
- Condos: -45% (338)
“What we can look at is what is currently happening and currently supply is still not catching up to demand. We are in a supply drought when it comes to listings,” said Association of Interior REALTORS® President Kim Heizmann in a news release.
“Despite the supply drought the market remains strong and is starting to rationalize,” she added. “With vaccine roll outs underway, once more and more people get vaccinated and we get some mobility and comfort back, hopefully we see more homes come on market.”
Could fresh supply be on the horizon for the Kelowna housing market? New properties are being constructed, but they slowed down in May. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts rose by 95 in May, up from 156 at the same time a year ago. In the first five months of 2021, housing starts have totaled 816, up 767 from the previous year.
Has the Kelowna Real Estate Market Peaked?
With prices at all-time highs and sales activity quieting down, does this mean the Kelowna real estate market has peaked? It might be easy to assume this is the case following last year’s buying frenzy following the first wave of the COVID-19 public health crisis. However, industry experts assert that this is a temporary slowdown, mainly because listings are still minimal and demand remains strong. Once the dust has settled and so-called buyer fatigue wanes, the Kelowna housing market is projected to experience liftoff once again.
Heizmann shared a perfectly apt analogy to describe the current situation in this local real estate market, telling Kelowna Now: “We are seeing an easing up on the gas pedal (of a car) that has been going above the speed limit, to now moving within a reasonable pace. There is a slight reduction in pressure that is creating a calming effect for a healthier market for both buyers and sellers.”