New homes continue to drive Okanagan housing market

With over $525 million in housing development permits being issued in 2017 from the city of Kelowna the building boom in the valley continues to fuel the economy as a whole. This has fostered some real hype in the media but looking closely at the reality of the new homes market it is warranted.

Precursors for Okanagan Real Estate Growth.

The Okanagan Valley is benefiting from a number of factors that are influencing this new homes building trend. Let’s take a look at a few of the top market conditions that are supporting this growth. 

1. First time home buyers

With the strong economy comes an influx of young professionals to the area. In 2017 the younger demographic between 20 and 34 become the largest single buying group for new homes in the area. This group of buyers is fueled by new jobs in the tech sector and large employers like Interior Health, KF Aerospace and the University of British Columbia Okanagan.  Many may not know the hard work underway by Accelerate Okanagan to grow the design and software industry in Kelowna. Through their efforts and those in the tech sector Kelowna is now a hotbed of talent and attracting larger technology companies from outside of BC to the regions. Their is also a vibrant startup and incubator group which has had tremendous success in the past few years. This brings well paying jobs and young talent to the community who move from renters to homeowners quickly.

2. Shortage of Rental Units

Another contributing factor to the building boom is a low vacancy rate for existing rental property in the valley. This includes suites, carriage houses, apartments, condos, townhomes, new homes and seasonal rental units in the valley. With vacancy rates below 1% the build up of demand for rental accomodations places pressure on prices for rental housing and demand for new construction. 

3. Low Interest Rates

While rates are finally starting to increase the availability of low interest mortgage rates has benefited the economy. On top of low interest rates the federal government has been pouring money into the economy at depression level rates. These federally and provincially funded programs also support the overall health of the economy and create jobs and growth. Local government project include Transit, Healthcare and Education.  UBCO as an example now has over 9,000 students with on campus housing only available for around 1670 students. New Kelowna housing projects are underway on campus and in the adjacent U District.

4. Investment Buyers

Another key contributor is the Investment buyer, who sees better value in Kelowna condos and new homes then opportunities in the Vancouver market. These investment buyers are evident at Sopa Square, Ella, Ellis Parc, The Shore, in the University District and at Central Green. With the rental market being so tight in Kelowna the ability to quickly rent out these condos once complete is a major buying factor. In support of this Kelowna was recently voted the best Investment real estate market in Canada which is certain to catch the eye of Accountants from coast to coast and foster buy recommendations for new rental properties and new homes and condos.

5. Low Inventory

There is also a low inventory of homes for sale in the Okanagan Valley which also supports the building boom. With home prices increasing there is incentive for more spec homes to be constructed and infill homes to be allowed. Low inventory also supports the larger developers decisions to begin new projects.  Prime examples of this are Kerkhoff’s decision to begin the One Water Street  condo project at Water and Clement Ave and Mission groups go ahead on Aqua at Cook Ave and Lakeshore Road in the Lower Mission and Ella on Ellis Ave downtown. These projects are large scale residential developments which will sell out quickly.

6. Boomer Buying Trends

This large population group is now approaching or in retirement with the trend to downsize or move to more world class communities with better climates. Kelowna continues to benefit from being one of the best cities in Canada to live and has an ideal retirement lifestyle with Okanagan Lake, ski hills, golf courses, wineries and a vibrant cultural scene.  The city of Kelowna is also stepping up to address these demands and has recently approved RU7 zoning in the Hospital District of the South Kelowna Neighbourhood. This infill housing with new homes and townhouses is ideal for boomers wanting a carefree lifestyle while being close to city parks, amenities, shops and dining.

What this all means for new homes and condos in Kelowna

Terrific demand and a vibrant economy makes for a strong building sector and this is exactly the situation we find ourselves in Kelowna. Home builders and larger developers are going flat out to help meet the needs for new homes in our growing city and region. While we may see a slight cooling off in the Kelowna real estate market compared to 2017 we still anticipate strong housing starts and growth in new home construction, townhome projects and condos in the Okanagan Valley in the immediate future.  

 

Here is a list of project to watch for 2018 / 19

  • ELLA
  • AQUA
  • ELLIS PARC
  • 24 KELOWNA
  • THE DOWNTOWN
  • GRANITE at MCKINLEY BEACH
  • ONE WATER STREET
  • THE SHORE
  • 1151 SUNSET
  • GELLATLY PLACE
  • OSPREY LANDING
  • URBANA
  • SOHO KELOWNA
  • UNIVERSITY HEIGHTS
  • GYRO BEACH TOWNHOMES
  • SAGE CREEK