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Brighter prospects for recreational property sales

Glen Korstrom , Business in Vancouver, Sept 11-17, 2012

Recreational real estate sales across B.C. are rebounding from an anemic 2011 while the Greater Vancouver residential property market continues to cool and is poised for one of the slowest years for sales in the past decade.

Landcor Data Corp. statistics for the first half of 2012 show a 22% jump in recreational property sales across B.C. to 1,079, compared with 883 in the first half of last year.

Vacation home prices are also starting to creep up, according to Rudy Neilsen , who is Landcor’s president and a principal at marketer Landquest Realty Corp.

“We are set to beat the number of recreational sales that we had in 2011,” he told Business in Vancouver. Landquest presidentRichard Osborne said the strongest sales rebound in recreational property categories is in Gulf Islands and Sunshine Coast waterfront and larger reasonably priced land packages.

Sotheby’s International Realty listed James Island, which is one of the Gulf Islands, for $75 million in June on behalf of telecommunications entrepreneur Craig McCaw. It remains available.

And realtors on the Sunshine Coast told BIV in July that waterfront prices are off at least 20% to 30% from their peak.

British Columbia Real Estate Association chief economist Cameron Muir said it’s too soon to get excited about recreational real estate sales or price rises for those properties, particularly when strength in that sector tends to lag behind strength in the economy. 

“Recreational real estate sales are the transactions that are most easily postponed or put off,” he said. “Relative bargains in the U.S. are certainly hampering recreational property sales across the country, but in B.C. there is some recovery partly because of the Alberta economy and the strong job growth there.”

A healthy market for residential properties in Metro Vancouver is a major driver for recreational property sales in B.C., but the Metro Vancouver home market has been faltering. Muir expects there to be 28,000 Metro Vancouver home sales in 2012, which would be the second slowest year in the past decade, after 2008, when there were around 25,000 sales.

The Real Estate Board of Greater Vancouver (REBGV) revealed September 5 that August home sales in Metro Vancouver were the second lowest of any August since 1998.

The REBGV’s MLSLink housing price index benchmark price for all properties in Metro Vancouver in August was $609,500. 

That benchmark home price fell 0.5% in August compared with the same month last year and 1.1% compared with July. 

“Home sales this summer have been lower than we’ve seen for most of the past 10 years, yet we continue to see relative stability when it comes to prices,” said REBGV president Eugen Klein.

Muir called the slight drop in prices as “statistical noise” and said he expects home sales in Metro Vancouver to start rising later in 2012 and into 2013 thanks to low interest rates and evidence of full-time job growth. 

Statistics Canada reported September 7 that B.C. gained 14,900 full-time jobs in August, and part-time employment increased by 18,600, more than offsetting the decline of 3,700 full-time positions. 

That combines with Central 1 Credit Union chief economist Helmut Pastrick projecting slower growth ahead. On September 6 he estimated that B.C.’s economy will grow 1.7% this year and 2.2% in 2013. That’s down from 2.6% in 2011.