2025 Housing Market Update: What’s Happening?

BMO just shared their 2025 housing market update, and it’s a bit of a mixed bag. They’re expecting home sales throughout Canada to go up by 12% this year, with prices rising about 4%. But how much depends on the type of home and also location.

BMO in the Canadian Housing forecast titled A Long Way Home (See it Here), points out that single-detached homes are still in short supply and highly sought after by young families. Condos, however, face challenges. Many new condos are owned by investors and will likely hit the resale market. Because of this, condo prices may struggle in 2025, even if single-detached homes do better.

Chart 1 -Single Family Housing Starts Kelowna- Source CMHC

Chart 2-Apartment Housing Starts Kelowna- Source CMHC

Chart 1 shows Kelowna’s single family housing starts in the last 35 years and in comparison to apartment starts in the last 35 years in Chart 2.  The shift to developing out of need instead out of demand is about to create a separation in terms of appreciation and value in certain property types.

Kelowna’s Housing Market in 2024

Looking at the numbers last year, Kelowna saw a lot of new housing being built, according to CMHC including:

• 3,790 new housing starts:

  • 390 single-family homes

  • 5,768 apartments

  • 460 townhomes

• According to BC Housing in December alone, Kelowna added 528 new purpose-built rentals that were registered, adding to BC’s total of 18,430 purpose-built rental units for 2024.

The big focus has been on building apartments and rentals. Immigration is still driving demand, but with fewer people moving to Canada in the future (395,000 new permanent residents expected in 2025, dropping to 365,000 by 2027), the demand for condos and rentals could slow down and investors that originally bought as presales hit the market as they come to completion.

What About Interest Rates?

The bad news, affordability is still way out of whack when looking at the mortgage payment as % of household income, there is still work to do and nowhere near where we were in 2020. Which will likely lead to a slowed appreciation in the coming years as housing gets more inline with affordability, but it will take time and expect it to be rocky.

But there’s good news on the horizon! Experts are predicting:

• A 0.75% drop in variable interest rates are priced in this year before September

• Fixed mortgage rates are predicted 0.50 basis points drop, but as US- Canada tensions and an election looming in Canada there may be more volatility in the fixed rate market.

What Does This Mean for You?

This was a report for all of Canada, different markets and housing productions will experience different demand and supply issues. If you’re thinking about buying, selling, or investing, it’s important to focus on the type of property. Single-family homes are presumed to be still in demand and demand increasing, while condos and rentals might offer chances for better deals.

Have a great week and don’t hesitate to reach out if you have any questions on the implications of this report or anything else.

Mark and Maddie Coons

778-744-0872