The way things have been going in the Kelowna housing market lately, the former Central Okanagan head of the Canadian Home Builders’ Association figured it would be all doom and gloom when an economist delivered the forecast for the next year and a half to the group on Thursday.
“It wasn’t as bad a forecast as I anticipated it to be,” Ray Wynsouw said. “We’re definitely on a downtrend, and from a CHBA perspective we’re certainly looking at that from all three levels of government. We’ve had the stress test, we’ve had the speculation tax, the step code that’s coming into play, and all these things have an effect on what we do.”
Taylor Pardy, a senior economic analyst with the Canadian Mortgage and Housing Corporation, delivered the forecast at Coast Capri Hotel, and said the recent downturn in home sales and construction is nowhere near what happened in 2008 when the global financial crisis struck.
“That was a big shock to the market,” Pardy said. “Right now we’re not really seeing a shock. We’re continuing to anticipate population growth to be pretty modest as opposed to very strong like we saw during that 2014 to 2016 period.”
Pardy said population growth is always the biggest driver in any housing market, and Kelowna is still on the right side of the ledger in that department. The government policies like the stress test and the speculation tax do have an impact, but population growth trumps them all.
“Ultimately, all of these factors—the slowing population growth and some of the policy and regulation changes—have contributed to some slowing conditions,” Pardy said, “but that silver lining is that population growth is still positive and still fairly modest.”
Wynsouw and the rest of Kelowna’s home builders would still love to get rid of the spec tax and the stress test, because they fear the policies could hurt their industry even more.
“That’s what we’re afraid of,” Wynsouw said. “We’re seeing the downward trend, and we haven’t seen the bottom. To have these up-and-down trends, we expect that. If you look at the cycle, if you look at the graphs, every 10 to 12 years we’re gonna get that cycle. But there’s really some contributing factors this time around that worries us.”
To hear Pardy talk, it doesn’t sound like Wynsouw and the rest of the CHBA in Kelowna need to be too concerned about the market plunging into the depths of darkness. Yes, construction of new houses will slow and prices will likely decline as the current inventory of houses gets filled
“It’s not all doom and gloom,” said Pardy, who is based in Regina. “The mortgage rate factor and that borrowing capacity multiple pulling back … that’s something that’s got people a little bit concerned right now as well, but the silver lining of that is that employment growth in the past few years has been quite strong, the economy is kind of operating at capacity right now with unemployment rates being so low. So we’re seeing wages rise. That, to some extent, is going to offset things.”
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