Real Estate Insider

Kelowna’s Real Estate Newsletter

In this issue: (6 minute read)

🔵 What’s the market doing?

🔵 You should know these stats…

🔵 New housing under construction?!

🔵 Who has the leverage?

🔵 How experts predict housing prices to change…

🔵 Homebuyer demographics

🔵 Unemployment and uncertainty

What’s the MARKET doing?

The Q2 numbers just dropped, and here’s what you need to know. Sales are slightly up compared to this time last year, not a huge jump, but a positive sign. Overall, we’re in a very balanced, steady market right now. It’s also likely that we’ve hit the seasonal peak for summer activity, so expect things to gradually slow down as we move into the later months of the year.

You should KNOW these stats…

In the figure below, you’ll see the key stats I always recommend keeping an eye on. We saw a 2% increase in sales year-over-year, which helps confirm that slow-but-steady growth trend. What’s interesting is that new listings actually dipped slightly… down 0.5% compared to last year. I’ve also included a chart showing annual household growth across the Okanagan. You’ll notice a sharp projected slowdown in the coming years, and I’ll break down what that could mean a little later in this newsletter.

New HOUSING under construction?!

One of the most interesting figures I pulled from CMHC shows a huge spike in housing under construction. Even more notable: a lot of that new inventory is purpose-built rentals, which is a direct response to the rental crisis. But here’s the twist… population growth in the Okanagan is slowing down fast. Recent federal immigration changes have majorly reduced the number of people moving to Canada, which has cooled big-city markets and slowed migration to our region. We’re still growing, just not as quickly. In fact, household growth is expected to hit its lowest pace since 2012. Over the next five years, only about 7,800 new households are projected to form… compared to over 5,500 in 2024 alone.

From 2021 to 2023, the Okanagan saw explosive growth, which kicked off a huge wave of new development… mostly condos, some townhomes, and a surge in purpose-built rentals thanks to CMHC incentives. At one point earlier this year, nearly 6,000 units were under construction. But here’s the catch: a lot of those new builds were small units designed for short-term rentals or vacation buyers. With the province’s recent ban on short-term rentals and pushback against tiny condos, demand for that type of housing has dropped off hard.

On the flip side, townhomes… once seen as the perfect middle ground… are also slowing down. They’re still more affordable than detached homes, but prices have crept up due to high construction costs. For many, multifamily housing (like condos and townhomes) is the only realistic entry point into the market. But with rates and prices where they are, it’s tough out there for buyers who don’t already own property.

Who has the LEVERAGE?

Prices have mostly leveled out after the correction we saw recently, and with more listings hitting the market, that usually means the scale tips a bit in favour of buyers. But there’s more to it. Interest rates have dropped pretty significantly… from 5% in April 2024 to 2.75% today. The next Bank of Canada announcement is on July 30, and while another cut isn’t expected, borrowing is already a lot more affordable than it was a year ago.

Inventory is also up 11.4% compared to last year. That’s a big deal. If you’ve got job security and you’re planning to stay in a place long term, this is the kind of market where you can take your time and find real value. For context, take a look at Toronto. Condo sales there are down over 21% year-over-year, and new condo sales have dropped to levels not seen in 30 years. When that kind of slowdown hits a major market, it tends to ripple outward.

Most importantly, the figure below shows inventory near a five-year high, while sales are staying low. That combination doesn’t come around often… and for buyers, it’s a pretty ideal setup.

How experts predict HOUSING prices to change…

Home prices across Canada are expected to dip slightly in 2025, down about 1.7% to $677,000. The main reason? BC, Alberta, and Ontario are all expected to see small price drops, which offsets gains in other provinces. But big picture, prices are still sitting near the $700K range and are expected to climb again by 2026. So if you’ve been waiting for a big price crash, it’s probably not coming.

Sales are also forecasted to bounce back a bit next year, up 6.3%. Even still, we’re looking at the fourth year in a row where national sales stay under 500,000. That kind of slowdown has only happened a handful of times since 2007. What does that mean for you? If you're buying, it could mean less pressure and more negotiating power. If you're selling, it just means pricing right and standing out will matter more than ever.

Homebuyer DEMOGRAPHICS

Here’s a snapshot of who’s actively searching for homes in Kelowna right now, according to Realtor.ca data. The biggest group is aged 35 to 44, followed closely by 45 to 54, which tells us a lot of the demand is coming from established buyers, people either moving up or relocating. But nearly 1 in 5 searchers are younger, between 25 and 34, showing that first-time buyers are still in the game despite high costs.

In terms of buyer intent, 35% said they’re planning to buy again within the next 6 months, and 22% are looking to buy their first home. That’s serious activity. And fun fact, 53% of searchers are men.

Unemployment and UNCERTAINTY

Canada’s unemployment rate held steady at 6.9% in June, which isn’t bad, but it’s still higher than the long-term average. What’s interesting is that full-time employment is actually at a record high. We added over 34,000 full-time jobs in June alone, and overall employment has fully bounced back from the dip earlier this year.

So why does everyone still feel uneasy? Consumer confidence is surprisingly low, even lower than during the height of COVID. When Canadians are asked how they feel about the job market and the economy in general, the outlook is pretty negative. It’s a weird disconnect: the job numbers are strong, but people still feel nervous about the future.

Why does that matter? In real estate, buyer confidence is everything. Even if rates drop and inventory rises, people don’t move if they feel uncertain. So while the job market stats look good on paper, the emotional side of the market still feels hesitant, and that’s something worth watching.

Thoughts on today’s issue?

 I hope you found this issue interesting! If you have any thoughts or suggestions for what you'd like to see next, feel free to email me at karsen@royallepage.ca. I'd love to hear from you!

The information contained in this report has been prepared by Karsen Koltun, The Canadian Real Estate Association, Royal LePage Kelowna and the Association of Interior REALTORS® - Okanagan. The information has been drawn from sources deemed to be reliable, but the accuracy and completeness of the information is not guaranteed. In providing this information, no source assumes any direct responsibility or liability.