Real estate market ready for liftoff?

Friday, 12 July 2013 18:00 Steve MacNaull

Dave Pfuetzner can feel it. "We're on the cusp of
increased demand for new housing," said the
partner of Acorn Communities, which is building
the Sunset Ranch Golf Course and Blackstone
subdivisions in Kelowna.

"Forecasts are always a guessing game, but I think 2014 will be a transition year. We've had a downturn for too long and it's time for an uptick."

Pfuetzner's assessment is in keeping with the just released Canada Mortgage Housing and Housing Corporation Kelowna housing market outlook report.

"Stronger employment growth coupled with low mortgage interest rates will support increased demand for housing in Kelowna," said CMHC analyst Paul Fabri.

Construction has been in the doldrums since 2008, when the worldwide recession rattled consumer confidence and drove down the demand and prices for new homes.

"Historically, everything is cyclical, so it's time for some positivity now," said Pfuetzner, who is also first vice-president of the Central Okanagan branch of the Canadian Home Builders' Association.

"I'm getting that vibe now, with resales going pretty well. And if people can sell their homes, then they can afford to build a new one."

The CMHC outlook estimates in 2013, construction will start on about 1,000 homes of all kinds - single-family, duplexes, townhouses, apartments and condominiums.
In 2014 that number will increase to 1,100.
In 2012 there were 836 starts.
At the height of the boom in 2007, there were about 2,700 starts.
While new-home construction has been soft for years, Kelowna is still a desirable place to live and it will again
attract second and vacation home buyers from Vancouver and Alberta.
The recession dampened demand, but prices didn't
exactly plummet.
The average price of a single-family new home in 2014 is predicted to be $760,000, because land, building materials and labour remain relatively expensive.
This year, the average is expected to be $750,000 and in 2012 it was $737,400.
The outlook pegs the number of resale homes that will change hands in Kelowna this year at 3,600.
Next year, that should increase to 4,000.
Resale average prices for single-family homes are lower
because there's a mix of older and smaller properties.

This year, the average is forecast to be $500,000, next year it will likely be $507,500 and in 2012 it was $504,600.
Other predictions contained in the outlook include: continued low mortage interest rates in the range of 3.5 per cent for a one-year term and 5.5 per cent for a five-year term; an unemployment rate remaining steady at seven per cent; a rental vacancy rate of three per cent; average two-bedroom apartment rent at $943 a month; and more people moving to Kelowna as the economy brightens.

CMHC doesn't do outlooks for smaller cities like Penticton and Vernon, however, monthly statistics the agency generate shows new home starts in those two cities are comparable so far this year to last.
In Penticton, in the second quarter, there were 24 starts and in Vernon, 81.

Amanda Westrheim

Amanda Westrheim

CENTURY 21 Assurance Realty Ltd.
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