Lower Mainland buyers flooding Okanagan’s new home market
High demand from Lower Mainland buyers is expected to continue to boost new home sales in the Okanagan this year and beyond, according to Shane Styes, president of Epic Real Estate Solutions in Kelowna.
“My business will double this year over last year,” Styles told iNFonews.ca. “Last year, we had 500 homes. This year we’ll have 1,000 homes to sell. We’re sold out of everything we had from last year.”
That means the 26,000 inquiries his firm handled last year will likely grow to 50,000 this year, a ratio that is consistent with past years.
Most of what Epic Real Estate Solutions does is pre-sales of upcoming projects, such as the two towers at One Water Street in downtown Kelowna that includes the city’s tallest building at 36 storeys with its $10 million penthouse.
READ MORE: iN VIDEO: Kelowna's One Water Street penthouse could be yours for $10 million
He recently looked into who his buyers are and where they’re coming from and compared that to real estate board numbers for resales.
In the resale market, 24% of buyers were from the Lower Mainland last year, more than double the 10% it was five years ago, Styles said.
For the new home market, he’s seeing 45% coming from the Lower Mainland, probably triple what it was five years ago.
Another 31% are from the Okanagan, 12% from Alberta and 5% from Ontario.
“I deal with the developers directly and the calls I get from Vancouver, from Calgary, Edmonton, Saskatoon, even Toronto, they’re all very focused on this market,” Styles said. “They’re doing projects all over Western Canada, or Canada, and they have a lot of interest in the Okanagan.
"Pretty much every one of those guys has a relationship with the Okanagan. They vacation here or they have family here or they’ve been coming here. Some of them, they’re just trying to transition their business so they can live here. They may still do development in Calgary but they want the Okanagan to become their home.”
The people coming to the Okanagan range from baby boomers and mature families to young professionals and investors.
This is a market where he’s not seeing a lot of pure speculation and flipping of homes to make a quick profit, as happened more often a decade ago.
“Some of them are pure investors – just straight up they want to buy a condo, put a renter in it long term,” Styles said. “That’s a small part of the market. Then you have an end user investor.
"They want to do that but they still want to have a place in the Okanagan that they may be able to use a little bit or they are going to hedge so they can use it more in the future. They have a personal interest. They’re going to buy a place now, get their foot in the door, maybe rent it for two or three years and then go and use it, eventually.”
Having Okanagan College and UBC Okanagan in Kelowna helps because that means people can buy a condo, rent it to students for most of the year and enjoy it themselves in the summer, he said.
Then there’s the contingent who can work from anywhere and choose Kelowna.
While this kind of demand from outside the region makes affordability an issue for some locals, there’s a lot of money in the area and an increasing demand from locals for multi-million dollar penthouses in Kelowna highrises.
“If you live on the lake and you have a house that you bought 25 years ago and you demolished it 10 years ago and built a brand new thing, it’s probably worth $12 million, to pick a number,” Styles said. “Now you’re getting long in the tooth and just want to travel and have another place in Palm Desert and where do we move to?
"They’re looking for their downsizing opportunity but they’re downsizing differently than you or I. They’re still looking for 3,000 square feet so they’re going to downsize from 8,500 to 3,000.”
Even with high prices in the Okanagan, it’s a bargain compared to international cities like Los Angeles and New York, places where these types of buyers regularly visit.
He estimates there are at least 2,000 properties in the area that are worth $2 million or more.
READ MORE: Housing sales down but prices jump in Kamloops, Okanagan real estate markets
Despite the highest prices in the region being in the Central Okanagan, Kelowna is not pricing itself out of the market, Styles said. He deals with real estate from Osoyoos to the Shuswap and doesn’t see a major difference in prices for new homes.
“We have a supply problem,” Styles said. “People want to be here but we can’t quite build it quick enough.”
What he’s selling now won’t be built and ready for occupancy for another 18 months to three years.
While a single-family home can be built in eight months, a six-storey wooden apartment can take two years and a concrete tower three to four years, longer if land acquisition is factored in.
A typical Kelowna buyer is putting down a deposit of usually 15% on a condo that will be ready to occupy in three years, Styles said. That gives the owners time to downsize and, as the market usually goes up, increases the value of their existing home since they’re staying in it longer.
To contact a reporter for this story, email Rob Munro or call 250-808-0143 or email the editor. You can also submit photos, videos or news tips to the newsroom and be entered to win a monthly prize draw.
We welcome your comments and opinions on our stories but play nice. We won't censor or delete comments unless they contain off-topic statements or links, unnecessary vulgarity, false facts, spam or obviously fake profiles. If you have any concerns about what you see in comments, email the editor in the link above.
