Second Quarter Housing Starts Reach Record High
The Kelowna area new home market surged ahead in the second quarter, housing starts reaching the highest quarterly level ever. Skyrocketing condominium starts accounted for all of the increase.
Demand for resort and other types of lifestyle-oriented multifamily housing has exploded during the past two year period. Retirees and move-down buyers also remain key markets. Higher density housing
is becoming more widely accepted among first-time buyers. Affordability has been the key driver. More builders are now targeting this segment of the condo and townhouse markets. Inventories of complete
and unoccupied unites are low. Pre-sales activity has remained strong despite an increasingly competitive market. Multifamily starts are on track to surpass singles starts in 2005.
Singles starts have dropped back in response to sharply rising new home prices. But remaining at a high level. Short-term lots supply constraints in some areas have contributed to the decline. Also,
rebuilds of homes destroyed in Okanagan Mountain Park wildfire boosted singles starts in 2004. Lake Country has seen the strongest growth in singles construction activity this year, the availability
of more modestly priced lots fueling the increase. Absorption remains strong. The inventory of complete and unoccupied detached unites has edged up, stabilizing at slightly higher levels than a year
ago.
Kelowna's economy continues to churn out jobs. Strong employment growth has, in turn, spurred in-migration. The search for lifestyle also remains a big draw, boosting population growth and demand
for housing. Low interest rates remains a key driver.
The Kamloops, Vernon, Salmon Arm and Penticton new home markets also recorded a strong second quarter performance. Penticton area multi-family starts have increased sharply this year, due in part
to a growing shortage of building lots. Singles remain the focus of construction activity in Kamloops, Vernon and Salmon Arm. Year-to-date, starts in all four centres have seen big gains over last
year.
Resale Market Highlights - Resale Markets Strong
Kelowna area resale markets, led by the condominium sector, maintained a blistering pace in the second quarter. Apartment and townhouse condo sales were up 23% and 49% respectively, over the same
three month period last year. With the price of detached unites continuing to trend up sharply, more buyers are turning to higher density housing. Like the new home market, retirees, move-down buyers
and lifestylers remain big sources of demand. Both sectors are well supplied with listings, high levels of condo and townhouse completion's boosting supply. Rising demand has meant stronger upward
pressure on price levels.
Singles sales, through remaining at record levels, have flattened out. Souring resale singles prices have triggered stronger competition from the new singles and new and resale multifamily sectors.
More builders are focusing on the production of moderately prices single detached and multifamily homes this year. The supply of singles listings has trended down since last fall. Overall, supply
remains tight. Strong demand in combination with tight supply continues to drive up prices. The year-to-date median resale singles price has jumped 15% to $298,000 from $259,000 in 2004. For now,
the Kelowna area resale market remains firmly in sellers' market territory.
The Kamloops, Salmon Arm, Vernon, Penticton and Cranbrook resale markets also remained strong performers through the second quarter. Year-to-date, sales are up in all centres except the Vernon area.
Salmon Arm and Cranbrook saw the biggest gains. Vernon area sales remained at a high level despite the decline. The supply of listings remains near historical second quarter lows in most centres.
Prices continue to trend up sharply in response to strong demand and reduced supply. Kamloops, Salmon Arm and both Okanagan centres remain sellers' markets.
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