This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.
Housing prices to skyrocket?
As most of you know, this column was started with a focus on Okanagan real estate. Over time, more and more columnists started covering the real estate sphere and so it morphed in to a personal column with some of my own viewpoints on life.
I had to come back to real estate this week after reading the above headline yesterday in an article. The article went on to quote a Remax report that said that we are in for a very happy time in Kelowna with skyrocketing house prices predicted. We are going to lead the country. The recreational markets are hot.
I was more than a little confused. My own home has been on the market for three years with barely a showing and I have many friends in the same position.
To suggest that recreational markets are a big plus in Kelowna is more than a little foolish. We have one ski hill that has just gone through foreclosure with no offers and another one that is unable to open and proceed with development plans plus a behemoth project on Kelowna’s south western corner of the lake that is rumoured to be in big trouble.
I was so intrigued I tried to pull some stats but interestingly the historical stats have disappeared from our databases.
I looked at one resort, the recreational type of darling that the article refers to, La Casa. A very popular resort with tourists and investors. In 2014 the average house sale (of which there were precious few, was $288,000 at the resort. Average lot sale (of which there were 21) was $40,000, however if you removed the top 4 outliers, that quickly reduced to $26,760 on 17 sales.
Compare this to 2007? Well I couldn’t because the history has disappeared. But I will tell you what was happening in 2007 because I was very involved in sales at the resort.
I was selling cottages for $650,000 and lots for over $100,000. I would hazard a guess since I have no files to refer to, that the average cottage sale at La Casa in 2007 was very close to $420,000 and the average lot sale may have been close to $100,000.
We had better lead the country for a good several years with skyrocketing prices to restore the equity that was here in 2007. But is that realistic?
The truth is plain and simple. The Bank of Canada is afraid of debt levels in Canada. Kelowna has seen more than its fair share of businesses close down this year, houses are not being listed because they are not getting the value the owners want (which is precisely the reason for the low inventory), the Canadian dollar is seriously weakened and oil is back to levels we have not seen for as many years as good real estate prices.
Good economy? Skyrocketing? Think again.
I think we should tread very carefully, I think we should write slightly more intellectual articles that dig in to the fundamentals that drive real estate markets and I think we should avoid the use of flagrant terms like “skyrocketing” because it sets us up for a fall. As REALTORS® we are meant to be professional mentors and guides to our clients not “cheerleaders” for a soft housing economy that has had a good year relative to the past few years.
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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.
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