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Investors flock to First Nation land as Kelowna home, condo values slump

B.C.’s Short-Term Rental Accommodation Act does not apply to reserve land or treaty land unless a First Nation chooses to opt in through an agreement with the province.
Few units remain in the Westrich Bay development along Okanagan Lake on WFN land.

new report by an international real estate search portal suggests the value of homes and condos in Kelowna has fallen rapidly in the past year.

Point2 Homes analyzed data from several cities across the country and found that single-family homeowners who purchased in late 2022, lost an average of $98 a day, the biggest loss in B.C. and the third biggest loss in the country.

“Adding it up, this means they would need to sell their home for $35,900 less than they bought it for — an unsettling prospect for any owner,” said Point2.

Yesterday’s motivated buyers are today’s disappointed owners

The report says that condo owners seem to faring worse than single-family buyers.

Kelowna condo owners who purchased in 2022 saw their values drop $60 a day in 2023. The average condo/apartment price in Kelowna was $502,800 two years ago, but Point2 says that fell to $480,800 last year.

So what drove the diminishing values? Point2 says it’s a combination of factors including inflation, high interest rates, and for condos, falling demand.

While the report did not single out B.C.’s new rules around short-term rentals, that could also be an emerging factor in the statistics for the second half of 2023.

Short-term rental rules drive demand on WFN land

However, demand isn’t down everywhere in the condo/vacation property sector.

Kelowna need look no further than across Okanagan Lake, where interest in properties at the Westrich Bay development on Westbank First Nation land surged in recent months.

“When these restrictions came out it was actually a blessing for us. It made the development that much more desirable, especially from an investor standpoint” said Westrich Bay sales manager Cole Killeen. “Even for the people who bought this as a vacation home, they have that option that they can rent it out now.

“So, it’s just having that ability to do that, help cover the mortgage if they have one on it, or make some of the costs go down of running that property.”

New legislation does not apply to reserve land

B.C.’s Short-Term Rental Accommodation Act does not apply to reserve land or treaty land unless a First Nation chooses to opt in through an agreement with the province.

Killeen says there are only two Phase 1 villas left that are directly on the waterfront, along with six in the second row, out of 52 total villas. Phase 2 of the project includes third row townhouses, bungalows and a condo tower.

“When we launched that tower, we sold it out in about 37 minutes, with just a handful of units remaining.”

Killeen says a lot of their investors are extended families or groups of friends.

“We have a marina coming with the development too. So a lot of the Albertans that come over with their boat, it’s very convenient to have your boat right there at the dock. And then if you’re sharing the home with another family you do have the space to do so.”

The only other similar development on WFN land is Shelter Bay, along Campbell Road, on the other side of the Bennett Bridge. According to the Shelter Bay website, only about a quarter of the 108 Phase 1 townhome units are still available.