2011 Kelowna Market Trends Outlook

Consumer confidence will be the key factor in the transition of Kelowna's real estate market in 2011.  With softer sales conditions and flat home prices, savvy buyers have been keen to take advantage of opportunites that exist in the market, with most realizing that prices will not hold the line much longer.  The upper-end has been especially vibrant, and that will carry forward as the market firms up in 2011.  Buyer's market conditions are expected to persist in the first quarter, although inventory has started to decline.  Affordable, entry-level product remains most sought-after, while demand from empty nesters and baby boomers continues to prop up the mid-to-upper price points, given Kelowna's status as a sought-after retirement and recreational destination.  With spotty signs of recovery following the lack-lustre summer months, resale activity finished the year at 3,644 units, eight percent off 2009 levels.  Average price closed at $420,000, an increase of 5% over 2009, a bounce-back that brings values virtually in line with the 2008 peak.  On the front lines, actual values are in recovery mode, but are poised for upward momentum in the months ahead.

Strong fundamentals will support the market in 2011.  GCP growth in British Columbia is forecast at approximately 3-3.5%.  Rebounding commodity prices will bode well for trade, while public infrastructure spending boosts non-residential construction and creates jobs.  A ramp up of the Alberta economy - particularly the oil and resource-based sector - is also expected to have some positive spin off in BC.  The combined effects of the recharged economic engine should serve to bolster consumer confidence and the demand for housing.

As absorbtion rates rise and inventory falls in 2011, the climate will shift back to balanced territory.  Watch for price growth to gain greater traction in 2011, with the average moving ahead 5% to $446,250.  Climbing values will once again prompt strong demand for affordable product.  As a result, the condominium sector will benefit, with price appreciation moving in line with the overall residential average.  Investor activity will also pick up in the new year, particularly among Europeans, who have demonstrated a strong penchant for Kelowna real estate.   The airport expansion, alllowing for larger international flights, will support this trend.  A continuation of favourable interest rates will remain a solid impetus.  As a result, the city should round out 2011 at 4,000 sales - a solid 6% gain over the 2010 year end figure.

CENTRAL OKANAGAN:

• Number of sales per month Dec 2010 - 169  Dec 2009 - 259
• Number of sales year-to-date Dec 2010 - 3,644  Dec 2009 - 3,948
• Residential average house price year-to-date Dec 2010 $481,405 Dec 2009 $458,304
• Residential median house price year-to-date Dec 2010 $439,950 Dec 2009 $425,000
• Residential average house price this month Dec 2010 $462,527 Dec 2009 $475,005
• Residential median house price this month Dec 2010 $418,750 Dec 2009 $443,500
• Number of units listed Dec 2010 447 Dec 2009 525

SOURCE: MLS statistics for Central Okanagan as reported by Okanagan Mainline Real Estate Board

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