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October 2021 – Okanagan Real Estate Market Analysis

faithwilson | Christie’s International Real Estate’s exclusive and comprehensive Market Analyses October 2021 have arrived for both the South Okanagan and the Combined Okanagan areas.

Wave from the east may lift Okanagan’s housing market

Housing sales across the Okanagan have been very strong this year, on pace now to easily break the annual sales record in 2021. Total sales through the Association of Interior Realtors, whose members serve the real estate market from Revelstoke to Eastgate Manning Park on the eastern boundary of the Lower Mainland, are forecast to reach an all-time high of nearly 13,800 transactions this year.

As of October, residential sales in the Central Okanagan, anchored by Kelowna, totalled 7,220 transactions, a startling 41.7% increase from a year earlier, even though sales have been slowing through the third quarter compared to the blistering first half of this year.

The slower sales, being seen across the entire Interior this October, are partly illusionary, however, due to the dramatic 40% drop in listings in the Central Okanagan from a year earlier with a similar trend across the region. Listings are now at all-time lows, which has reduced the overall transactions.

The result has been a sales-to-listing ratio of 100% in the Central Okanagan and averaging higher than 96% throughout the entire Okanagan-Revelstoke market.

The benchmark price for homes in the Central Okanagan, North Okanagan, South Okanagan and Shuswap/Revelstoke regions continue showing double-digit percentage increases in year-over-year comparisons in all home categories.

There is reason to suspect that both home sales and prices will to continue to increase even above projections, due to a unique combination of immigration, interprovincial migration, demographics and the pandemic.

Canada plans to welcome 1,233,000 new permanent residents over the next three years, with more than 400,000 immigrants expected next year alone. Traditionally, B.C., Ontario and Quebec are the primary destinations for new immigrants.

But it is people moving to B.C. from other parts of Canada that is setting the tone for the Okanagan right now. The most recent data from Statistics Canada shows B.C. saw the country’s largest gain in interprovincial migration in the 12 months ending June 30, 2021. The province saw an increase of 34,277 people, the largest net gain in interprovincial migration into B.C. since 1993-94.

And the latest record surge is during a global pandemic, when much travel was restricted.

Studies also show that, unlike former migration surges, newcomers now are much more likely to move to B.C. areas outside of the Lower Mainland, including the Okanagan. This is tied to two factors: the pandemic and our aging population. The pandemic-inspired remote working phenomenon has caused many Canadians to re-evaluate their housing needs and move outside major centres for larger, more affordable housing, which is stoking the market in smaller centres, such as Penticton, Osoyoos, Vernon and Kelowna.

This dovetails with a huge number of baby boomers, the wealthiest Canadian generation in history, many of who are cashing out of big-city real estate to retire or semi-retire in places like the Okanagan – and they are coming from across the country.

There is no mystery to why the Okanagan is now a prime destination. Where else in Canada does a single region have massive lakes, mountains with numerous world-class ski hills, a moderate climate and strong economy?

A trend to watch is the return of Albertans buying homes in the Okanagan and Revelstoke area as big-city Alberta markets recover. In October, for example Calgary home sales were 61 per cent higher than average transactions over the past five years.

With restrictions being lifted as the pandemic wanes, the Okanagan can expect a long-term migration wave from the east that will likely lift the housing market to new heights.

Kelowna and the Central Okanagan

Kelowna often attracts headlines for its robust real estate market, but it has one of the strongest overall economies in the country. Among census metropolitan regions, Kelowna and the Central Okanagan have the fourth-lowest unemployment rate in Canada. In B.C., Kelowna, at 4.4% in October, tied with Victoria for the lowest unemployment rate in the province. The Okanagan has a jobless rate of just 4.5%, the lowest of any B.C. region, according to Statistics Canada.

This helps to explain why housing has been in high demand and a short supply in Kelowna and its neighbouring communities this year. Sales are down this fall compared to the first half of this year, which may represent an opportunity for buyers over the winter months.

In October, a total of 619 homes sold in the Central Okanagan, down 19.8% from the same month a year earlier, while the number of active listings plunged 40% to 1,515 units in the same period. The result is a startling 100.3% sales-to-new-listing ratio and a sharp increase in prices. The average composite residential price in October was $858,937, up 21.8% from a year earlier.

In the detached-house market, which dominated the Central Okanagan with 250 transactions in October, the average price is now $1,031,700, 21.5% higher than a year earlier, but virtually unchanged from the second quarter of 2021. There were nearly two-dozen houses listed at the end of October for less than $699,000, however, which is less than a typical condominium apartment price in Greater Vancouver.

Waterfront: The average price for a waterfront home in the Central Okanagan, based on 74 sales in October, was $3,46,63, up 19% from October 2020. Waterfront sales are up 8.8% year over year, the only residential sector to post an annual increase. The price of a waterfront building lot is now $1.1 million, up nearly 23% from a year ago.

There were 154 condo apartment sales in October, down 6.6% from the same month last year, but the average price increased 27.3% to $492,626.

Listing for townhouses dipped 6.1% in October, compared to October 2020, and the 91 sales were off 33%, year-over-year. The average Central Okanagan townhouse now sells for $677,672, up 21.2% from October 2020.

As an indication of the future demand from developers and homebuilders, sales of building lots in the Central Okanagan increased nearly 55% in October, to 364 lots, compared to the same month last year. The average price for a lot has increased 34.3% in the same period, to $539,997. while the price of a waterfront building lot is now

Vernon and the North Okanagan

The North Okanagan, which is anchored by the lovely lakeside city of Vernon with a population of 43,000 as the second-largest Okanagan urban centre, is further from Vancouver and more affordable for homebuyers than the Central Okanagan. But fair warning: prices are rising faster in the North Okanagan and strata listings are vanishing.

In October, the average composite home prices was up 3.7%, year-over-year, to $621,563. The total inventory of homes for sale, however, is down 35.6% from a year earlier to just 435 properties. Total sales dipped 22.3% in October to 191, but the shortage is so tight that the sale-to-new-listing ratio was 99.5%.

Detached houses posted 119 sales in October in the North Okanagan, down 36% from October of 2020, but the benchmark price increased 28.3% to $854,326. This is primarily because of the lack of new listings, with just 121 houses added in October and total active detached listings running 38% below the pace of 2020.

While strata property prices are relatively low in the North Okanagan, at an average of $303,152 for condos and $446,632 for townhouses each up about 8% from a year ago the selection is becoming slim.

In October just 26 condos were added to the market, down 13% from a year earlier, while new listings for townhouses were down 31.4% in the same period, to just 24 transactions. As well, starts of new units in Vernon remain low, with only 42 new condos and 26 new townhouses started this year, according to the latest figures from Canada Mortgage and Housing Corp. With 25 condos and 34 townhouses selling in October, the law of supply and demand points to higher strata prices going forward.

Waterfront homes: The average price of the 42 waterfront homes sold in the North Okanagan so far this year has been $1,574,824. That is down 5.3% from 2020 and remains the lowest price for waterfront property in the Okanagan. Lakefront building lots average $809,038.

Shuswap / Revelstoke

The Shuswap to Revelstoke area represents among the lowest priced real estate within the boundaries of the Association of Interior Realtors, despite recent price hikes. The composite home price in October was $653,023, up 18% from October of 2020, while the detached house price is now $718,33, 29.8% higher than a year earlier. As across all of the Okanagan region, the price increase is a reflection of a lack of inventory. Total active listings in Shuswap/Revelstoke are now 27.4% lower than last year. In October, for example, only 54 detached houses were added to the market and there were 52 sales.

Revelstoke, where the local Revelstoke Mountain Resort was recently nominated as the Best Ski Resort in North America by USA Today, has long had a tight rental vacancy rate. But investors planning to buy a condo as a rental will face a tiny selection. Only 6 condos were added to the listings in October and the sales-to-listing ratio was 100%, as there were also 6 sales. The average price of a condo in the Revelstoke area is $335,667, up 15.3% from October of 2020.

Townhouses are also in short supply in Shuswap/Revelstoke, which has helped drive average prices up 29% from last year to $494,050 this October.

Waterfront: The average price of waterfront home in the Shuswap Lake region in October was $1.34 million, up 9.8% from a year ago. So far this year, 67 waterfront homes have sold in the area, a 59% increase compared to the first 10 months of 2020.

South Okanagan

As many day trippers out of Vancouver know, the South Okanagan includes the popular lakefront towns of Osoyoos and Penticton, plus smaller resort and winery/farming communities such as Kaleden, Keremeos, Naramata, Summerland, Okanagan Falls and Oliver. The South Okanagan is an easy three-hour drive or so from the big city, yet housing prices here are actually more affordable than near Kelowna, which is another 90 minutes to the east.

Reflecting a seasonal change – the South Okanagan is more of a summer than a winter destination – overall housing sales were lower in October. The total of 206 transactions was down from the monthly average of 248 so far this year, and also 19.5% below the pace in October 2020. With 100 sales, detached houses were the most popular sector in October, despite average prices rising 25.4% from a year earlier to $774,543. Townhouse prices were up 10.3% to $496,53, while the average condo apartment now sells for $368,892, a 14.3% increase from October 2020.

There is a shortage of homes for sale, with active listings for detached houses down 42% from a year ago and just 15 active listings for townhouses, a drop of 61.5% from October of 2020. Listings for condo apartments, which are mostly in Osoyoos and Penticton, are running about 38% below last year.

So far this year there have been 38 sales of waterfront homes in the South Okanagan, compared to 40 a year earlier. The average price of a waterfront residence this year is $1.9 million, up 39% from 2020.

Despite the shortage of homes of all types, there also appears to be mounting resistance to new developments after two years of fairly healthy construction. In October, for example, a planned 108-unit condo project at Summerland was shot down by a vote at the Regional District of Okanagan-Similkameen. In Penticton, also in October, city council approved a new 148-unit apartment complex, but only after a contentious two-hour public meeting.

It appears that like most of the Okanagan, indeed most of southern B.C., a shortage of homes in the face of higher demand will characterize the South Okanagan for some time to come.

Combined Okanagan Report:

South Okanagan Report:

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