Central Okanagan seeing new wave of young people

KELOWNA – Millennials are finally starting to push the boomers out of the way in the Central Okanagan.

And, that’s good for the construction industry.

“Within five years, millennials will outnumber the number of boomers,” Andy Ramlo told a packed house of Urban Development Institute members at the Capri Hotel today (Jan. 31). “It’s the millennials who will be buying homes.”

Ramlo is Vice-President of Marketing Intelligence for the Rennie Group out of the Lower Mainland and came armed with slides full of graphs and statistics.

He said the region’s population grew by about 50,000 in the last 18 years and predicted it will grow by 71,400 over the next 18 years, to 2036.

That will trigger a 70 per cent growth in the number of seniors but that’s mainly due to people who already live here growing older.

Since more people die in Kelowna each year than are born and immigration is a very small factor, the main drive behind the growth is people moving in from other provinces and many of those are younger.

He predicted almost 49,000 of the new people will be millennials (aged 22-37). Boomers are currently 54 to 72 years old.

The problem is, millennials tend to enter the work force later in life than earlier generations, earn lower starting wages and face higher housing costs.

But, it’s not just the millennials who are finding it harder to afford homes. The increase in mortgage rates since late 2017, plus a new mortgage stress test that can add two per cent to a mortgage, makes it harder for people of all ages.

A family earning $100,000 in 2017, if they could swing a $100,000 down payment, could afford a $675,000 mortgage, Ramlo said. Now, that same family could only afford $522,000.

That’s one reason housing prices have dropped since they peaked in 2016.

Another key reason for the decline is that there were just too many housing units being built in the Central Okanagan.

While it seems like there’s been a marked decline in housing sales and prices, those are just returning to 2016 levels with the real estate market becoming balanced, meaning it's neither a seller’s nor a buyer’s market.

Going forward, it appears there won’t be any further increases in interest rates in 2019 and, with continued growth in B.C. and the Central Okanagan, things are looking good.

“The real estate market is normalizing to balanced market conditions,” Ramlo said. “I can’t say the sky is falling.”

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