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As 2025 unfolds, the Central Okanagan real estate market is set to experience a period of recovery and renewed growth, driven by several key trends specific to British Columbia and on a larger scale as well. Here’s what to expect in the year ahead:
With inventory trending downwards after a busy 4th quarter of 2024 in Kelowna, we anticipate seeing the number of buyers in the market to continue to rise. More favourable interest rate conditions, new lending parameters, and more favourable press about interest rates continues to bring buyers off the side lines, beginning to release some pent up demand. Interest rates are projected to continue dropping as the Bank of Canada looks to ease inflation while supporting the GDP; the jury is still out on just how much they will continue to drop and how quickly.
So while more buyers come off the side line, with the stress test continuing to limit buyer's budgets and an anticipated increase in inventory in the Spring, we don't expect to see a massive increase in prices. Action in the marketplace should increase, and maybe even the frequency of multiple offer scenarios, but the buying power of Canadians is not where it was post-pandemic. So expect correctly priced properties to go quickly, but sellers who are still sticking to the prices of years past will find themselves continuing to rack up longer days on market. Price increase estimates vary across banks, real estate brokerages, and economists, and hover between 3-9% increases. For Kelowna and the Central Okanagan specifically, which has higher prices when compared to other areas, expect a growth of around 5% over the year depending on the sector. TD has eased off on its earlier prediction of a 23.2% increase in activity, settling to an estimate of a 16% increase in sales activity. That is a lot more homes, a lot more buyers excitedly planning their moves, and a lot more sellers popping their champagne bottles this year! We anticipate a stable year with modest growth.
New rules implemented over the past year, and coming into affect this year will impact the dynamics of the local market. The BC Home Flipping Tax come into affect, which will decrease the number of renovated properties coming to the market for the next 2 years. This will mean that the options for buyers who do not want to take on a project will decrease, and those homes which do hit the market should see increased demand. New Capital Gains rules rolled out midway through 2024 will impact how real estate investors approach the sales of their homes, and how they approach purchasing new properties. AirBnB restrictions implemented in Spring of 2024 continue to affect not only the tourism industry in Kelowna, but the real estate market as well, as sales in short term rental focused communities have slowed down as demand has dropped.
New CMCH mortgage rules will open up the buyer pools for homes priced between the $1,000,000 to $1,500,000 range by lowing the downpayment thresholds needed for homes in this price point. On top of this, 30 year amortizations began being offered to first time home buyers and those looking to build new homes, helping to bring some balance and accessibility to the monthly mortgage payments of buyers given higher interest rates coupled with higher prices. And the new secondary suites program for refinancing will help homeowners to unlock the potential of their homes, and to increase their affordability by having the income that the suite generates. All of these factors come together creating a complex picture of how the real estate market will look, and what the right moves will be for you to acheive your goals.
To gain a deeper understanding on what we expect in 2025 for the Kelowna Real Estate market, and more importantly, how to strategize for your specific goals, give me a call!