'Sold' signs are a common occurrence around the Central Okanagan right now as demand is exceeding available housing supply. (File photo)

Okanagan real estate boom fueled by housing supply shortage

Multiple sale offers, bidding competition will remain heated for now, says Kelowna developer

Supply and demand.

It is a simple economic concept that aptly describes the housing boom across the Southern Interior which is particularly magnified in Kelowna right now, says the chief executive officer for the Mission Group.

Jonathan Friesen believes a combination of factors have contributed to the current over-heated real estate market, where homes listed on the market illicit multiple offers within hours rather than days and bidding $30,000 above the asking price is often a buyer competition starting point

Friesen says the typical real estate sales market cycles we traditionally see in the Okanagan have disappeared since the pandemic bounce back started last fall.

“A stable market for us would typically see about 20 per cent of sales against available inventory in a given month. In April, we saw that figure hit 90 per cent,” said Friesen.

He feels that speaks to several issues: Kelowna becoming an attractive option for home and recreational buyers; the newfound opportunity exposed during the pandemic to work from home; pandemic inspired buyer mentality to buy now rather than wait which may be an increasing post-pandemic attitude; better job opportunities in a community with low unemployment; large urban area residents in a Vancouver or Toronto size of city tired of the higher densified lifestyle.

“Our lifestyle here is hard to beat. We have all the services of an urban centre but we have the outdoor lifestyle experience to offer, and we don’t have to fight the traffic or have a long commute time to get anywhere,” Friesen said.

But given all that, it still comes back to the fundamental characteristic of supply and demand.

Friesen says while that demand has traditionally come from Alberta, and more recently at a higher level from the Lower Mainland as Alberta’s economy hit a downturn, that same appeal is now spreading across Canada.

For Mission Group, the firm’s focal point is not single-family but higher density residential projects and potential buyers they converse with on a sales level reiterate that message to them.

Currently, Mission Group is working on the completion of the Bernard Block multi-tower commercial residential project while moving forward on the development of 550 Doyle Avenue. project in partnership with UBC Okanagan, and the long-awaited waterfront Aqua tower development in the Mission.

Friesen says they see ample opportunity for continued growth in Kelowna, with a changing philosophy in city subdivisions with a shift to higher density housing developments in traditional single-family neighbourhoods.

“People want to live in housing where amenities are right next door to each other, reducing the need to drive everywhere, awareness of the need to reduce greenhouse gases and a better lifestyle,” Friesen said.

Friesen acknowledges the boom times for sellers have imposed tougher financial obstacles to overcome for renters and first-time buyers struggling to assemble a downpayment.

He says Mission Group projects make some allowance for providing affordable housing options for those who qualify.

“We are not making a huge impact doing that but we are trying to do our part,” he noted.

“We see in the short-term that the market will normalize to some extent, those traditional market cycles will return, but overall we see Kelowna as an extraordinary healthy market for the next couple of years.”

READ MORE: Okanagan real estate boom keeps escalating

READ MORE: Okanagan-Shuswap real estate market continues hot start to 2021

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