$275,000 — $25,000 — $25,000 = $225,000 That’s the price reduction on a sample unit in the Verana Okanagan condominium project, shown in an artist’s drawing below, being built in Penticton. The final price of $225,000 is an even better deal because it includes the GST, unlike the original price.
The shine is off Okanagan real estate, with a buyer’s market returning to the sun-drenched region and some developers not only delaying projects but dropping prices sharply to promote sales.
The once-lucrative source of recreational properties for Albertans has also diminished.
“We’re definitely slower on the recovery [than Vancouver or Victoria],” Okanagan Mainline Real Estate Board president Brenda Moshansky said in an interview Monday. “It’s been slow and steady coming back.”
Moshansky said that while top-end properties are once again starting to sell, additional homes are also coming on the market.
“We’re seeing more listings coming on, but there’s definitely now a heavy enough inventory to create a buyer’s market. And Alberta, with their natural resource sector being slower, their discretionary spending for recreational spending has been a lot more cautious.
“People are getting much better pricing.”
A B.C. Real Estate Association survey released this month stated that sales activity in May levelled off in the region, with listings continuing to increase and more selection for buyers.
The survey showed that while Metro Vancouver residential prices increased 13.4 per cent to $662,000 from May 2009 to May 2010, prices in the Okanagan Mainline — the north Okanagan region representing the bulk of the Okanagan’s listings — rose just 0.5 per cent to $391,000 over the same period.
The smaller south Okanagan sector saw a sharper increase — 8.4 per cent to $352,000 — over the same period while, provincially, prices rose 7.1 per cent to $498,000.
The BCREA also forecast that the Okanagan Mainline will see a 1.8-per-cent increase in the number of sales this year to 5,780 units, before rebounding in 2011 to 6,200 units.
Prices are expected to rise 2.4 per cent this year (compared to 6.2 per cent provincially and 10.7 per cent in Metro Vancouver) in the Okanagan Mainline and another 2.1 per cent in 2011 to $397,000.
The south Okanagan is also expected to see sales rise this year and next, with moderate price increases.
“Recreation buying has not come back [in the Okanagan] to pre-recession levels and that’s having an impact on the whole market,” B.C. Real Estate Association president Cameron Muir noted in an interview. “There’s also an overhang of inventory on the new-home side. And when you have a large supply of homes, it has an impact on pricing.”
Muir agreed that the Alberta buyers are not the force they once were, although he believes that will change. “There’s also been some leakage of buyers on the U.S. recreational side. More Canadians are looking south of the border.
“But my expectation is the Okanagan market over the next 18 months will show recovery as the economy begins to fire on all cylinders and the return of the Alberta buyer.”
Both Muir and Moshansky anticipate that the recovery in the Okanagan will be much more moderate than elsewhere in the province.
“We’re expecting a very slow stabilization to the market over the next two years,” added Moshansky, who is also a local realtor. “Vancouver [experienced] a great rebound. We should have felt that, but we didn’t.
Meanwhile, a Penticton condominium developer has cut prices by up to $60,000 — the development’s second round of discounts, each worth $30,000 — in an effort to boost sales.
Keith Hay, marketing manager at the Verana Okanagan, near Lake Skaha, said in an interview that on top of those reductions, the developer, Rivendell, has now also decided to cover the GST.
Hay said that while the market is down considerably since 2007, sales are starting to pick up with the reductions.
“We discounted it $30,000 last year, but it didn’t generate much of anything because of the global meltdown. We want to get these units sold.
“Will there be a return to the days of wine and roses? In a few years. Will there be a reasonable listings-versus-sales ratio? It’s been good.”
He said that although the slow market has delayed construction for phases three and four, Rivendell will proceed with plans to complete the development’s clubhouse this summer.
Source: The Vancouver Sun
Around B.C. by the numbers:
Percentage price increase for Okanagan Mainline from May 2009 to May 2010: 0.5%
Percentage price increase for Metro Vancouver from May 2009 to May 2010: 13.4%
Percentage price increase for B.C. from May 2009 to May 2010: 7.1%
Average residential price for Okanagan Mainline in May 2010: $391,000
Average residential price for Metro Vancouver in May 2010: $662,000
Average residential price for B.C. in May 2010: $498,000
Forecast percentage price increase for Okanagan Mainline in 2010: 2.4%
Forecast percentage price increase for Metro Vancouver in 2010: 10.7%
Forecast percentage price increase for B.C. in 2010: 5.2%
Total number of sales in 2009 in Okanagan Mainline: 5,678
Total number of forecast sales in 2010 in Okanagan Mainline: 5,780 (up 1.8%)
Source: B.C. Real Estate Assocation