Kelowna, and with it the Central Okanagan, has the fastest-growing population in Canada, posting a 14 per cent increase from 2021 to 2026, according to Statistics Canada.
With 224,000 people, the city of Kelowna has twice the population of Nanaimo, Kamloops or Prince George as the second-largest B.C. city outside of the Lower Mainland.
The broader Thompson-Okanagan region is currently growing at about 1.6 per cent per year, hitting 620,000 in 2021 and adding roughly 10,000 new residents annually.
Judging by real estate development being launched this spring the regional population will continue to accelerate, providing the current residential downturn proves shallow and brief. It is housing, after all, that is driving the real estate market across the Okanagan, but residential sales have slowed recently.
In May, total Okanagan home sales were down 28.5 per cent from a year earlier, though the average price increased nearly 10 per cent, year-over-year to $785,600, according to the B.C. Real Estate Association (BCREA).
The BCREA is now forecasting that Okanagan home sales will drop 19 per cent this year, from 2021, and fall a further 14.8 per cent in 2023, with home prices eking out just 1.3 per cent increase that year compared to 2022.
May sales across the Okanagan slid down only 1.2 per cent compared to April, noted Lyndi Cruickshank, president of the Association of Interior Realtors, which she said reflects the market’s stability.
The mantra in the Okanagan real estate community is that a lack of supply has helped to stifle sales and keep prices rising. This year should test that theory, if all the current projects proceed.
One of the largest is Greata Ranch, a 46-acre lakefront parcel near Summerland between Kelowna and Penticton along Highway 97. On the development radar for more than a decade, the property has now been extended with the addition of 28 adjacent waterfront acres, the Butler family lands.
The entire 74 acres is now being marketed as a single parcel for mixed-use with a residential emphasis, according to Stephen Webber, associate vice-president of Colliers International.
The price will be decided by bids submitted by potential buyers on the vendor’s “form of offer.”
The City of Kelowna voted unanimously on May 31 to approve a 425-home development at the Tower Ranch area in east Kelowna. Also in Kelowna, a 1,000-home development was approved in late May that includes 16 buildings, up to 17 storeys high, on Lakeshore Road. North Kelowna is the focus of major mixed-use development plans on two former industrial sites, including 40 acres of lakefront that was once a sawmill.
In downtown Kelowna, the University of British Columbia Okanagan (UCBO) is pushing to build a 46-storey residential and administration tower. Nearby, the 26-storey ONE Varsity condo tower is in process of being brought to market, according to Shane Styles, president of Epic Real Estate Solutions of Kelowna.
Styles, who was born and raised in the Okanagan, estimates that investors account for 60 per cent to 70 per cent of new condominiums buyers.
There are user investors, like parents buying an apartment for their children to use while attending UBCO or using it themselves as a vacation home and renting it out seasonally; and what he calls “pure investors” who count on rental income and appreciation.
The May benchmark price for condominiums in the Okanagan increased 31 per cent to $342,500, compared to a year earlier. The rental vacancy rate in Kelowna is 0.6 per cent, the lowest level in Canada.
At least a score of new developments are planned in West Kelowna, including the next phases of Kind Development’s Lakeview Village, where 120 homes in the first two phases sold out and a retail village is already complete.
In Penticton, the largest residential development in years was granted regulatory approval in May for a 219-unit market-housing project on a 6.6-acre site. The development is now awaiting provincial highways approval and a bylaw amendment. An even larger Penticton development, for nearly 700 new homes in the North Witse Block area received approval to proceed to public hearings on June 20.
On Shuswap Lake, the Old Town Bay development has been refreshed for 2022, with a trio of developments, including a 32-lot single-detached subdivision, new strata units, a hotel and a large recreational vehicle park where lots will be sold as strata.
A market to watch, according to Styles, is Vernon and the North Okanagan, which he sees hosting the next wave of real estate investment.
Styles believes the entire Okanagan economy will be booming this summer, the first in two years with no pandemic restrictions.
“It will be nuts,” Styles predicts, which could also prove an accurate forecast for the entire Thompson-Okanagan real estate market.