Okanagan/Kelowna Market Update - July 8, 2016
The Okanagan Real Estate market continues to see long overdue growth, demand and price increases (we were statistically suppose to start going up in 2014 but the plummeting oil prices in Alberta took us down with them). The Okanagan real estate market will go up for the next 5-6 years. Why - because real estate is cyclical and this is how the market works and will always work (smart people look to the past to predict the future). When you see cranes in the air it's time to buy. Large tracks of land are being snapped up by developers in the Okanagan right now. On average it takes 2 years to get a project off the ground with 4th reading, permits, funding, etc. If developers are buying now they are projecting an increase in the future.
Vancouverites have now overtaken Albertans as buyers in the Okanagan. We are seeing a massive influx from Vancouver buyers who are tired of living pay cheque to pay cheque to only be able to afford a tiny studio. I recently had a couple sell their house in Vancouver for $4.4M. They downsized to a Kits townhouse for $2.5M and gave each of their 3 kids $200,000 to purchase a property. The 2 daughters purchased 1 bedroom condos in Vancouver. The son purchased a 5 bedroom house with suite and in ground pool in Kelowna. The suite will generate passive income for him for life!
The City of Kelowna has recently changed bylaws making it quite easy to add an income suite to your home. You no longer need to rezone, you simple need to apply for a permit ($510), pay the Development Cost Charges ($2,500) and follow the building requirements (the main emphasis is placed on safety - you need 3/4 hour fire separated rated drywall (1/2" gypsum board), windows you can fit out of in case of a fire, lighted entrance, etc.)
Buyers are able to use income from a suite to help them financially qualify for a mortgage even if the suite is only an "in-law" suite, meaning not legal. If a home has suite potential you get nothing. The suite must already be in place for financing. What does this mean? If you are thinking of selling and your home has the ability to add a suite - DO IT!
We saw a 38% increase in sales in June 2016 compared to June of last year. 1,263 sold properties were posted on MLS, that does not include all the private sales. Buyers are starting to feel the pressure of having to act fast if they don't want to miss out on their dream property.
Interest rates will stay low for the next 2-3 years thanks to Brexit. The British pound is pulling down the Canadian dollar. The Canadian government will not raise interest rates while our loonie is down. This is common sense.
Our rental vacancy rate is near ZERO! It is easy to find really great tenants to rent your suite or investment property. We have a full time property manager on staff (Aoife O'Neill) to take care of investment properties for our clients. Most of our clients have been able to find investment properties in this market that are producing positive cash flow.
If you think you are going to retire to the Okanagan in the next 5-20 years and are smart, you will buy now! All you have to do is come up with your down payment then rent your property out, let your tenant pay your mortgage down for you until you are ready to retire. 5% down is still available even if you own another property! I will have to jump through a few hoops to make it happen for you but it is doable.
Please let us know what you are looking for and we can send you the best options available in your price range. We do have access to exclusive listings that are not currently on MLS. We just did a deal for a fourplex downtown Kelowna for $690,000 that has $5,100 in rental income - more than enough to cover all expenses and return a nice monthly profit.
For more information on Okanagan/Kelowna properties please contact:
Lake Okanagan Realty Ltd.
Tel: (250) 870-2792
506 Doyle Ave
Kelowna, BC V1Y 6V8