British Columbia: Following the current in Castlegar

by Kit Kadlec18 Mar 2011
The lure of beautiful Castlegar, B.C. may have been a secret to locals for years, but word is starting to spread. Some property investors have taken notice as well.

Located at the end of the Arrow Lakes and the confluence of the Kootenay and Columbia Rivers, Castlegar had once supported mostly local pulp mill workers and those in the mining industry. The quiet city of about 8,000 has started to take on a bigger profile, however.

Simon Laurie of Castlegar Realty Ltd. says a diversifying local economy and growing exposure to tourists has led to more attention of late.

"We started in the past few years to get a lot more interest from investors, for more than one reason," he says. "One, the overall cost of real estate is less than you'd find in the nearby major city centres. Secondly, in regards to rental, there's certainly a strong demand here from renters."

Renters in the city are attracted to the scenic surrounds, but also the proximity to work. While no major city is nearby, Castlegar is a central point to Trail in the south and Nelson in the northeast. Locals often choose to live in Castlegar, while commuting to work elsewhere.

Castlegar was just a town, not a city, until it merged with Kinnaird on its south border in 1974, doubling its population. In the middle of both towns now sits the Castlegar Airport and Selkirk College. To the east is the Columbia River and on the other side are the sharp valleys and mountains.

"It's a small town, it has a very stable lifestyle and it's a safe place to live," says Laurie. "If you're raising a family, that's very attractive."

Young people are also drawn to the myriad of outdoor activities available, which has spurred a strong tourism industry. Hiking, boating and fishing are all popular in and around Castlegar.

Like the two towns that once made up Castlegar, the city is still somewhat split in terms of what buyers can find in the real estate market. To the north, in the original Castlegar town, there are smaller parcels and the homes are a bit older. This also offers investors a chance to find something with a bit of a heritage feel to it.

The south is where the larger open spaces are, allowing for most of the newer homes, as well as much of the recent land development. Most homes in Castlegar range from 1,500 to 2,500 square feet, however, and are rarely any larger.

No agencies in Castlegar offer property management, making vacancy figures difficult to calculate. However, Castlegar Realty's office does offer free advertising of units. Rarely do any stay on the market too long, says Laurie.

"The comment we hear all the time is that by the time the ads hit the newspaper, the property is already rented," he says.

Rents can vary widely, but Laurie says a simple basement suite can rent for about $500 to $700 per month. A condo or townhouse, depending on the property and location, can go for $700 to $1,000.

Houses are not as popular in the rental market here, as most people who want to live in one would prefer to buy, rather than rent, says Laurie, so it's probably best to stick with a condo or townhouse for a rental investment. But overall, houses can rent from $900 to $1,200, he says.

About 70 per cent of the housing stock in Castlegar is single-family homes, according to the Ministry of Community Development.  The Kootenay Real Estate Board says the October 2009 average sale price of a single-family home in Castlegar was $269,700. With a 20 per cent down payment, an investor with a 35-year amortization would need to pay about $950 per month for a mortgage. Thus it's possible to be cash flow positive as long as the rent is over $1,000.
Multi-family homes averaged $214,200. The ratio of multi-family homes is set to increase as Castlegar gears to meet a growing population while still preserving the surrounding environment.

The city says in its recent community plan that in 10 years, the average price of housing lots has increased by more than 100 per cent, following a province-wide trend until the market stalled last year.

"We're not a primary market, we're a secondary market, so we really feel the spinoff from a lot of the trends going on in the larger centres," says Laurie. "When those other markets like Vancouver and Calgary tend to really pick up and get hot, we also tend to catch the spinoff from them."

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