Kelowna Housing Market Predictions

News Release

Kelowna area housing markets will record another strong performance in 2005, according to Canada Mortgage and Housing Corporation (CMHC).

Housing starts, led by the multi-family sector, will jump 10% to 2,500 units next year. “New home construction will break the 2000 unit mark for the third straight year, numbers not seen since the early 1990s,” noted CMHC Market Analyst Paul Fabri.

“Apartment condo starts will surge ahead, fueled by skyrocketing demand for retiree, resort and other lifestyle-oriented housing.” “For the first time ever, combined multi-family starts will surpass singles construction,” added Fabri.

Resale market house sales will also maintain a brisk pace, dropping back slightly after soaring to record highs this year and last. Sales have begun to slow in response to sharply rising prices and increasingly stiff competition from the new home market. Expect resale house prices to continue trending up in 2005. Look for smaller price gains next year.

The demand outlook for both new and resale housing remains positive. The BC economy will see stronger growth in 2005. Inter-provincial migration has begun to turn around, recovering in tandem with the BC economy. Consumers
are upbeat and in the mood to spend. Closer to home, an increasingly diversified and expanding Kelowna area economy has lead to solid employment growth. Kelowna is now seeing more broadly based population growth -
retirees, “lifestylers” and job seekers.

Mortgage interest rates will continue to edge up through 2005, but remain low by historical standards. On the supply side, inventories of new, complete and unoccupied units are low, pointing to more opportunity for expansion. Though good news, slightly higher interest rates and limited income growth in combination with this year’s big up-tick in prices, point to reduced affordability in 2005.