The Okanagan real estate market continues to navigate challenging waters in Q3 2024, grappling with the effects of public policy changes and shifting economic conditions. Despite a modest uptick in transaction volume and sales value, the market remains subdued compared to historical averages.

Market Performance

In Q3 2024, the Okanagan region saw 2,086 home sales, totaling $1.6 billion. This represents a slight increase of 1.4% in transaction volume and a 2.2% rise in sales value. However, monthly sales throughout 2024 have consistently fallen below the 10-year average, often approaching decade-low levels for the area.

Tourism Impact

The summer of 2024 brought additional challenges to the Okanagan's tourism-driven economy:

Lingering wildfire concerns and economic pressures led to shorter vacations and fewer visitors.

A sharp drop in short-term rentals resulted in a shortage of affordable accommodations.

The BC Hotel Association predicts a challenging year, citing mixed occupancy rates and lower room rates in Kelowna.

This decline in tourism has had a ripple effect on the housing market, as many potential buyers typically make purchase decisions after visiting the area.

Market Dynamics

The summer market favored buyers, with sales comprising less than 40% of new listings. However, the landscape remains complex:

Buyers are frustrated by limited room for negotiation.

Prices, while 10-15% below peak levels, remain 40-60% higher than pre-pandemic figures.

Sellers are holding firm, reluctant to lower prices further

Inventory Levels

Active listings have surged to levels not seen since 2015. As of September 2024, there were 6,568 listings, marking a 31.2% increase from the previous year. Despite this increase, many homeowners are not in distress, benefiting from lower mortgage rates or reduced balances

Supply-Demand Mismatch

A significant challenge in the market is the mismatch between buyer demand and available inventory:

55% of home sales in Q3 2024 were under $700,000, but only 39% of listings fell in this range.

Homes over $1 million accounted for 36% of listings but only 18% of sales

This disparity has led to multiple offers on entry-level properties, despite the overall buyer-friendly market conditions.

Construction Challenges

Developers face obstacles in addressing the shortage of affordable homes:

High land costs

Complex regulations

New Building and Energy Codes

These factors make construction expensive and profit margins slim, leading some builders to delay sales of near-complete homes.

Government Intervention

Recognizing the market's challenges, the BC government has introduced policies to boost supply. In Q3 2024, new listings for vacant homes in the Okanagan surged by 36.7% year-over-year, with 1,138 new listings entering the market.

As the Okanagan real estate market continues to evolve, buyers and sellers must stay informed and adaptable. For personalized advice and expert guidance in navigating these complex market conditions, don't hesitate to reach out to our Team!