Kelowna Real Estate Development Factors

In 2017 and 2018 we have been dealing with a very active market with strong prices and tight supply. During this period we have been asked questions on what to look for and what to consider for Kelowna real estate development in residential projects. Here are a few top consideration we feel are important in this current real estate climate.

Leading Real Estate Market Sector

The largest increase this year has been in the $750,000 to $1,000,000 home price range. The sweet spot for new construction is $750K because of the new exemptions with land transfer tax. If you are considering building a spec home in Kelowna a way to achieve this would be a 2 story home at approximately 2400 sqft. finished with 1200 sqft. unfinished in the basement.  A second new home options would be a one level rancher with 1500 sqft. finished with unfinished basement. Larger Kelowna homes in this bracket require bigger lots and a higher level of finishing to justify the $1 million dollar pricing.

Building Costs

Building material costs are increasing as demand  in the USA shows no sign of slowing down in 2018. Lumber prices for example are at their highest since 2004. With the average price per sqft. on a new home going up the gross profit margin is tightening. You can expect the average for this type of Kelowna real estate development  to be in the $150-$180 sqft. range.  A modern home will have a higher cost than a craftsman, so there are different factors to consider when looking at building plans. High end home can go over $350 per sqft. depending on the level of finish.

Days to Sell

While this number bounces around depending on the time of year the average days on market in the Central Okanagan is 51 days. This is for a finished home but does not vary significantly for new or for resale homes.  It does however, differ at different stages of construction and pre-construction and also depends on the type of presale activity that is going. If the Kelowna real estate development also has a sales centre and dedicated inhouse sales team this can also improve the days to sell ratio.

Demographics

For our prime neighbourhoods like Lower Mission or Upper Mission in Kelowna the main demographic is the family buyer because of the proximity to great schools in Kelowna and excellent amenities like the Mission Recreational Complex, CNC hockey rinks, soccer fields and the H2O as well as excellent local beaches.  The older generation and retirees tend to be opting for closer to downtown in South Kelowna and the Hospital District.  This group is also looking to downsize and go for view properties in Upper Mission or Dilworth or Black Mountain neighbourhoods. Ranchers for this group are a very hot commodity as are new homes with the master bedroom on the main floor.

 

Strong employment in the  tech sector of Kelowna is generating strong demand from first time home buyers which makes townhouses and condos in Kelowna a hot product to build. The Cultural District, Downtown Kelowna and the Lower Mission are all experiencing tremendous development for Kelowna Condos and even Micro suites. Another Condo hot bed is the University District as UBCO continues to be an economic engine for Kelowna real estate development.

With so much good economic news happening in the region projects in development like ONE Water Street and Aqua are bringing presale opportunities on to the market ahead of schedule. New infill opportunities are also a hot product with the City of Kelowna creating the new RU7 zoning in 2017 in established neighbourhoods around the Hospital District, Pandosy area and South Kelowna neighbourhoods to the north of KLO.

 

Basis Project Marketing and Sales can help your real estate development project get off to a strong start. COntact us to learn more about our real estate marketing services and real estate sales services.