Canada’s recreational property market is going strong and the Okanagan is one of the most popular places to buy. If you can afford it.
RE/MAX released its annual Recreational Property Report, showing healthy activity across much of the country and forecasting modest increases in sales and prices through the rest of the year.
Although central and eastern Canada has seen a slow start to the season, Western Canada is “experiencing healthy activity heading into summer.”
The report states that consumer confidence in Western Canada is high and motivated buyers are seeking out their dream vacation homes, with some markets reporting the most activity they have seen since the 2008 recession.
It is also believed that the weaker Canadian dollar has prompted buyers to remain in Canada rather than buying south of the border.
“We see momentum in recreational property sales, especially near urban centres where local residents have experienced several years of economic growth,” said Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “This year we are seeing the effects of buyer confidence in some regions thanks to built-up equity gains and strong job markets across the West.”
Recreational property markets in British Columbia are therefore back up in value after price depreciation was felt following the 2010 Olympics.
British Columbia’s mild climate, culture and active lifestyle activities continue to be a significant draw for potential buyers. Especially in the Okanagan Valley which is seeing an increase of buyers from Alberta with new direct flights from Fort McMurray.
Here is the breakdown of regions in the Okanagan:
“Kelowna has a wide selection of properties for recreational buyers, from waterfront condos to homes in wooded areas with stunning mountain views and access.”
Demand in Kelowna is being driven mostly by a growing number of baby boomers moving to the area to retire, as well as young professionals seeking a milder climate to raise their families. Total year to date residential unit sales in Kelowna are up 20 per cent year-over-year.
The average year to date residential sale price in Kelowna (not-waterfront) in May was $425,856, up from $383,395 the previous year. However, the report notes that Kelowna saw a number of high-end sales early this year so the median price tells a better story. The median residential sale price in Kelowna was $380,000 in May, up 7 per cent year over year.
Just over 20 per cent of buyers in Kelowna are now from Alberta, but buyers from across B.C. remain the largest demographic accounting for over 70 per cent of sales.
“Summer residents and visitors participate in a wide-range of outdoor activities such as golf, swimming, water skiing and mountain biking in the summer and snowmobiling and skiing in the winter.”
The South Okanagan is attracting buyers who want waterfront property and they are paying big. With Okanagan Lake and Skaha Lake attracting buyers, property prices start at about $900,000.
Sales activity in the area is picking up this year due to the strengthening economy in Western Canada.
Buyers in the South Okanagan tend to come from the Lower Mainland and other parts of B.C., as well as Alberta.
The majority of buyers are baby boomers that are close to retirement age and are looking either to retire in the area, or for a vacation home.
“Properties in and around the North Okanagan area start at about $650,000 and increase to just under $6 million, depending on location, size and amenities.”
The North Okanagan is starting to get the attention of the central and southern area thanks to growing confidence in the economy and the real estate market in particular says RE/MAX.
Buyers in the North Okanagan, like the South Okanagan, are looking for high-end homes, preferably waterfront, either as weekend getaways or to live in during their retirement years.
Most buyers are between ages 35 to 55 and come from the Lower Mainland, parts of Alberta, and the U.S.
“The annual Salmon Arm Roots & Blues Festival, held each August, is a big draw for residents and tourists, attracting over 30,000 people ever year."
This northern part of the Okanagan is increasing in popularity and price, while remaining more affordable then the rest, for now.
Recreational property in this region in B.C.’s interior starts at about $427,000 for boat access properties and about $450,000 for homes with road access.
There are also some condos in low-rise buildings in places such as Sicamous and Sorrento that are priced in the low-to-mid $200,000 range.
RE/MAX notes that sales across in the Shuswap were significantly depressed in the recession, which created a true buyers market.
The average waterfront home in 2007 in the area was $900,000, in 2014 it sits at only $590,000.
While each real estate market and province has its own identifying trends and attractions RE/MAX discovered some national findings in their report.
First of all is who is buying these recreational secondary homes. They found that two groups are buying the majority of properties.
“The first is made up of families with younger children, who have built up equity in their primary residence and are using that money to purchase a vacation property. The second group is made up of near or recent retirees who have purchased a recreational property with a plan to use it as a primary summer residence and launching pad for winter travel.”
The report also found that there has been a large increase in people buying close to city centers as the value of their own home in the city has increased enough to give them the equity to purchase a recreation home.
One other significant report finding was a change in why people were buying these vacation homes.
“While in the past, properties were largely used for weekend getaways and a week or two of summer vacationing, today many are purchasing a property from which they can work throughout the summer. Furthermore, a majority now see their recreational property as a four-season vacation option, rather than just a summer retreat.”