Recession will probably be delicate, Kelowna home costs down 20%
Brace yourself for 2023.
All signs point toward a mild recession next year with higher interest rates, continued inflation and Kelowna home prices spilling a total of 20%.
“BC will manage 3% growth this year,” Bank of Montreal chief economist Doug Porter told a breakfast crowd at the Coast Capri Hotel in Kelowna this morning.
“But next year there will be a shallow downturn, a mild recession. It will certainly not be as bad as the recession of 2008-09, but there will be a softening, the job market will weaken and there will be a substantial drop in house prices and building activity.”
Economist Doug Porter said Kelowna home selling prices are already down 7% and could go down 13% more.” class=”img-responsive” data-src=”https://news.google.com/files/files/images/Kelowna% 20house(1).jpg” style=”margin: 5px;”/>
Porter said Kelowna is getting off lightly compared to some Ontario cities like London, Kitchener and Windsor where prices are likely to tumble 30% or more.
The economist expects interest rates will continue to go up at least to the end of the year, further dampening demand for housing.
The runaway inflation that higher interest rates are supposed to be taming will ease from 8% to 5% in 2023, which is still considered uncomfortably high, especially when the target for inflation is 2%.
Any talk of recession, higher interest rates, dropping home prices and stifled construction activity is concerning, said Luke Turri, chairman of the Okanagan chapter of the Urban Development Institute and executive vice-president of prolific Kelowna developer Mission Group.
“Obviously, we have to take this in stride,” he said.
“Our industry is resilient and we will continue to be optimistic. The long-term trend is that the Okanagan is poised for success. There are always opportunities in development, so while home sales and prices are softening there could be opportunities building rentals (apartments ) or commercial rentals.”
Mission Group remains busy building a highrise condo and a highrise office building at Bernard Block downtown and planning the highrise Aqua Waterfront Village on the lake south of the Hotel Eldorado.
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