In 2015, the Thompson-Okanagan had the highest population growth rate in B.C., which stimulated our region’s overall economy. According to the Chartered Professional Accountants of British Columbia (CPABC) Regional Check-Up, the red hot Vancouver housing market looks to be making its way east, having spillover effects on the region.
Some Lower Mainland homeowners are cashing out and relocating to the Interior. David Wilson, CPA, CMA, vice president, finance and administration at Mission Hill Family Estates attended the CPABC Kelowna Economic Roundtable in June. He noted that, “Anecdotally, we know people are moving to the Okanagan from the Lower Mainland to be mortgage-free. The baby boomers and Generation X are looking for a lifestyle change and are bringing their assets and their families here.”
This has resulted in higher prices and record real estate sales. The influx of roughly 8,000 new residents to the region resulted in a nine per cent increase in housing sales, which has driven housing values up by 3.1 per cent, and spurred a six per cent increase in housing starts.
The boom in the housing market was expected to stimulate job creation in both construction and real estate related services. However, while real estate was up by 500 positions, construction, particularly in road, utility, and residential, showed a contraction of employment. In fact, our region’s construction industry realized the greatest losses in the goods sector, dipping by 4,100 jobs. However, the decline in residential construction employment suggests that overstocked housing inventories may have been drawn down.
Additionally, the population increase has led to a boom in the service sector, which saw its third consecutive year of gains. Seven of 11 industries within the service sector reported increased employment in 2015. The 3,800 new service sector jobs were concentrated in transportation and warehousing; other services; and the business, building, and other support service industries.
The Okanagan’s technology sector has also benefited from the population gains, as evidenced by the increase in professional, scientific, and technical service jobs, and the region is becoming a hub for the tech sector. Raghwa Gopal, CEO of Accelerate Okanagan, noted at the June roundtable that, “The technology sector is probably one of the fastest growing sectors in B.C. right now, especially here in the Okanagan. There are 89,000 workers in B.C.’s tech sector, that’s more than oil, gas, forestry, and mining combined.”
In May 2016, Kelowna had 219 residential building starts, driven by a large number of new condominium developments. This was a significant increase when compared to the same time last year at only 74 new residential building starts. Increased sales activity in the resale market, low housing inventory, and low vacancy rates are fuelling our region’s housing market.
However, as Lower Mainland residents continue to uproot and relocate to Kelowna, there is a growing concern for underemployment. David McDougall, CPA, CMA, president of Okanagan Blenz, echoed this concern at the roundtable discussion, “There are lots of talented people here that are underemployed. They’re not in their twenties. They’re later on in their career and moved here and bought a house. They’ve shed all of their debt, but are kind of idle. There’s a real pool of talent and experience here and they’re just waiting for us to figure out how to tap into it.”
Karen Christiansen, FCPA, FCA is a partner at MNP LLP in Kelowna. The CPABC Regional Check-Up reports are available online at:www.bccheckup.com.