Okanagan Wildfires Impact on Real Estate Market 2023-24
Another summer has passed, and another summer has left an indelible mark on the BC Okanagan Valley as wildfires raged once again. While Penticton was spared, the Kelowna area was not so lucky. The persistent occurrence has left many prospective homebuyers and property investors asking about the impact on the real estate market. Below is a succinct look at everything they (you) need to know as we enter the tail-end of 2023 and ready for 2024 to come.
How BC Wildfires Have (or have not) Impacted Real Estate Investment in the BC Okanagan Valley
Impact on Pricing?
Most investors wonder about how owning a home in “wildfire country” impacts property values. It doesn’t play-out the way many people think. Logic infers that prices would drop, but look no further than what has recently occurred in California (similar market traits to the BC Okanagan Valley) to clarify how market behavior reacts. The price of properties located within a fire perimeter declined by less than 1 percent (just 0.64% to be exact). Meanwhile, properties located within one mile from fires experienced price increases of over 5%.. Those situated one to five miles away experienced a 7.21% gain.
It all comes down to location, location, location. A desirable community in California is no different than a desirable community in the BC Okanagan Valley. The threat of wildfires, earthquakes, tsunamis, and now hurricanes (a new trend to the California coast) will do nothing to dissuade buyers in what are essentially resort communities, and the same occurs here in Canada’s lake-side paradise. In fact, with ravaged forest lands not growing back like they used to due to climate change, some might argue that scorched land may be a preferred alternative for new construction properties. View more on climate change (wildfires included) and impact perceived mortgage risk.
Impact on Inventory?
At press, a total of 181 properties were confirmed damaged or destroyed this summer. While rebuilds will ensue as soon as the areas are deemed fit (or otherwise) this does chip away at a market where inventory is already lean because some households will buy just outside of at-risk zones. What we also expect to see, is a greater number of multi-residential properties being built to replace what has been lost. When communities are frequently displaced due to wildfire, multi-residential properties become all the more desirable and valuable from a property developer perspective. These are generally built in mixed residential-commercial districts that have constructs and safeguards to protect against the approach of wildfires. Ultimately inventory of single detached family homes will likely stay lean for the foreseeable future in the Okanagan Valley, while availability of new multi-residential properties will grow strong. Invest accordingly.