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Is It Cheaper To Buy or Rent in Kelowna, BC?

We have all heard and felt that Kelowna has been growing at a pace of 2% and before 2030 the area's expecting to have more than 40,000 more people living in the area. These numbers are all pre-covid figures and the rate may increase more in the new Covid-19 era, where people are looking to move out of highly densified areas and looking for space.

People working from home is no longer just a "dream" but is now a reality for many workers and businesses. This radical shift allows more flexibility in location and Kelowna can be viewed by people looking for a change as a desirable place to live.

The growth has seen the median single-family home prices in the Central Okanagan increase from $444,346 in 2010 to currently this year at $708,988. The median home prices have increased by nearly 60% in the last 10 years which is becoming more and more unaffordable, not only for people looking to buy a home but for people looking to rent.

According to Mortgage Sandbox, 32% of Kelowna's population can afford purchases over $430,000. There are some holes with using this chart as it is based on 2016 Stats Canada figures, higher than current interest rates, and more importantly does not include the over 40% of buyers from outside the Central Okanagan that is buying every month. But it does give you an idea of affordability in Kelowna and what household income it would take to qualify for each price range.

Looking at the Fall 2020 rent analysis guide put together by Ron and Curtis Baszucki that are Property Managers with Associated Property Management (APM), It provides current market conditions and rents given the type of property and location.

For the housing rentals, the lowest price for rent is $1,900 for a 2 bedroom downtown or in Glenmore. According to the CMHC Mortgage calculator and a 3% interest rate that amount of rent would equate to a mortgage amount of $400,000.

And looking at the monthly highest rent for homes for a 4 bedroom home in Lower Mission at $3,000. Paying that amount of rent equates to a mortgage amount of $640,000 which is a purchase price of $800,000*.

Looking at the affordability aspect in the Condo market, the lowest rent start at being a studio in Cambridge at $950. This equates to a mortgage of $200,000*.

The affordability aspect puts things into perspective given the median home prices in each area which I created in January for single family homes. Median Sale Prices have increased 12% since then.

Whether you are currently renting and looking to make a purchase, currently own and looking to sell your home and rent, or if you are an investor looking to purchase a rental and create cash flow. With prices increasing and low-interest rates, we are seeing people working on getting in the market right now. Historically, given the situation(strong demand and low inventory) as a seller, there has never been a better time to sell.

I do a personalize a market analysis for you given your situation to help give you an idea if it makes more sense to rent or to own. To get your own personalized analysis send me an email here everything is kept strictly confidential or ask for my analysis template to do it on your own.

All rental rate information has been provided by property managers Ron and Curtis Baszucki with Associated Property Management.

Have a great week! Stay Safe!

Mark Coons

*Assuming 20% down and 3% interest rate according to CMHC Mortgage Calculator


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