Are cracks starting to appear in Kelowna's economy?

Right off the bat, Krista Mallory clarifies that the Central Okanagan Economic Development Commission doesn't make forecasts.

But, the commission's manager does admit: "The economy is changing rapidly. Our data is lagging. We've seen changes in the housing market with a slowdown in sales volumes and drop in prices."

And that's not all.

"Absolutely, there's a labour shortage," said Mallory.

"You experience it every day when you shop at stores or eat in a restaurant. They don't have enough staff."

After booming for the past two years, Kelowna's economy is cooling.

The reasons are myriad.

Everything is cyclical and after a big run up over the past couple of years, Kelowna's economy seems to be taking a breather.

The Russian invasion of Ukraine and resulting supply chain problems, runaway inflation and surging mortgage and loan interest rates have scared people off spending.

Don't get us wrong -- Kelowna is not in freefall.

But it is making adjustments and taking a wait-and-see stance before ultimately moving forward again.

Compared to last year, home sales in the Central Okanagan have plunged 50%.

Home prices have slipped 6%.

Potential home buyers have hit pause after prices peaked in April.

The commission's latest batch of economic indicators shows the median price of a new home in Kelowna in the second quarter of this year was $1,085,000, which is 11.3% higher than last year at the same time.

While that certainly shows year-over-year growth and that Kelowna housing is still expensive, it doesn't necessarily reflect the downward trend in prices over the past three months.

Thus, that 'data lag' Mallory previously mentioned.

Kelowna's population is still growing.

In fact, Kelowna (measured as the Central Okanagan) is the fastest-growing metropolitan census area in Canada with a more than 15% increase in population since 2016 to 229,400 in 2021.

And, more people are working in Kelowna -- 110,867 in the second quarter of 2022 compared to 105,000 at the same time last year.

Yet, job postings in the first half of this year hit 17,234 in the Central Okanagan, up 52% from the 11,333 last year.

At first glance you might think that's great -- there's lots of jobs out there and employers are ready, willing and able to hire.

However, so many unfilled jobs means there's a labour shortage and without enough staff business growth and expansion is thwarted.

In the first half of this year, the number of home construction starts was 1,546, up 39% from the 1,113 starts over the same period last year.

That's a lot of construction, but not enough to keep up with population growth and not enough to generate the type of competition that would force developers to sell homes for less.

An indication that a construction slowdown might be on the horizon is that the value of building permits issued in the first six months of the year was $880 million, off 9% from the $966 million last year.

The number of licensed businesses in the Central Okanagan in 2021 was 15,426, up 6% from 2020.

That's a lot of businesses, most of them are small and many are sole proprietorships with no employees.

The average monthly rent for a two-bedroom apartment in 2021 was $1,463, up 7% from 2020.

However, with the data lag, those numbers don't take into account that rents have slipped a little lately.

The biggest-impact number in all the indicators is the 311% spike in the number of passengers flying in and out of Kelowna airport in the first half of the year to 770,736 from 187,462 last year.

That's stunning, but even if that rate is kept up, 2022 will fall short of the record-high 2 million passengers that used the airport in pre-pandemic 2019.

"It points to solid recovery as Canadians return to air travel," said Mallory.

"And it also highlights the Central Okanagan's desirability as a tourist destination."