A summer like no other may be a common refrain to describe the unprecedented sales rush in the Central Okanagan real estate market this year.
The good times are likely to continue well into the future for the real estate development industry in our region, but likely not at the robust levels seen over the period from last fall through the summer, says Scott Brown, CEO of Fifth Avenue/Epic Real Estate Solutions.
Brown, whose firms specializes in multi-family home development sales, says Kelowna remains an iconic lifestyle option for larger urban centre residents, with buyers in Ontario and further east now having a buyer impact on the marketplace.
He said Kelowna remains the magnet for real estate buyers looking for that increasingly cherished commodity of the Okanagan lifestyle.
He describes homeowners this past year looking at what community they live in, the home they have, the ability to work remotely, and thinking they want something different, an outcome of the COVID-19 pandemic forcing people to spend more time at home because of travel restrictions.
“You are seeing that impact felt in the Greater Victoria area and in the Central Okanagan. The question for many is the ferry versus the Coquihalla as which you prefer to deal with. The summer fires this season in the Okanagan also adds an element to that decision,” he said.
But despite the smokey skies and driving access challenges in winter months on the Interior highways, Brown says the trend in Kelowna’s popularity is expected to continue, calling the city “second-tier size with first-tier lifestyle.”
“There is a hip factor to Kelowna like you see in some similar cities like an Austin or Charleston in the U.S. It is a great place to live for the young and old, it has an international airport and growing entrepreneurism,” said Brown.
As that popularity continues, Brown says land limitations will affect the supply and demand relationship that fuels housing costs, causing a spillage affect as people eye neighbouring communities like Penticton, Vernon, West Kelowna and Peachland as financial affordability alternatives to the Okanagan lifestyle.
“It is going to spill both north and south. I really feel right now Penticton is about where Kelowna was four or five years ago and I see big things happening there. Penticton could be the place we are all talking about next summer,” he said.
Brown was commenting on the local real estate scene as the keynote speaker for the Kelowna chapter of the Urban Development Institute monthly luncheon on Thursday, Oct. 21.
Brown said projects his firm was involved with this past year enjoyed heated sales traction this past year, causing the company to expand its workforce by 300 per cent to ramp up and meet the buyer demand.
One anecdote he noted from the One Water Street East Tower downtown Kelowna high-rise development, of the 228 pre-sales only 20 buyers have put their units up for resale since construction was completed.
“That is despite a significant appreciation in the value of those units since the presales were done. That tells me those owners love living here, love owning here and love keeping those units as a rental asset in the marketplace,” Brown said.
Another advantage of the Central Okanagan, Brown noted, is the current transfer of wealth inheritance for our aging population of baby boomers, which Brown says is estimated at $13 trillion worldwide.
Where some of that potential investment money filters out across Canada will have a lot to do with the lifestyle, he said.
“You see people in the Lower Mainland saying this is not the city I grew up in anymore. It has changed and people start looking elsewhere,” he said.
Also adding to higher density development opportunities, he added, is a new younger generation not wanting to live as their grandparents did – asset rich as a homeowner but lifestyle poor.
“This generation wants it all so the priority for them won’t necessarily be to want that single-family home but a more affordable option,” he said.
While the real estate bubble may look to solid foundational building blocks to continue rapid growth in the short term, Brown is often questioned about potential threats to the current boom times in the real estate industry.
He cited a hike in interest rates, which Brown expects to see happen as the economic recovery from COVID fuels inflation, but not for another 18 to 24 months while that recovery takes place.
The other issue remains a global economic collapse similar to what happened in 2008.
“In the end you can’t worry about things you can’t control. If there is another global collapse we will figure it out. What I like to say about real estate is I am pretty certain about what will happen today, what will happen tomorrow but not so much about the day after that,” he said.
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