kelowna ’ s housing market gains momentum, but how long will it last? Recent buyer confidence in Kelowna carried forward into May in the form of increasing sales counts. With listings lagging behind, sellers hold most of the cards—for now.
that prices increased once again in May, with the median sold price of detached homes up 10% over April, while condos were up 3% and townhomes were 1% higher. While there are a couple of notable external factors (think high interest rates and slowing but still elevated inflation) impacting Kelowna’s below-average sales and listings counts, the fact that market activity is slower than usual is all the more striking when considered against the region’s recent growth. Indeed, the population of the Kelowna Census Metropolitan Area (or CMA) grew by 14% between the 2016 and 2021 Census years, earning it the moniker of “fastest-growing CMA in Canada”. Given the seasonal patterns we typically observe in Kelowna, we expect slowing sales counts and rising inventory in June. But with the Bank of Canada raising its policy rate another 25 basis points at the start of June, it wouldn’t be surprising to see sales drop off at a quicker pace, and those recent price pressures abate, as would-be buyers pull back in the face
Real estate is an inherently seasonal industry, and while seasonality went out the window for most housing markets during the tumultuous years of 2020 and 2021, more typical seasonal patterns returned last year. And the typical seasonal pattern that we can usually expect to see is one where sales counts are at their highest in the spring, with the apex in the Kelowna market typically coming in May. So far in 2023, the expected sales trend has played out in Kelowna, with sales counts rising with each passing month. In May, total MLS sales in the Central Okanagan reached 569, a whopping 31% increase over April. That’s also about even with last May’s 567 sales, though it’s 5% lower than the past 10-year May average, as the market continues to play catch- up to get back to typical activity levels. Inventory, meanwhile, usually follows a pattern of expansion through the first half of the year, peaking in the summer and then contracting
in the fall and finishing the year at its lowest point. And while total listings have generally followed that trend so far this year, the degree to which the number of homes available for sale has grown is considerably less than we typically see in this market. To wit, there were 2,335 listings in the Central Okanagan in May—a 3% increase over April, sure, but this amounted to only half of the rate of a more typical April- to-May expansion (of 6%). And while May’s listings count was 27% higher than last year’s near-historically-low total, it was 17% less than the long-run May average. With sales counts expanding more quickly than listings, market conditions have tipped in favour of sellers, with the region as a whole having just 4.1 months of inventory (a months-of-inventory ratio, or MOI, of less than 5 reflects a sellers’ market; 5-8 MOI reflects balanced conditions; and an MOI over 8 reflects a buyers’ market). In light of this, it shouldn’t come as much of a surprise
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