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Okanagan housing affordability still a distant dream

Sales and inventory are down, while prices again on upswing
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New residential construction, particularly in the higher density rental market, continues to expand in Kelowna but still falls short of creating an affordable housing balance in the marketplace. (File photo)

What has been called “an unusual market environment” doesn’t bode well for those trying to break into Central Okanagan real estate.

Despite increased mortgage interest rates and inventory which is inching higher but still far from abundant, housing prices show signs of rising again as 2023 plays out.

Elton Ash, regional executive vice-president of Re/Max of Western Canada based out of Kelowna, said typically when buyers start to pull out of the market, prices depreciate.

But not completely so this year.

“But what we are seeing is prices remain relatively stable. Looking at the Metro Vancouver market, the benchmark price is down from a year ago but comparing February to January of this year, there has been a sight increase in prices,” said Ash.

“It is an unusual set of circumstances. I have been in the real estate business for 43 years and never experienced anything like this. But while it is unusual circumstances, the biggest issue remains a housing supply shortage, whether owner or rental.”

And he feels the federal government has to step up in some way to assist in addressing that housing supply shortage with tax incentive programs for developers.

He said for potential Central Okanagan home sellers, they are hedging their bets that prices might actually increase rather than decrease this year.

“It creates a lot of head scratching as to where the market is going…thinking what to do and how will the market affect the price of my home, and then if I sell now then what I am going to move into, up or down, as there is not much to choose from,” said Ash.

Ash said his own crystal ball is “a little foggy right now” but he anticipates a flat housing sales market for the second quarter of this year, and movement starting up again in the third and fourth quarters.

The Association of Interior Realtors residential real estate market report for February shows a 46.1 per cent decrease in sales, at 831 unit sales across the region, compared to the hyper sales market of February 2022, yet up compared to January’s 555 unit sales.

The region encompasses the Kamloops, Kootenay, Okanagan and South Peace River areas.

“The overstimulated boom of the last few years, along with multiple mortgage rate hikes made many buyers and sellers hesitant to make any moves,” said Lyndi Cruickshank, president of the Association of Interior Realtors.

“Now that the dust is starting to settle, these buyers and sellers can move forward in a transitionally healthier real estate market more reminiscent of pre-pandemic conditions.”

Cruickshank also echoed Ash’s sentiments of the need for a “refreshed housing strategy” that will expand available inventory in the marketplace.

As the millennial influx to the Central Okanagan follows an upward trend, Ash said he is also encountering the supposed desire for higher density lifestyle options closer to public and commercial services for that generation is finding some push-back.

“The feeling 12 or 14 years ago was millennials wanted an urban lifestyle, living in condos or apartments, close to public transportation and other services. What you have happening now is those millennials who are having kids are discovering they want a house and a yard just like everyone else in suburbia,” he said.

“They want a bit of elbow room and the apartment/condo thing doesn’t really work that way.”

READ MORE: Development outlook still bullish for Kelowna

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Barry Gerding

About the Author: Barry Gerding

Senior regional reporter for Black Press Media in the Okanagan. I have been a journalist in the B.C. community newspaper field for 37 years...
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