Kelowna house prices climbed 156%

New construction, more than infill and renovation, has served to support rising prices in Kelowna over the past decade.  The strength of new construction exceeded the early 1990's building boom by 2003, and continued to post strong activity until the effects of global economic downturn put a damper on buyer enthusiam.

Over the past decade, the total value of residential building permits reached nearly $2.7 billion. Average price, over the period, has climbed 156%, rising from $188,004 in 2000 to $481,405 in 2010.

Supply and demand also played a role, as building activity gained momentum in part to accomodate a rising population.  Infill and renovation, however, has experienced an upswing in recent years, as more homeowners update and improve their homes, increasingly with resale in mind.  The bulk of the revitalization has occurred closer to the core, where homes tend to be older.  Young buyers, especially, are willing to invest sweat equity to secure an affordable detached home or the right location.

As a vibrant retirement desitination, the city has begun to experience a shift in its existing housing mix, as aging baby boomers make their next moves.  A boom in condominium construction has taken place as older buyers downsized and transitioned to a lower maintenance lifestyle.

The city has welcomed the change in purchasing patterns, as it seeks to encourage higher-density development within its central core, as opposed to contributing to greater sprawl on the peripherals.

While condo product represents greater affordability -- appealing to first-time buyers -- many boomers are active in the mid-to-upper-price points, and a growing number of builders are in tune with this reality.

Regardless of housing type, the common denominator among today's purchasers, compared with one generation ago, is the overwhelming desire fore quality features and amenities.  The trend has bolstered costs and, as a result, prices across the board.

A considerable infuence on average price has also been the unprecedented demand for luxury homes, with custom builds popular in areas such as Upper Mission.  The momentum in this segment has continued to defy expectations year after year.  Development has given rise to new sought-after areas and up-and-coming communities, including Wilden, Upper Mission and Kettle Valley, where homes typically range from $500,000 to over $2 million -- some offering stunning lake views.

Rising prices have made areas such as Rutland and Glen Rosa a popular choice for first-time buyers, given affordability, with renovation revitalizing older homes and neighbourhoods.  Yet, condos are now considered the  first step to homeownership, representing 33 per cent of all sales.  Young buyers are increasingly willing to compromise on size or condition rather than location, particularly as single-family homes have become out of reach.

Townhomes have emerged as an important player in Kelowna's housing mix.  The product's appeal is strong, bridging the gap from condo apartment to single-family home for a growing number of first-time and move-up purchasers.  It's also gained traction with boomers and retirees not yet ready for apartment living.  Gated condominium communities, offering single-family bungalows and a bevy of other options and amenities have also experienced an upswing.

With population growth expected to remain steady in the years ahead, Kelowna will continue to evolve to meet current and future needs.  City plans call for strategic expansion to preserve character and appeal in the years to come.

Currently, average price -- hovering at $475,250 -- and unit sales at 1,383 are up approximately two per cent year-to-date (September).  The market remains off peak levels, but confidence is slowly returning, and listings are starting to decline.

Overall, buyer's market conditions are expected to remain in place, as stability characterizes residential real estate in the months ahead.

Source of Tables & Text: RE/MAX of Western Canada

 

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