Why Investing in Kelowna is THE Smart Option
Kelowna offers higher returns on real estate investment than Vancouver and boasts a host of new developments at lower costs.
In a large portion of the city residents have seen the value of their home jump by 16% or more, according to the BC Assessment notices. The city is growing FAST! In investment opportunities and potential for returns… three times as fast as Vancouver and four times as fast as Toronto.
The Okanagan is one of the fastest-growing areas of Canada, and Kelowna is driving that growth. The local government has taken a lot of initiative to change zoning, create incentives for tech and other factors that has driven demand. And then add the stellar views, huge lakes and mountains… its paradise 10 minutes of your work.
Not only is the population booming, its drawing in a demographic that already has money. A lot of my clients and potential clients have cashed out from Vancouver and are planning on doing the same increases in Kelowna. It’s the next real estate boom.
Kelowna is a few housing markets; ultra-high end, Lower priced condos, higher priced condos, detached housing from 550k to 775k, detached housing from 776k to 900k and the 900k to 1.4M mark. It is very important to distinguish between these groups as they all act differently. General statements about real estate values are not enough.
A lot of the population increase is in the younger demographic, and they are not buying the mansions dotting the shore. Instead they are buying condos, lots of them. Several years ago you could buy a very modern and new 2000 square foot condo for less than 300k. Now, you’ll get a deal at 500k. And the growth in this range will only increase.
Recently the government introduced a number of changes to mortgage lending in BC. The intent was to create padding so people were not as stretched in personal finances as to make payments. The stress test, to which I’ve written entire other articles, has created an interesting shift. Under the new +2% rules many who were qualifying for the detached housing in the 550k to 750k range are no longer able to afford this price point. The effect is that it has added substantially to the amount of buyers looking for condos. And we’ve noticed a significant increase in value of these condos as a result. This change has also affected the demographic looking to buy introductory condos as they no longer qualify at all. The net effect? Higher rent prices due to the sudden higher demand from those who can no longer afford to buy. So now you can buy a condo for 300k and have $300-$500 more per month after carrying costs. With as little as 50k down and you’ve got a pretty good return, plus the bonus of the equity building per month. Recently Kelowna was named one of the best landlord markets with a per door between 90k to 97k!
And this is just one example of the benefits of investing. On the Commercial side of real estate, the construction cannot keep up with demand. In residential construction, in warehouse construction, it’s all in demand (Ask me more!). The commercial market is less competitive from a bid perspective and the margins are fantastic.
Demand in the industrial sector is down to a 2.1% vacancy rate, one of the lowest in the entire country. It seems to be reinforcing. The rate is low, resulting in more construction projects. By the time those projects are nearing completion the influx has created more demand. From the perspective of retail Kelowna’s highest employer, it’s a boom as more of the influx want new retail.
If you have looked at the Vancouver market then you understand have far your money can go, or how little it can get. Using the same amounts and looking at Kelowna, you can get a lot more… for now. This market is driving the higher end condo and medium detached markets. You can sell a condo in Vancouver and come to the Okanagan and buy a detached home. Or you can sell a detached home and buy a 5000 Sqft home in the middle of an orchard. The per square foot is an amazing opportunity. If you head a bit further out into Lake Country, West Kelowna or Peachland and the cost per square foot drops even more!
The Best Part
Not only can you get more, but you also get the lifestyle change. A 30-minute commute gets you completely from one end of the city to the other… in rush hour. Local may complain, but compared to Vancouver, Toronto or other populated cities rush hour only adds minutes to a normal commute, not hours. To be 20 minutes from downtown in Vancouver you can afford an apartment, condo or maybe a town home, but not a single family home for under 500k. In Kelowna you can get a detached home as large as 2700 sqft!!
The best part; the local municipalities are pouring money and energy into the revitalization of Downtown Westbank and the Rutland communities. This means revitalization for the lowest price point areas. Further assisting your investments value. Commercial is also continuing to boom in these areas as retail shops pop up all over the place. The community is ready to get out and spend.
We have a government that is talking active steps to make investments more favorable, we have a booming tech sector, a large and further growing university and a booming industrial sector. You have opportunities and a much better per sqft price point then neighboring Vancouver so…
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