After a record 2021, housing sales in the Central Okanagan are predicted to drop around 35 per cent through this year and into 2023.
Despite that, Brendon Ogmundson Chief Economist for BC Real Estate Association, told a Kelowna Chamber lunch crowd on Wednesday (May 18) he expects prices will stay relatively flat.
“We still don’t have a lot of listings,” said Ogmundson “So that means we’re still seeing a fair amount of pressure on prices, at least year over year. It’s going to take a while for supply to catch up with demand.”
Ogmundson added listings need to triple in the Central Okanagan to get back to healthier levels. He also predicted the Bank of Canada rate will likely end up at 2.5 per cent.
“That’s already been priced in for the most part by bond markets. Markets kind of think that’s where the bank’s going.”
If that’s the case added Ogmundson it means a five-year fixed interest rate from lenders in the mid-four per cent range and a qualifying rate of close to seven per cent for new home buyers.
“That’s going to have a pretty big impact on home sales, and fewer people are going to be able to qualify at those rates,” he said. “That’s part of the overall kind of narrative of why sales will be falling over the next two years. Rates are going to be at a level we haven’t seen for probably 12 years.”
Overall, B.C. is also facing other challenges.
“We’re building a lot,” said Ogmundson. “We’re just not completing them very fast, we’re not adding to the housing stock fast enough. Especially in a growing place like Kelowna.”
Ogmundson added the Central Okanagan, and the rest of B.C., will get to a point where the market is well supplied in terms of listings. But, as demand falls action needs to be taken on challenges affecting the new construction side of the market, to ensure a steady supply of housing.
“We need workers to do that, and the estimate I saw was 13 per cent of the construction labour force in B.C. is set to retire in the next five years and we’re already having trouble filling positions. B.C. has the highest job vacancy rate in construction in Canada.”
Kelowna is also in a unique position in terms of housing supply, with a young population that is growing and retirees flocking to the Okanagan.
“They bring their demand but they don’t bring their supply, because they don’t have anything to list here, and then you have young people who don’t have a home to list. So you have all this demand with no associated supply.”