The Okanagan real estate market endured another sluggish spring in 2025 as inventory levels surged. In Q2, there were 2,571 home sales totaling $2.0 billion—a modest 2.0% increase in transactions and 5.0% rise in value compared to the same period in 2024. Despite the uptick, this was still the third-slowest second quarter since 2014, with every month this year falling below the 10-year average for sales activity.
A key factor behind the slowdown is a sharp deceleration in population growth. Federal migration policy changes have significantly reduced immigration, cooling major markets nationwide and slowing domestic migration to the Okanagan. While the population continues to expand, it’s at the slowest pace in over a decade. Household formation—the key driver of housing demand—is expected to see its weakest growth since 2012, with just 7,879 new households projected over the next five years, compared to 5,505 added in 2024 alone.
With demand easing, inventory has surged to its highest level since 2016, reaching 7,023 active listings in June 2025. New home inventory has also exploded, now sitting at 325% above the long-term average. Fueled by the 2021–2023 boom, developers launched a wave of condo and townhome projects and purpose-built rentals—spurred by CMHC financing. As of May 2025, 5,213 housing units remain under construction.
But shifting policies have reshaped demand. The provincial short-term rental ban and resistance to micro-condos have softened interest in many of these new units. Townhomes, though more appealing than condos and more affordable than detached homes, are slowing too—pressured by high construction costs and pricing out many first-time buyers. Multifamily housing is increasingly the entry point for ownership, but affordability challenges persist.
Amid these conditions, the Bank of Canada is holding rates steady at 2.75%. Inflation has slowed to 1.7%, but global instability and U.S. trade tensions are weighing on the economy, prompting caution from the Bank. Mortgage rates are expected to remain largely unchanged through 2025, with economists split on whether further cuts are coming.
Looking ahead, the Okanagan market will remain shaped by rising supply and uneven demand. Inventory is creating distinct micro-markets, and the gap between what sellers expect and what buyers are willing to pay is widening. Buyers haven’t disappeared—they’re simply waiting for value before making their move.