Kelowna’s Housing Market Is Holding Its Breath

Sliding Quietly Downhill

Kelowna’s housing market is in correction territory, though you would not know it from a glance at today’s prices. The benchmark price for a detached home in the Central Okanagan now sits at $1,030,000, down 10 percent from its $1,132,000 peak in spring 2022. Yet this top-line figure masks a more unstable dynamic underneath.

The benchmark rose 3 percent over the past year, but that’s after giving up 3 percent in just the past three months. The short-term trend is negative again, and the market has entered the quieter half of the year. As summer and fall typically bring lower transaction volumes, sellers may soon have little choice but to drop prices further.

A Buyer's Market, Technically

Buyers hold the upper hand. There are seven months of inventory in the region, a level that by convention signals a buyer’s market. Sellers are taking longer to close deals, and aggressive list prices are often met with silence. Curiously, inventory is lower than it was last year, but the imbalance between high asking prices and cautious buyers remains unresolved.

Sellers may take comfort in the notion that inventory has dropped from 8.1 months to 7. In reality, this marginal shift does little to restore confidence. The pool of active buyers is smaller than the market has grown accustomed to, and many are waiting for better deals or for the interest rate cuts to take effect.

Prices Are Detached from Incomes

The more troubling signal is structural. Similar to Vancouver and Victoria, detached home prices in Kelowna have risen far beyond what most local incomes can afford. That gap widens the longer prices stay high. It also reinforces a sense that the recent stability is artificial, driven more by limited supply than renewed demand.

The result is a standoff. Buyers suspect prices will fall. Sellers hope they will not. In this kind of market, time works against the seller. As listings accumulate and sales slow, price concessions become the path of least resistance.

Too Much Construction, Too Few Buyers

Developers have yet to adjust to this new reality. Construction activity remains well above historical norms. Projects launched in 2021 and 2022 are now reaching completion. Absorption is proving difficult. Buyers are scarce, and new units compete directly with older inventory that is not moving either.

To avoid being left with unsold stock, developers are expected to offer more aggressive pricing or bundled incentives in the second half of 2025. Upgrades, parking, and delayed closing terms may be on offer, but if demand does not pick up, outright discounts will follow. The new-build segment often acts as the leading edge of a correction. When it breaks, the resale market follows.

Falling Rates, But Not Fast Enough

Interest rates are coming down. That should, in theory, breathe life back into the market. However, rate cuts take time to work. Buyers need confidence, not just capacity. The first impact of an easier monetary policy is psychological. The actual effect on household budgets and borrowing power tends to be delayed, often by 12 to 18 months. As well, rates are falling less than many people anticipated, and at a slower pace. More recent rate drops that should breathe life into the market are instead garnering disappointment because rates aren’t as low as people want them to be. The record-breaking low rates of the pandemic have skewed expectations of what normal rates look like.

In a high-price, low-demand environment like Kelowna, falling rates alone are unlikely to trigger a rebound. They may prevent a hard crash, but not the slow unwinding that is already underway.

No Trough in Sight

The Kelowna market has not bottomed. Prices may look stable, but they are drifting downward again. The seasonal lull ahead will test seller resolve. If buyers remain inactive, as seems likely, more price drops will follow. Developers will blink first, homeowners later.

The broader conditions are not favourable. Prices remain out of reach, supply is rising, and new construction continues to flood the market. Buyers have time, leverage, and little urgency. That means the path ahead is down. Not steeply, but steadily. The correction continues.