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BCREA has just published its Kelowna 2025 Housing Forecast as part of its full BC Real Estate November 2024 Report. It offers valuable key insights for buyers and sellers looking to understand where prices are headed in 2025.
Let’s review which recent market dynamics have impacted Kelowna’s housing sector & their Real Estate Forecasts for 2025.
Kelowna’s Economic Struggles in 2024
Kelowna and the broader Okanagan area have faced several economic challenges this year. Here’s a quick summary:
- Low Regional Growth: The Thompson-Okanagan region saw economic activity grow by less than 1%—the slowest in BC. Rising living costs, Housing Affordability & Employment concerns all added to economic uncertainty and curbed buyer confidence. Additionally, a cautious approach by both investors and potential buyers, worried about affordability, and recent Provincial Government Short-Term Rental legislation kept activity lower.
- Affordability Pressures: Higher mortgage rates squeezed household budgets, limiting consumer spending. Limited wage growth and rising costs impacted buyer confidence, particularly among first-time buyers.
- Lagging Employment Gains: Key sectors that typically drive Kelowna’s economy—like tourism, hospitality, and construction—saw reduced hiring due to economic pressures and cautious consumer spending. Tourism, a vital contributor to Kelowna’s employment, felt the strain of rising travel costs and a challenging year for BC’s wine industry, after the winter freeze, both of which affected visitor numbers. Meanwhile, the construction sector faced delays in new developments, impacted by high material costs and uncertainty around future demand, which limited job growth.
Even the technology and health sectors, traditionally resilient, showed slower hiring. High housing costs deterred some potential new employees from relocating, while local discretionary spending power was stretched thin, affecting businesses’ ability to expand. This combination left the Central Okanagan with limited employment opportunities, further slowing economic growth in the region.
Kelowna Real Estate Market Performance in 2024
The Kelowna Real Estate market faced one of its slowest years, with sales and prices both cooling off. See my latest Market Report for November 2024.
- Sales Decline: Unit sales in the Okanagan region fell by 5.8%, the lowest in over ten years.
- Increased Inventory: With more homes on the market, Kelowna saw inventory levels grow to 10-year highs, offering more choices for Buyers.
- Minimal Price Changes: Interestingly Central Okanagan average home prices only dropped 0.7% despite higher inventory and reduced demand.
Kelowna 2025 Housing Forecast: Modest Price Growth Amid Economic Recovery
According to the BCREA’s Kelowna Q4 2024 Housing forecast, the Okanagan Real Estate market is set for gradual improvement in 2025, although growth will likely be tempered by high inventory levels and cautious buyer sentiment. Here’s what the forecast indicates:
- Price Increases to Remain Modest: Average home prices in the Okanagan are projected to rise by just 1.5% in 2025. This modest increase reflects the balance of recovering buyer demand with ample inventory from 2024, which prevents prices from surging too quickly. The gradual price growth may also encourage affordability-sensitive buyers who were previously sidelined by high costs.
- Lower Mortgage Rates to Attract Buyers: Expected rate cuts from the Bank of Canada will likely ease borrowing costs, providing a boost to buyer affordability. As rates become more favourable, some of the delayed demand in 2024, due to high mortgage rates, may start to re-enter the market, driving activity. This will be especially relevant for first-time buyers and young families looking to make their first real estate investments in Kelowna.
- Pent-Up Demand Expected to Boost Activity: A cautious economic climate in 2024 led many buyers to delay purchases, contributing to higher inventory levels across Kelowna. This pent-up demand may drive increased activity in 2025, as buyers re-enter the market, spurred by a more stable economic outlook and affordability improvements. The impact may be especially noticeable in condos and townhomes, which have gained interest among affordability-conscious buyers.
- Sellers Returning to the Market: Many sellers in Kelowna have opted to wait for a stronger market before listing. As conditions improve, these sellers may begin listing homes in greater numbers, keeping inventory levels high. This means that while buyer demand will likely rise, the supply of homes available may also remain ample, further moderating price growth.
Kelowna 2025 Housing Report : Other Useful Links
Read the full BC Real Estate Association Report
