Alberta’s out-of-province playground still drawing buyers
Kelowna’s healthy economy and population growth are driving resale home transactions up and fuelling higher levels of new home construction, suggesting a sellers’ market, according to housing industry figures.
And the lure of the valley continues to draw buyers from Alberta despite the province’s economic downturn.
The largest city in the Okanagan Valley of British Columbia, Kelowna has recorded nearly 3,600 sales for the first half of this year compared with slightly more than 2,700 a year ago, according to figures from Canada Mortgage and Housing Corp. (CMHC).
The average selling price for the comparative January-June periods moved up to $485,100 from just under $430,000 in 2015, CMHC reports.
For the same period, CMHC reports construction started on 712 homes of all types — more than double the first six months of 2015.
“Housing demand continues to be robust,” said Anthony Bastiaanssen, president of the Okanagan Mainline Real Estate Board (OMREB).
He also noted that while the average selling price may have slipped back slightly and days on the market increased in June, “consumers looking to buy are still likely to feel pressure to respond quickly and decisively to listings.”
OMREB figures show that for June, the average price was about $475,000 compared with $486,600 in May.
One thing that is noticeable — and perhaps expected — is a decline in the participation of Alberta buyers because of the impact of the struggling oil-induced economic downturn back home.
Long considered the playground for Albertans, the largest city in the Okanagan Valley of British Columbia, is welcoming more people from the province’s Lower Mainland and other parts, and fewer from the eastern side of the Rockies.
OMREB reports at the nearly six of 10 homebuyers are existing residents of the Okanagan region, followed by 17 per cent from the Lower Mainland or Vancouver Island — and 12 per cent from Alberta.
“While our Alberta neighbours continue to be a significant portion of buyers in the Okanagan, their numbers have dropped off in the past year, for sure,” said Bastiaanssen.
Down, but not out
Developers of recreational housing communities in and around Kelowna continue to see interest from Albertans looking for an escape destination, or buying as a future retirement home.
Steve Shoranick, founder of residential developer MKS Resources, said the appeal of the valley is still strong, despite the fact many Albertans are feeling the pinch of a weakened economy.
“I guess I’m a bit surprised at the strength of our Alberta sales. Even with the bad economy, people are buying here after deciding to retire, to move on with their lives,” he said from the sales centre of the company’s latest venture Water’s Edge North.
Project sales manager Bonnie Kaufmann noted Albertans bought about 35 per cent of the first phase, along with three more in the 16-unit second phase.
“They are still buying, perhaps not at the same pace, but they are still a part of the success of the project,” she said of the development located in the Mission district of Kelowna off Lakeshore Road and a block south of the Eldorado Hotel.
Despite the ups and downs of the market over the years, Adventure Bay, located about 10 minutes from downtown Vernon has seen steady sales with only minor fluctuations, along with constant price appreciation.
“And now with the combined sources of buyers from Alberta plus the Lower Mainland, we are witnessing the most sustained market surge in a decade,” said Sherry Wiebe, project manager for Adventure Bay by Tavistock Properties Ltd.
“At least half of all buyers are from Alberta, but there has been a shift this year and we are seeing purchasers from all of the provinces — still though, the Alberta group remains dominant.”
So the Okanagan continues to be a magnet for Albertans looking to take advantage of the mild winters, warm summers, and the abundant opportunities for year-round outdoor activities.
The Okanagan’s economy has been surprisingly resilient to the impact of low commodity prices and a slowing of the flow of Albertans buying retirement and recreation properties, said the British Columbia Real Estate Association.
Homebuyers from Alberta typically account for about 15 per cent of home sales in the Okanagan, but the struggling Alberta economy appears to be taking a toll on that demand, a CBREA report says.
“During the first quarter of 2016, the proportion of home buyers originating from Alberta slipped to approximately eight per cent.”
However, the report goes on to state that at least part of the declining proportion of buyers from Alberta has been offset by a commensurate increase in buyers originating from the Lower Mainland and other regions of the province.
Shifting buyer origins belies the fact that housing demand is on a pronounced upswing in the region, with record unit sales recently recorded at the Okanagan Mainline Real Estate Board.