Okanagan Valley
Real Estate Trends and Price Forecast
HIGHLIGHTS
Home values in the Okanagan have been volatile in recent years, see-sawing up and down. However, the broader trend since 2022 has been downward.
While industry experts have declared that market conditions are improving when compared to 2023, purchase activity in 2024 is unlikely to match 2020.
A multi-factor analysis identifies Metro Kelowna and surrounding areas as a higher-risk real estate market.
Budgets for home purchases are under strain due to the significant increase in mortgage rates since their historical lows.
This article covers:
What is the state of the Okanagan property market?
Where are prices headed?
Should investors sell?
Is this a good time to buy?
1. What is the state of the Okanagan property market?
Home Price Overview
The pandemic turbocharged the Okanagan Valley housing market, driving up prices at a remarkable pace and causing aspiring homeowners to be pushed further away from their dreams. And just when they thought things couldn't get trickier, rising interest rates now force even more potential buyers to sit on the sidelines.
For those contemplating selling their homes, time is of the essence. Early Spring is the best time to sell because there is typically less supply.
Prospective homebuyers might consider waiting for a lighter mortgage burden. Mortgage rates are relatively high but are expected to fall in late 2024. Patience will be needed because forecasters keep revising their predictions, pushing out the date when they expect rates to drop.
The market fundamentals are riddled with risk and uncertainty as consumer sentiment has taken a substantial hit. But remember, consumer sentiment can be volatile and is an unreliable predictor of future price trends.
Okanagan Valley Detached House Prices
Since the peak in Spring 2022, house prices in the Okanagan have fallen significantly. Government intervention successfully shielded the real estate market from the pandemic-induced recession, but now higher interest rates are weighing on the market.
Our politicians are striving to return the market to a more typical real estate cycle, where prices grow consistently and modestly at an annual rate of 1 to 3%, in line with income growth. They are orchestrating efforts to guide the market toward this balanced trajectory without much success.
Demand in the Okanagan is low. Many people want to buy a home, but affordability is very low, which is reflected in the number of successful purchases. Significantly fewer people can realize their homeownership dream in these market conditions.
New homebuyers can’t afford to get onto the first rung of the homeownership ladder, and high rates trap existing owners. Families that want to upgrade to a larger home can’t qualify for a new mortgage at the current rates.
Meanwhile, the total active listings are trending upward. They are at their highest level in three years.
Metro Kelowna New Construction Home Prices
Prices of new homes have begun to drop, and some new construction homebuyers might find they will have paid much more than the most recent buyers in their development.
Does this concern you? Read the Pros and Cons of Buying Pre-sale Homes
Market Risk
Based on Mortgage Sandbox Analysis, Kelowna is at high risk of a significant market correction.
Our platform matches you with local, pre-screened, values-aligned Realtors.
Shared values make better working relationships.
Okanagan Condo Prices
Like house prices, the Okanagan benchmark apartment price is trending downward.
Condo purchases in 2023 were relatively lacklustre. 2024 is shaping up better than last year but below average.
Today's purchases are much lower than in most of the previous three years.
With more people working-from-home, we expect developers will begin marketing larger (i.e., 2 and 3 bedrooms) apartments to meet buyer preferences. As the supply of more generous floor plans comes to the market, it may depress the values for small floor plan condos.
At Mortgage Sandbox, we would like developers to build 4 and 5 bedroom condos because:
Not everyone can afford to buy a house for their family.
Canadians who now work from home need more room to segregate workspace from living space within their homes.
Many Canadians with longer working hours find it challenging to stay on top of necessary house upkeep (i.e., mowing lawns, clearing eaves, shovelling sidewalks).
Many people prefer to live in higher-density neighbourhoods with all the essential amenities within walking distance.
Okanagan Valley Townhouse Prices
Sub-market Reports
Still a challenge for first-time homebuyers
Although Okanagan home prices have moderated, they are still not very affordable. A homebuyer household earning $71,000 (the median Metro Kelowna household before-tax income) can only get a $270,000 mortgage. For that household to buy a condo, they would need to save at least $100,000 cash for a down payment or receive a very generous gift from family. For most people, that’s just not on the cards.
What about the rest of B.C.?
Read the Vancouver Home Price Forecast and Victoria Home Price Forecast.
Are you interested in specific areas of the Okanagan Valley? Try these reports!
2. Where are Okanagan Valley home prices headed?
There is a lot of uncertainty in the forecasts for 2024, 2025 and 2026. Many of the forecasters we've surveyed have different expectations for:
Will the federal government achieve its aggressive immigration targets?
There is no consensus among economists.
How do we arrive at our forecast range? Check out our full assessment of the five factors that drive these forecasts. These five forces help explain why several forecasters are anticipating price drops.
Need a Realtor?
We match you with local, pre-screened, values-aligned Realtors and Mortgage Brokers.
At Mortgage Sandbox, we provide a price range rather than attempting a single prediction because many real estate risks can impact prices. Risks are events that may or may not happen. As a result, we review various forecasts from leading lenders and real estate firms. We then present the most optimistic estimates, the most pessimistic prediction, and the average forecast. Do you want to learn more about real estate risk?We've written a comprehensive report explaining the uncertainty level in the Canadian real estate market.
Our forecast inputs:
Get a mortgage broker to pre-approve you
Realtors want you to be pre-approved before you look at homes
3. Should Investors Sell?
From a seller’s perspective, more changes in the market influence prices downward so now may be a better time to sell than in two years, and the annual real estate cycle usually favours sellers in the first half of the year.
Sellers should consult a mortgage broker early to prioritise flexible loan conditions and reduce the risk of cancellation penalties. Find out more about the benefits of a mortgage broker.
Planning to Sell? Check out our Complete Home Seller’s Guide.
Fixed or Variable rate mortgage?
Find out where mortgage rates are headed before you start to negotiate.
4. Is this a good time to buy?
It’s hard to say. Prices have been falling, but interest rates (borrowing costs) are high, so prices could fall further. It's almost impossible to time the market. If you are buying your forever home and don't plan to sell for ten years, then the risks of buying now are lower.
Regardless, the annual real estate cycle usually favours buyers in late summer.
If you are considering buying, be sure to drive a hard bargain and pay as close to market value as possible. Also, don't bite off more than you can chew when it comes to financing.
Planning to Buy? Check out our Complete Home Buyer’s Guide so we can walk you through the end-to-end process and get you ready to buy your new home!
How much home can you afford?
Our mortgage calculator takes uses up-to-date mortgage rates and calculates the price of a home you could afford.
Here are some recent headlines you might be interested in:
Bank of Canada: era of very low rates is likely over, people and firms must adjust (Reuters)
Bank of Canada deliberations show some felt rates may need to rise higher (Global News)
Bank of Canada likely done raising rates, to cut by mid-2024 say economists: Reuters poll (Reuters)
Rising rates on homeowners and the shocks that lie ahead (CMHC)
Upcoming mortgage renewals have homeowners concerned (Edmonton Journal)
Canada is in for a cooler winter in real estate as sales slow: CREA (Global News)
Home Prices in Canada Are So Stretched That Even Owners Want Them to Fall (Reuters)
Posthaste: The risk of forced home sales is rising in Canada, warns economist (Financial Post)
B.C. real estate market notches downward amid climbing interest rates, association says (Vancouver Sun)
LACKIE: Bleak times for Toronto real estate market (Toronto Sun)
Calgary Real Estate Board reports 17 per cent increase in October home sales (Calgary Herald)
Vaughn Palmer: End of the line for single-family neighbourhoods in most of B.C.(Vancouver Sun)
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