While Vancouver has grabbed all the national headlines for its continued year-over-year home price gains, the rest of British Columbia's real estate market has performed much differently.
Vancouver has seen a surge of international buyers, mainly from China, according to the latest real estate industry accounts. That's led some to worry that the market is now building towards a bubble, with prices up 23% in June compared to a year earlier.
There is no controversy over the influx of mainland Chinese buyers in the Okanagan Valley - the Okanagan Mainline average home prices were down about 10% year-over-year in June, and south Okanagan prices were down 8%, according to the British Columbia Real Estate Association.
A number of national studies have come out lately predicting drops of as high as 15% over two years or 25% over three years in national homes prices. But in the Okanagan Valley, the price correction occurred a few years ago and there's no bubble to burst. Average single-family home prices in the Okanagan region are back to where they were nearly five years ago.
"Certainly, the Okanagan Valley and basically the entire B.C. interior went through a price correction two years ago, especially in the condominium market," says Elton Ash, regional executive vice-president for Re/Max of Western Canada. "So prices are, I wouldn't say at the bottom when you've got an average price of about $450,000, but housing is a great value in the B.C. interior and the Okanagan Valley especially."
For those attracted to the Okanagan lifestyle, that's made it a popular time to buy with the prices down from where they were a few years ago.
While it is a separate market, there's certainly a major impact from Vancouver, says Ash. One way to see that is to look at the gap in performance from the struggling Okanagan condominium market and that of the much stronger luxury lakefront home market that defied price drops in other sectors.
As the Chinese buyers have been buying luxury Vancouver homes, that's left a large number of former owners of those homes who are looking to buy as well. They either look to downsize and then include a vacation or investment home in the B.C. interior, or they look for a similar price point in the Okanagan Valley, such as a lakefront house.
"When those sellers are looking at relocating entirely (from Vancouver), that drives the luxury market as well in the Okanagan region," says Ash. "That's why that luxury market has not been negatively affected."
The luxury lakefront homes in the Okanagan Valley are driven by an international demand from buyers from as far as the U.S., Europe and Australia, says Ash. A return of confidence in the economy in Alberta has also been beneficial.
"A lot of buyers from Alberta come here because they think we live in God's paradise, and they buy recreational properties," says Brenda Bachmann, a Realtor with MacDonald Realty.
An influx of oil money lately has meant there are a lot more Alberta licence plates in local real estate agent parking lots in the Okanagan Valley.
The condo market is more locally driven, and has been overstocked lately. Demand just has not been there to meet the supply for condos as it has been for the luxury home market.
Ash suspects the overall market is strengthening in the Okanagan region and by the end of the year, the prices will be comparable to where they were at the end of 2010. Inventory is down, and sales activity has started to pick up.
There has already been a visible shift in the central Okanagan region, as house prices were trending down and condo prices were up in June compared to a year earlier. The longer-term picture is still cloudy, but there's clearly a feeling of more stability in this region than Vancouver.KELOWNA
The central city of the Okanagan Valley is Kelowna, located on the Okanagan Lake and a metropolitan population of about 162,000 people.
It is an attractive spot for retirees, adventure seekers and tourists alike, and it's the biggest city experience you'll find in the Okanagan region. The larger downtown is especially attractive to residents who don't want to do much driving.
Often tourists will visit the city and then want to buy into a property later. That's true with summer visitors to the lake and countless wineries, as well as winter visitors to the ski slopes.
"Like all the communities in the Okanagan, it's aware of the demographic that attracts people to the area - always strong for lifestyle and retirement," says Ash.
There are now an increasing number of people who are discovering the area as Kelowna International Airport has extended a runway and is one of North America's fastest growing airports, serving 1.4 million passengers in 2010 from cities in Canada, the U.S., and Mexico.
The infrastructure growth just keeps going in Kelowna. The latest developments include an additional 296 slips to the Kelowna Yacht Club, making it the largest freshwater marina in the Pacific Northwest. The expansion is helping to answer a growing call for more lake access to residents.
"A lack of moorage has been a real problem on the lake," says Ash.
Kelowna is also building a $4-million new senior centre, replacing the existing senior centre in downtown to make way for expansion of the Yacht Club.
In terms of real estate, the condo market has been favouring buyers this year due to a supply that's been well above demand for years. Rental demand, however, has also been low. The vacancy rate has steadily risen from about 1% a few years ago to a high of 3.7% in the latest Canada Mortgage and Housing Corporation stats from April. Carriage houses attached to properties remain popular rental options, however.
Bachmann said that away from the lakefront, the single-family home market can still offer some bargains under $300,000. The average price for a house in June was $478,502, compared to $2.5 million for a house on the waterfront, according to the Okanagan Mainland Real Estate Board.To get the scoop on Vernon and Penticton, pick up a copy of our October issue, on newsstands until Oct. 12.
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