Kelowna’s Condo Market and Short-Term Rentals: What Buyers and Investors Need to Know in 2025

Kelowna’s real estate landscape continues to shift in early 2025, with two key developments shaping buyer behaviour and investor strategy: a cooling condo market and newly updated short-term rental regulations. These factors are closely intertwined, and understanding their connection is essential for anyone considering a purchase or investment in the local market.

Condo Prices Showing Signs of Softening

While the single-family home segment in Kelowna remains strong, with year-over-year price growth continuing into Q1 2025, the condo market is showing signs of cooling. Though median prices are up slightly compared to last year, the first quarter has seen a marginal decline in value on a quarterly basis. This indicates a shift in momentum, suggesting a plateau or potential correction in the near term.

This trend may be due in part to supply pressures.

The city has seen a surge of condo construction in recent years, and developers are now facing slower sales and increased costs.

As a result, new condo developments have slowed or been paused entirely, leading to a more cautious outlook in the attached housing market.

New Short-Term Rental Rules Bring Fresh Opportunity—and Responsibility

Adding another layer of complexity to the condo market is Kelowna’s newly updated short-term rental framework. Following recent changes to provincial legislation, the city has revised its own regulations to bring them into alignment. These new rules restrict short-term rentals to an owner’s principal residence and allow them legally in secondary suites or carriage houses.

Importantly, Kelowna is once again accepting business licence applications for short-term rentals, creating a more structured and enforceable environment for hosts.

Operators must now register both with the city and the province, and non-compliance may result in significant penalties. These changes are designed to support long-term housing availability while also providing clear guidelines for short-term rental activity.

How These Two Trends Are Connected

The recent dip in condo values and the re-opening of short-term rental licensing are more connected than they may appear at first glance. Many prospective investors have historically turned to the condo market as a gateway into Kelowna’s short-term rental space. With new licensing pathways now available and the condo segment experiencing softer pricing, this moment could represent a unique window for well-informed investors.

However, the updated rules make it clear: short-term rentals are only permitted in principal residences, not in purely investment-oriented properties.

This shifts the investment strategy considerably. Buyers must now be more strategic, often opting to live in the unit themselves or leverage secondary suites to stay compliant.

For buyers who plan to live in their condo full-time and use it for occasional short-term rentals, the regulatory clarity may actually reduce risk. But for those looking for hands-off investment returns, the playing field has changed significantly.

What This Means for Buyers in 2025

Primary homebuyers may find more opportunity in the condo market as prices soften, particularly in developments with high walkability, amenities, or proximity to downtown and the waterfront.

Investor-buyers must now carefully consider compliance with short-term rental rules, especially around principal residence requirements.

Sellers of condos may need to adjust expectations and work with a team that understands how to market units effectively in a more competitive and regulated landscape.

Strategic Advice from Jones Realty Group

At Jones Realty Group, we monitor policy changes and market trends closely to help our clients make informed, confident decisions. Whether you’re entering the market as a first-time buyer, downsizing, or looking to capitalize on the evolving short-term rental landscape, we’re here to help you understand every step.

If you’re curious about how these shifts affect your plans or you’re ready to explore available opportunities in Kelowna’s condo market, connect with our team today.