People, and their money, moving to Kelowna will keep the local housing market buzzing for at least another five years.
“Population growth, driven by strong migration, is anticipated to keep demand for all housing types elevated in Kelowna over the next five years,” said B.C. Interior analyst Taylor Pardy in a Canada Mortgage and Housing Corporation forecast released Wednesday.
“The report reveals strong migration to Kelowna, particularly young adults and seniors, which correlates to increased demand for multi-unit housing options.”
Multi-unit housing means apartments, condominiums, townhouses and duplexes.
The corporation’s forecast is welcome news suggesting Kelowna’s current hot real estate market is not a flash in the pan. It also shows Kelowna isn’t just a retirement and vacation destination.
The city has a healthy, diverse economy attracting young people in their prime earning years to work in their own business or in sectors ranging from high tech, health care and tourism to professional services, tourism and wine.
The corporation’s report cites B.C. Statistics projections showing population growth in Kelowna of between 0.5 and 5.1 per cent from now until 2020 for the age groups 25-29, 30-34, 35-39, 40-44 and 45-49.
The age groups covering early retirees and retirees also show bumps of between 0.4 and 6.5 per cent.
Very little of Kelowna’s 3.25 per cent annual population growth is babies being born in the city.
Rather, much of it comes from people moving here from Vancouver and Alberta. About 18 per cent can be attributed to people moving here from elsewhere in the province and 12 per cent from our neighbouring province.
“Kelowna is not in a bubble,” said Okanagan Mainline Real Estate Board president Anthony Bastiaanssen, a real estate agent with ReMax.
“Bubbles are for the extremely hot markets of Vancouver and Toronto. Kelowna’s real estate surge is based on fundamentals and migration.”
That means 56 per cent of purchasers of Okanagan homes are local residents who are buying their first place, moving up to a bigger and more expensive home, or downsizing or upsizing as an empty nester, early retiree or retiree.
There has been some speculation the 15 per cent tax on foreign homebuyers in Vancouver to help cool that market will prompt foreign buyers to look in secondary cities like Kelowna and Victoria.
“I don’t think we’ll get much of that activity in Kelowna,” said Bastiaanssen.
“Foreign buyers in Vancouver want to be in Vancouver and are usually wealthy enough not to be put off by a 15 per cent surcharge. Where we’re seeing the ripple effect is Vancouverites cashing out and moving to Kelowna to buy a more affordable home.”
Of course, affordable is relative.
The average selling price of a single-family home in Kelowna in July hit a record high of $625,000, up a whopping 19 per cent from the same month last year.
But that’s still cheaper than the $1.1-million average in Vancouver.
July figures from the Okanagan Mainline Real Estate Board also show the average selling price of condominiums up seven per cent to $290,400 and townhouse prices climbing 16 per cent to $451,500.
July home sales in the Central Okanagan were 668, a bump of 24 per cent from the 540 that changed hands in the same month last year.
Such demand, and relatively few homes listed for sale, makes for a seller’s market, in which homes are snapped up quickly, possibly after multiple offers drive up the price.