Don’t expect a real estate boom in 2019 and 2020, says a CMHC report.
Taylor Pardy, a B.C. market analyst with Canadian Mortgage and Housing Corporation, said the Okanagan overall will see a slowdown in housing sales and price growth due to rising mortgage interest rates and slowing population growth.
Pardy said the market characteristics for Kelowna are about the same for the South and North Okanagan as well.
“Our analysis is not writing off potential price growth over the next two years, but we are anticipating the pace of sales (to be) closer to what we saw in 2014—more of a balanced market, ” Pardy said.
“As housing listing inventories rise, which has been the case this past year as sales have slowed, you will see that balance tilt possibly in favour of buyers because there will be more to choose from.”
The October residential sales report from the Okanagan Mainline Real Estate Board, which covers an area from Revelstoke to Peachland, reflected an increase over the previous month of nine per cent, but a 13 per cent drop over the same month in 2017.
“Interestingly, more homes sold (in October) in less time than in September, but the average price was five per cent less than September and four per cent less than this time last year,” noted OMREB president Marv Beer.
“Growing housing supply is a strong indicator of continued movement towards a balanced market where sellers and buyers are favoured more equally.”
Pardy said there are a multitude of factors that play into the CMHC analysis modelling, two in particular that deal with population migration.
He said the slowdown of the Alberta economy in recent years has impacted the Okanagan real estate market, slowing down the rate of inter-provincial migration to B.C. overall.
Meanwhile, the intraprovincial migration—largely from the Lower Mainland to other regions across B.C.—has impacted Kelowna, Victoria, Nanaimo and other Vancouver Island markets.
“The intraprovincial growth factor is something that has been stronger the past three years as Vancouver prices have gone up. We see that trend continuing over the next two years, which will offset the interprovincal migration reduction we are seeing,” Pardy said.
He said statistical data collected from the past two Canada census reports also indicates an increased interest among seniors and the 20 to 44 age range for multi-family rental housing, a reflection of the high price of housing and stringent change in rules for mortgage qualification.
“From about mid-2017 we were starting to see this reflected in the marketplace, the interest in rental housing,” he said.
Pardy also noted countering the population growth decline is the low unemployment rate and quality and salary level of new jobs being created in the Okanagan labour force.
“Income growth is an off-setting factor from these other aspects that moderate market growth in a local real estate market,” he said.