Economic indicators report points to boom in Central Okanagan
Home construction booming, average household income up
Kelowna is a powerhouse. The Central Okanagan can do no wrong.
Third-quarter economic indicators in 10 categories circulated by the Central Okanagan Economic Development Commission point to a region with incredible growth, dynamic change and endless possibilities.
“It’s an exciting time to be in the region, for sure,” said commission director Corie Griffiths.
“It’s important to recognize that although we call this a quarterly report, this shows quarter after quarter after quarter of growth and, in some cases, a five-year trend of expansion.”
With such rapid growth, the issue now becomes how to manage it.
“The low vacancy rate is being addressed, for instance, with a massive increase in apartment construction,” said Griffiths.
“We also have to train, attract and retain more workers so we don’t have a serious labour shortage. And with growth, the community also has to make sure to protect its water and environment.”
The most dramatic statistics come from Canada Mortgage & Housing Corporation. They show home construction starts in the Central Okanagan increased an astounding 90 per cent in the first nine months of 2017 compared to the same period last year.
From January through September, construction started on 2,912 homes of all kinds in Greater Kelowna, including 681 single-family homes and 2,231 multi-family starts, the term used for apartments, condominiums, townhouses and duplexes.
In fact, there were 1,945 apartment starts in the first three quarters of 2017, a 180 per cent surge from the 695 starts in the same period in 2016.
Kelowna has a shortage of rental apartments, and developers have responded by building projects at record pace.
Two of the projects are setting records as the largest rental complexes in Kelowna and West Kelowna.
Highstreet Ventures’ $63-million Mission Flats development on KLO Road, beside Immaculata High School, is well under construction. When it’s finished, it will have 288 suites in three four-storey apartment buildings and three rows of townhouses.
At the $50-million Carrington Ridge site, Highstreet Ventures is putting up three four-storey apartment buildings with 240 units at the corner of Majoros and Carrington roads.
The apartment shortage has put upward pressure on monthly rents.
That ties into another of the 10 indicators in the economic development commission’s survey. The average monthly rent for a two-bedroom apartment in Kelowna in late 2016 was $1,066, up six per cent in a year.
The vacancy rate remains an ultra-tight 0.6 per cent, meaning it’s extremely difficult to find a place to rent in the city.
However, with all the new construction, the vacancy rate is expected to swell to 2.1 per cent next year.
The average monthly rent could still go up because new units will fetch a premium price.
The indicators report pegged the median single-family home price in the area at a record $700,000, up 19 per cent over 2016.
The Kelowna average is higher than Calgary’s, at $550,000, and less than Toronto’s $725,000 and Vancouver’s $1.7 million — the highest in the country.
Average annual household income in the Greater Kelowna area also showed an impressive bump to $71,127, a 41 per cent increase over what it was 10 years earlier.
Kelowna’s income increase outstripped both the national average of 11 per cent and the provincial average of 33 per cent.
The city’s average annual household income is comparable to Vancouver’s $72,662 and Toronto’s $78,373.
The Central Okanagan’s six other economic indicators break out like this:
— Building permits were issued for $710.2 million worth of construction in the first eight months of the year, up 36 per cent compared to the same period in 2016.
— Job postings rose in the third quarter to 4,109, up 22 per cent over 2016.
— The Central Okanagan had a total of 13,579 licensed businesses in 2016, up 3.2 per cent from 2015.
— Kelowna’s airport continues to set passenger records and in the first nine months of this year served 1.42 million passengers, up 11 per cent from the same period last year. The airport is well on its way to beat last year’s record annual count of 1.73 million.
— From 2011 to 2016, the Central Okanagan’s population swelled 8.4 per cent to 194,882.
— A total of 99,133 people are employed in the Central Okanagan, up from 89,888 last year.
The unemployment rate sits at 5.2 per cent. A jobless rate of five per cent is considered the start of a labour shortage.