Kelowna housing market to remain a sellers market in 2021, prices expected to rise 5%
Kelowna real estate is likely to continue as a seller’s market in 2021, with an active year ahead. This is characterized by a growing demand for single family and townhomes away from big cities. The COVID-19 pandemic and potential fallout in the United States will continue to drive these conditions into 2021. The average sales price in Kelowna increased 5.6% to $553,175 in 2020 (Jan. 1 – Oct. 31), compared to $523,832 in 2019 (Jan. 1 – Dec. 31). The RE/MAX Outlook for Kelowna real estate in 2021 is an increase of approximately 5% in average price to approximately $580,833 across all property types.
Who’s Driving Demand for Kelowna Real Estate?
Move-over buyers are currently driving demand in the Kelowna real estate market, which is expected to continue in 2021. While this has not specifically changed since the beginning of 2020, it emphasizes the increase in people selling their home in a less desirable area (perhaps pandemic influenced), to move to a more desirable location.
First-time homebuyers in Kelowna are typically families seeking single condominiums and townhomes ranging from about $350,000 to $550,000. First-time homebuyers who had a difficult time buying real estate in 2020 are unlikely to find any relief in 2021, with low inventory and rising prices in Kelowna expected to continue into the next year.
There has been some hesitation seen in first-time homebuyers in 2020, as real estate prices never dropped. As inventory in Kelowna continues to stay low, prices will hold as we move into 2021.
Move-up buyers in the Kelowna area are typically young couples. There has been very little hesitation in move-up buyers, as the COVID-19 pandemic has driven more young couples to sell their condos and townhomes in the Lower Mainland and buy single-family homes in the suburbs in Kelowna. This is expected to continue into 2021. Limited supply and rising prices have proven to be difficulties that move-up buyers have to face when purchasing in Kelowna.
The condominium market in Kelowna was the only category that showed a decrease in sales year over year in 2020. However, the average sale price for condos has remained steady, which is expected to remain the same in 2021. The Kelowna condominium market is popular with single homebuyers, and a falling demand in condos is expected in 2021.
Kelowna’s luxury market is currently driven by move-up buyers, with the typical starting price for a luxury home in Kelowna being approximately $1,200,000. COVID-19 initially hurt the luxury real estate market, but Kelowna saw a spike in luxury sales between wave 1 and wave 2 of the pandemic. If the pandemic gets worse, it is expected that luxury sales spike in Kelowna will decrease into 2021.
Kelowna’s Hottest Neighbourhoods
Kelowna’s top-selling neighbourhoods in 2020 were Lake Country, Upper & Lower Mission and Rutland. Lake Country continues to drive new builds at similar prices to older established homes in Kelowna, making it desirable. Rutland continues to have an investor eye for rental potentials and development. Upper & Lower Mission continues to be sought after for desirable neighbourhoods. A noticeable increase in developers seeking land assemblies has been seen in many of the OCP City Centres.
Kelowna New-Home Construction
Kelowna’s new-home construction market was strong in 2020, following a slow down in 2019. Since the beginning of the COVID-19 pandemic, new-home construction activity has steadily increased, and is not currently keeping up with demand. New-home prices are similar to those seen in the resale market in Kelowna, with older homes focusing more on the lot and location within the city, whereas new-construction is focused on the build itself. One new trend that has emerged since the beginning of the COVID-19 pandemic is that more land assemblies in the OCP designated urban centers for condensed mixed-use buildings, which is expected to continue into 2021.
Lake Country is one area in particular that has been doing extremely well in terms of new-home construction, and the area around the University of British Columbia – Okanagan is also steadily growing.
Canadian Housing Market in 2021
Canadians are on the move. RE/MAX isn’t calling this an “exodus,” but the re-location trend across the Canadian housing market is real, and it’s just one focus of the RE/MAX 2021 Housing Market Outlook Report. RE/MAX Canada anticipates healthy housing price growth at the national level, with move-up and move-over buyers continuing to drive activity in many regions across the Canadian housing market. An ongoing and widespread housing supply shortage is likely to continue, presenting challenges for homebuyers and putting upward pressure on prices.
Due to these factors, the 2021 RE/MAX 2021 outlook for average residential prices is an estimate of +4% to +6% nation-wide. Here’s the regional break-down: