Housing market activity in the Thompson-Okanagan region has moderated from the elevated highs of the spring and home sales are currently trending in line with long-run average levels. However, the strength of the first half of the year has home sales on pace for a record-setting 2021.
Employment growth in Kelowna is recovering from the COVID-19-induced declines of 2020, though another summer of wildfires and limited tourism in addition to stricter COVID-19 protocols has tempered that recovery. The same holds true outside of Kelowna where employment has only recently started to post year-over-year gains in job growth. Despite a challenging economic environment, housing demand has remained strong, in part due to still robust migration into the region.
A major theme observed during the pandemic has been the relocation of buyers into less densely populated areas of the province. That trend is evident in how demand has evolved over the past year in the Interior. As a result, markets in the Okanagan and Kamloops are on pace to break the previous annual sale record in 2021. We are forecasting that MLS® home sales will reach a record 13,700 units this year in the Okanagan and will rise 21.6 per cent to a record 3,700 units in Kamloops. While home sales are forecast to decline from record-high levels in 2022, a bright outlook for the BC economy is expected to keep sales activity strong across the region despite a projected gradual rise in fixed mortgage rates.
On the supply side, the inventory of homes for sale in the Interior has continued to decline and now sits at all time lows in both the Okanagan and Kamloops. An initial recovery in new listings activity has now reversed with new listings trending back below pre-pandemic levels. Consequently, even with sales moderating back to long-run trends, market conditions in the region are historically tight. We estimate that active listings would have to rise about 60 per cent to bring markets back into a healthy balance of supply and demand. As a result, MLS® average prices are up considerably across all product types.
An anticipated normalization of listings activity in 2022 and slightly higher fixed mortgage rates should help to ease upward pressure on prices in the region. As a result, we do not anticipate price growth to match the frenzied pace of the past two years that saw prices increase more than 30 per cent. Consequently, we are forecasting the MLS® average price will rise about 2.5 per cent across the Interior and Kamloops in 2022.
Kelowna Real Estate Agent
Our thanks to Brendon Ogmondson, Chief Economist of the BC Real Estate Association (BCREA) for this data.