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SHOULD YOU BUY A HOUSE OR A CONDO IN WEST KELOWNA 2021?
Moving further into 2021, the question on new homebuyer’s minds is often simply whether they should be looking to invest in a condominium or a residential house. With the updraft of buyers coming to the Okanagan in search of the city life without the exorbitant costs of a major city, there has been a steady rise in the value of homes to match.
For many realtors watching the market evolve post-COVID, uncertainty made for the common prediction that demand in the market might begin to fall off due to safety restrictions and economic downturn. However, this has not been the case.
Instead, there has been a shift to increased investment in homes outside of the metropolitan city centres, provoking a rise in the average price along with it. For those who are looking at the market and wondering where it is heading next, West Kelowna is positioned to receive much of the demand that has oversaturated the Kelowna city proper.
CONSIDERATIONS FOR WEST KELOWNA HOMEBUYERS
Is it cheaper to buy or rent in West Kelowna?
Throughout the Central Okanagan, the rapid construction of new condominiums is enabling first-time homebuyers to enter the market. Rather than rent, younger buyers are finding condominiums to be more accessible and central to their professional lives in a growing city.
According to the available data, Kelowna’s rental market rates have risen around 5-10% year over year, settling at an average price of $1,450 per month for a 1 bedroom rental unit or $1,780 per month for a two bedroom unit as of February 2021. That would mean that in just 5 years time, the average Kelowna rental unit would end up costing around $87,000 – not accounting for inflation.
That’s money gone, whereas mortgage payments will amount to an asset and home ownership in the end.
Combined with Canadian mortgage interest rates hitting record lows at the end of 2020, it makes sense that, for many, looking to enter the market early in 2021 will be in their best interest.
Is it smart to buy a house to rent it out?
With Kelowna (and by extent, West Kelowna) being in the top ten most expensive cities to rent in Canada, homeowners are incentivized to list their home, or a portion of it, for renters. This is especially desirable for first-time home buyers that want to decrease their monthly mortgage payments with the help of a renter.
Yes, it can be an excellent opportunity if you have the time to invest as a landlord. However, the rising price at the low-end of the housing market may make it difficult to find a home that has a legal suite within your budget.
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If you are wanting to purchase a home to use purely as a rental property, it is a good idea to consider the taxes and deductible expenses involved. Current tax provisions will enable you to claim capital expenses on your property. There are several items that fall under the provision of “capital costs”, including furnishings, renovation expenses, and the purchase price along with most fees involved. “Current expenses” will also be deductible, including items such as insurance, loans, maintenance, and utilities.
Given the depth involved in each individual’s personal situation, it is worth having a discussion to see if it may be worth your time to become a landlord.
The pros and cons of owning a condo
Condos vs homes is a divisive topic. Although there are benefits to owning a house, it can come at a steep price and requires more involvement on the homeowner’s part to keep it maintained. Condominiums are certainly a worthwhile investment for the right individual, so don’t be too quick to rule it out!
On the one hand:
- Condo owners often love the lower average prices
- Condominiums are usually situated in excellent locations near city centres
- There is less need to take care of property maintenance like lawn care, snow removal, repairs, or upgrades to the building
On the other hand:
- Strata fees and insurance costs have been on the rise in recent years
- Rules imposed by condo boards can be restrictive
- Generally, you’ll have less privacy in condo
- The price of condominiums typically do not increase at the same speed as houses in a similar market
No matter how you split it, though, it’s undeniable that in a hot housing marketing like West Kelowna and the Okanagan, condominiums offer excellent value for first-time home buyers wanting to save on their initial investment.
Depending on their personality, a homebuyer may find that condo living is perfect for their lifestyle. Making that decision is much easier with a qualified realtor helping you to assess your daily life and budget to find a home that is sure to please.
Still struggling to decide? Jessica can help.
PRICES OF HOUSES VS. CONDOS IN THE CENTRAL OKANAGAN
Over just the six year period from 2012 to 2018, prices of single detached homes in Kelowna had soared over 70% to an average price of $779,000 with no signs of slowing down since then. As of January 2021, the average price across the Central Okanagan was up to an impressive $887,868. Amidst fears of the COVID-19 pandemic effecting real estate prices, the Central Okanagan (and West Kelowna in particular) have remained particularly stable with a relatively consistent upward trajectory.
Source: the Association of Interior REALTORS®
When is the best time of year to buy in West Kelowna?
It is common to see the Spring and Summer as the most active seasons for real estate markets. This is especially true in the Okanagan, where homebuyers are attracted to the area as a vacation destination in the warmer months, with tourism and population numbers picking up massively.
All that said, COVID-19 has altered this dynamic in the past year. The real estate market saw an influx of homebuyers driving up the average price of homes as people prepared to hunker inside for the Winter. Safety precautions have altered buying behaviour, and so we may not see the same shift as in the past for Okanagan real estate this Spring.
What does this mean for home buyers wanting a house over a condo?
The West Kelowna housing market is seeing significant growth in the construction of new condominiums, whereas new builds of single detached homes simply cannot keep up with demand. In your search, consider how the value of the property itself in addition to the home since that is often a major factor in its long-term value.
Although you will almost certainly be paying more for a house instead of a condo, it may still be in your best interest to go that route. Particularly if you intend to raise a family in your new home and are likely to outgrow a condominium in the near future. While you may need to spend more time in your search given that the market has fewer homes available at comparable prices, you can be rewarded for taking the time to wait for the right option to come your way.
