According to Taylor Pardy, an analyst for Canada Mortgage & Housing Corporation, the Kelowna real estate market is resilient enough to withstand the uncertainties of foreign buyer tax, speculative tax, tougher mortgage regulations, and rising mortgage rates.
“These are all factors that shape rather than influence the marketplace,” said Pardy, speaking on Thursday at a sold-out lunch at the Coast Capri Hotel organized by the Central Okanagan branch of the Canadian Home Builders’ Association.
“Kelowna has strong economic fundamentals and population growth, and is affordable compared to Vancouver, so the market will start to weaken from record year 2017 but will still be strong and stable in 2018 and 2019.”
Non-Canadian buyers only make up about two to three percent of Kelowna’s real estate transactions, so Pardy doesn’t see the overseas buyers dampening the market.
With the speculative tax, he takes a wait-and-see approach.
“We need to see how the exemptions and tax breaks work,” he said.
“All we know right now is that we don’t know the implications. Since the tax applies in the City of Kelowna and the City of West Kelowna, the demand could shift more to Lake Country and Peachland. “
Pardy said this year’s single-family home sales activity suggests a balanced market while townhouses and condos are still in the seller’s territory.
Last year was a record year for Kelowna real estate that will be difficult to copy.
Last year, construction began on a record number of 3,577 houses of all types – single-family houses, townhouses, semi-detached houses, condominiums and apartments.
56 percent of these starts were rental apartments.
“That’s a number we won’t see again because 2017 activity was driven by a critical shortage of rental apartments and an extremely low vacancy rate,” said Pardy.
The extra inventory makes it easier to find an apartment, but demand will still lead to rising rents.
Last year, the average monthly rent for a one-bedroom apartment was $ 910, which is set to rise to $ 950 in 2018 and $ 975 in 2019.
In 2017, the average monthly rent for a two-bedroom apartment was $ 1,120, which is projected to increase to $ 1,160 this year and $ 1,190 in 2019.
With the supply of rental apartments replenished, construction activity is likely to focus more on condominiums this year.
The start of house construction this year will not set a new record, the group forecast ranges from 2,500 to 3,000.
This year, construction starts for single-family homes have decreased by 17 percent, construction of terraced houses by 12 percent and construction starts for condominiums has remained stable.
Last year was also a record-breaking one, with the average single-family home selling price in town soaring 11 percent, peaking at $ 720,000.
That record is unlikely to fall in 2018, as the company predicts that average single-family home sales prices will rise only in single digits from the $ 678,000 average at the end of 2017.
Meanwhile, average sales prices for townhouses and condos are expected to rise more than 10 percent this year and next.
At the end of last year, the median sales price for a Kelowna condo was $ 332,344. For a townhouse it was $ 458,656.
When it comes to selling used homes through the Multiple Listing Service, 2016 was Kelowna’s record year with 6,693 properties changing hands.
That pace has already slowed to 5,834 sales in 2017 and is expected to remain roughly the same this year, with the company forecasting a range of 5,330 to 6,070 sales.
