Housing Market Stable Moving into Summer

MLS® residential sales through the Okanagan Mainline Real Estate Board area are forecast to remain relatively unchanged this year, albeit up by 0.6 per cent to 4,865 units. This follows a 15 per cent decline in unit sales in 2010. While local economic conditions are improving, as evidenced by a strong employment recovery, many recreation and investment buyers are bargain hunting in the United States. In addition, migration to the region has not yet fully recovered from its pre-recession level, pulling overall housing demand below the ten-year average of 6,700 units. Next year, improvement in consumer demand will be tempered by the impact of gradually rising mortgage interest rates on affordability and purchasing power. MLS® residential sales in 2012 are forecast to increase 5.9 per cent to 5,150 units. The average annual MLS® residential price is forecast to edge down 2.7 per cent to $384,000 this year, after increasing 3.9 per cent in 2009. While the inventory of active listings remains relatively high, the number of new listings to the market has pulled back sharply, suggesting that market conditions may soon trend toward balance. The average annual MLS® residential price is forecast to remain relatively unchanged in 2012, up by 0.3 per cent to $385,000. A substantial inventory accumulation in the Kelowna multiple market and an elevated inventory in the single detached market will hold back many prospective projects this year. Total housing starts in the Kelowna are expected to decline to just 800 units in 2011, with 350 new multiple starts and 450 single-detached starts. It is worth noting that the pace of construction would have to accelerate markedly from the levels observed in the first quarter of 2011 just to match the already depressed levels of 2010. However, household formation in Kelowna is projected to be very strong in coming years at 1,800 new households per year. Once current inventories are absorbed, we anticipate that construction will resume at a healthy pace.

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