Why we’re seeing record-high prices for homes in Kelowna area
Average selling price of 2-storey home in Kelowna tops $662,000 in Royal LePage 1st-quarter house price survey
As inventory dwindles and prices soar, the natural question about Kelowna’s red-hot housing market is: When will the bubble burst?
But it’s not a bubble, according to Royal LePage Kelowna sales manager Dave Favell. “At least it’s not a bubble in the traditional sense that it will burst. The trouble is we don’t have enough inventory (homes for sale), and that creates a seller’s market where buyers are scrambling, and that pushes prices up.”
Favell’s sense of the market is that prices will continue to creep up this year until more inventory comes on stream and prices might pull back a bit then.
“But, of course, I don’t know for sure what will happen,” he said. “I don’t have a crystal ball.”
The latest Royal LePage House Price Survey pegged the average selling price of a two-storey home in Kelowna at a record high of $662,317 in the first quarter of this year.
Last year at the same time, the average selling price of a twostorey in the city was 11.4 per cent lower at $594,247.
The survey is further backed up by the Okanagan Mainline Real Estate Board’s latest figures.
The average selling price of all single-family detached homes (excluding lakefront homes) on the Multiple Listing Service in March was $640,513.
In March 2016, that number was 13 per cent lower at $566,762.
This didn’t happen all of a sudden, and it also didn’t happen for a single reason.
For instance, the previous peak in the market was summer 2008, when the average selling price of a single-family home set a new record high of $550,000.
Then the recession came along, and house prices slumped as much as 20 to 25 per cent and took years to recover.
Last year, prices started a run up.
In February 2016, a new record high was set at $552,761, and that continued to rise month by month, breaking $600,000 for the first time in May 2017.
For the next eight months, prices set new records half the time and dipped slightly the other times.
The new year seemed to bring new vigour to the local housing market.
In February, board statistics put the new record at $638,604, a pinnacle that was topped in March with $640,513.
Sure, the economy is healthy in Kelowna and unemployment is low, both key factors for a steady housing market. But, into the mix, Kelowna was caught short on inventory.
The recession meant builders scaled back. When demand did return, there wasn’t a lot of choice.
The buying frenzy reverberated through new and resale housing, causing a shortage across the board.
As an indication of how quickly new inventory is snapped up, most of the units in the underconstruction, 21-storey, 1151 Sunset Drive tower are pre-sold, and in one week 52 of the 69 townhouses in the yet-to-be-built Drysdale Row development in Glenmore were purchased.
In addition, buyers from Vancouver turned to the Kelowna market to also snap up inventory that is affordable compared to Vancouver, where the average single-family-home selling price is $1.5 million.
All factors combine to put strain on inventory and push prices up.
The only markets with higher average two-storey house prices are Greater Vancouver, at $1.5 million, Greater Toronto, at $894,919, and Victoria, at $808,044.
Even bigger cities, such as Greater Montreal, Winnipeg, Calgary and Edmonton, have lower average two-storey prices than Kelowna at $410,002, $278,866, $500,190 and $442,848, respectively.
The cheapest two-storey homes can be snagged in Windsor and Moncton at $190,003 and $199,870, respectively.
By the way, average in Kelowna is, well, average, but nice.
A look at listings for sale in the $640,000 to $650,000 range comes up with a five-bedroom, threebathroom, recently updated home in Magic Estates for $639,900, a four-bedroom, threebathroom rancher with finished basement on Glenhaven Crescent for $648,800 and, at $644,900, a three-bedroom, two-bathroom split-level in the Lower Mission.
With the average price of a single-family home at an all-time high, many buyers are turning to condominiums and townhouses for more-affordable options.
But they are also in short supply and increasing in price.
In March, Okanagan Mainline Real Estate Board figures show the average selling price of a condo in Kelowna was $349,506, up a whopping 26 per cent from $277,758 in the same month last year.
Townhouse prices are up 18 per cent, to $453,619 from $385,417.
The action ricochets into the rental market, where Kelowna has the country’s third highest twobedroom apartment monthly rent at $1,520 and the seventh highest one-bedroom rent at $1,040.
The only cities with higher twobedroom rents are Vancouver, at $3,200 a month, and Toronto, with $2,270.