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By Liam Verster

Housing Forecast

Okanagan housing market expected to rebound in 2024

Oct 25, 2023 | 1:24 PM

The local housing market is expected to take a dip this year, but rebound in 2024.

The B.C Real Estate Association (BCREA) released its 2023 Fourth Quarter Housing Forecast Wednesday, Oct. 25, which predicts the Interior-Okanagan would see a total of 8,500 housing units sold by year’s end.

That would be down 10.5 per cent from the 9,506 units sold in 2022.

However, the report forecasted that housing sales would climb 5.9 per cent annually to 9,000 in 2024.

The report did not provide specific data for Vernon or the North Okanagan, but did state that Kelowna would see housing sales decline in both 2023 and 2024, while Penticton and Kamloops would see sales decline in 2023 then rebound and increase the following year.

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The prediction for the Okanagan area came as part of a provincial report that forecasted a 4.8 per cent annual decline in housing sales throughout B.C. in 2023, followed by a 4.8 per cent increase next year.

“Activity in the BC housing market has mirrored movements by the Bank of Canada over the past two years,“ Brendon Ogmundson, chief economist, said in the BCREA report.

“As such, there is little reason to believe that sales will meaningfully detach from the anchor that is monetary policy over the next year. Thankfully, it appears that the bank is at, or at least very near, the end of its tightening cycle and may begin lowering its policy rate late next year.”

The report also forecasted the average Multiple Listing Service (MLS) prices for the area that includes the Okanagan at $750,000 in 2023, down 4.8 per cent from the previous year. However, it’s expected the prices will rise two per cent in 2024 to an average of $765,000.

The BCREA noted the Okanagan area was “one of the country’s fastest-growing regions” with high employment and low unemployment rates, and “these economic tailwinds have helped prevent significant declines in home prices despite tepid sales in the region.”

It also stated that housing market activity in the Thompson-Okanagan region “has moved in lockstep with interest rates in 2023,” thanks in part to a conditional pause in rate hikes in January, helping sales recover through to the summer, when rate hike resumed, leading to sales trending downward again.

Meanwhile, active listings “have mostly moved sideways” since the beginning of the year, and remain “well below the levels needed to keep price appreciation in line with inflation.”

Provincially, the average housing price in B.C. was forecasted to decline 1.9 per cent to $977,000 in 2023, then climb 1.6 per cent to $992,900 in 2024.

The 2024 forecasted prices for the Okanagan and B.C. as a whole were still down from the 2022 figures of $788,055 and $996,416, respectively.

The Bank of Canada announced it would be holding the interest rate at five per cent Wednesday, Oct. 25, and the BCREA said rates are expected to begin declining toward the mid-to-late 2024 as the BoC looks to pull inflation back down to two per cent without causing a recession.

“Financial markets expect rates to begin declining toward the end of 2024, but with fixed mortgage rates above six per cent, high borrowing costs will likely put a damper on housing markets for some time,” the report stated.

“That said, unexpectedly cool inflation, a sharp rise in unemployment, or economic contractions could cause the bank to change direction and cut rates sooner than anticipated.”