Marty Hope, Calgary Herald, Saturday, August 16, 2008
Whether it's a lakeside home, mountain retreat, or golf course bungalow, B.C. continues to be the playground of many Albertans, says a Kelowna-based expert.
It's not hard to figure out why, says Elton Ash, regional executive vice-president of Re/Max of Western Canada: "Alberta winters, B.C.'s sun, sand and lakes with a wide choice of various kinds of recreation property all over the province."
In B.C.'s Columbia Valley, for instance, the summer population more than triples as an influx of Albertans -- mostly Calgarians -- heads there to golf or hang out by the water.
It's a phenomenon not limited to B.C. alone. Alberta's strong economy has helped boost recreation property markets as far afield as some parts of Ontario and even Atlantic Canada, says the recent annual Re/Max Recreational Property Report.
But closer B.C. destinations, such as the Okanagan Valley, Sunshine Coast, the Kootenays and Vancouver Island, continue to beckon most Albertans over the Rockies -- and waiting for them are hundreds of lakeside estates, mountain hideaways, health and wellness spas, and golf course communities.
There have been some recent changes, though.
While B.C.'s recreation housing market remains a solid performer, some Albertans are re-examining their options as the Canadian real estate market changes and prices in the U.S. decline, says Ash.
"Canadians are taking a serious interest in the price drop in the U.S. Sunbelt properties, as are Americans who may have considered buying Canadian recreation property," he says.
A growing number of potential buyers of B.C. properties -- particularly younger buyers with less equity -- are also stepping back to reconsider their wants and needs.
Do they really need that more expensive home or lot on the lake when something cheaper set back a bit will do?
Do they need a home that's big or elaborate? Maybe they want to look around and check prices elsewhere.
For the most part, Canada is witnessing a transition to a more balanced market, says Ash, with recreation property listings increasing at the same time as sales activity is decreasing.
But research by rareEarth Project Marketing of Vancouver shows consumer confidence is still high in resort real estate, with the Okanagan being the number one choice of Western Canadians.
The company has been responsible for more than $1.25 billion in resort real estate sales in the Okanagan, Vancouver Island, the Sunshine Coast, and resorts across North America, says president James Askew.
Baby boomers and young families with time-sensitive needs will continue to fuel the demand for recreation property, he says.
"Boomers have a built-in urgency to purchase resort real estate while they are still active, while their grandchildren are still young, and while they can still enjoy the true benefits of spending quality time with friends and family." he says. "Boomers recognize that the prime window of opportunity is only 10 or 15 years for them, so rather than be led by speculative market conditions, they're choosing to just get on with life."
The same goes for the young family market, says Askew. "That segment feels a natural sense of urgency to find that special place by the lake, ocean or ski hill where they can enjoy cherished summers and, or winters together as a close family before the children grow up."
When asked where they would buy a second home, Albertans made the Okanagan their clear favourite.
Thirty-eight per cent of those surveyed said they would buy a second home in the Okanagan. Another 26 per cent preferred Vancouver Island, while 17 per cent liked the Sunshine Coast.
"Combine the sense of urgency with the emergence of the largest and wealthiest demographic in history who are deciding the time is now to secure their dream recreational property and we have a recipe for a continued and very strong recreational property market," says Askew.
The rareEarth survey examined buyer preferences of those who are currently planning to buy recreation property. The results show that 80 per cent of buyers will only consider purchasing in projects offering whole ownership, with about 56 per cent who do not currently have a second home planning on purchasing one in the near future.
The fact that 80 per cent will only consider buying whole ownership properties is an indication of a good real estate economy, says Askew, because such a purchase requires a greater investment than fractional ownership.
There has been a slowdown in B.C.'s housing market as a result of the "cooling off" period, says Rudy Nielsen, president of Landcor Data Corp. in New Westminster, B.C.
As a result, three regions have seen values climb and sales decline, while three other have seen decreases in both value and sales from January to March.
Greater Vancouver and the Okanagan -- followed by the Kootenay region as a distant third -- continue to see an increase in sales value during that period compared to a year ago, says Nielsen, adding that in the Vancouver Island, Fraser Valley and B.C. north/northwest regions, the total sales value has declined.
"There are many reasons for the decline in sales in the first quarter, one of which appears to be the decline in interest from buyers outside of British Columbia -- namely those from Alberta and the United States," he says.
Ash says there is a small percentage of American owners of Canadian property who are looking at cashing in on their Canadian holdings for reinvestment in the U.S. at the new reduced prices.
"They may have purchased in Canada when our dollar was at 65 or 68 cents -- and now they are realizing a significant gain on the exchange rate, along with the overall increase in property values," he says.
But while there is a bang-for-the-buck mentality at work -- as there always has been -- the recreation housing market continues to be driven by baby boomers and their desire for an escape destination, a future retirement location, or to establish a legacy for their children and grandchildren.
Another, younger group of people is also looking at this market -- people who are "plugged in with young families and are looking at ways they can unplug from the 24/7 world they live in to de-stress and enjoy family time, looking for personal balance," says Ash.
It's these people, he says, who have felt the affect of escalating prices and for whom affordability is an issue. They are the ones more willing to travel further and look for spots off the lake rather than pay extra for lakeside.
Ash gave his version of what could happen to recreation property using three scenarios.
- The short term (one to two years): Some caution with affordability being an issue, more property choices for buyers.
- The medium term (three to five years): An overall balanced market with absorptions equalling inventory.
- The long term (six-plus years): Strong demand and increasing prices, with the Okanagan and Columbia Valleys being very desirable.
Re/Max's report surveyed 45 markets across the country, including eight in B.C. In all but four -- one of which was Salt Spring Island off the east coast of Vancouver Island -- markets were moving from favouring sellers into more balanced conditions. Affordability was also a primary factor in 35 per cent of markets surveyed.
"We're coming off the longest period of economic expansion since the Second World War," says Ash.
"Recreational property values have appreciated beyond our wildest dreams across the country. More balanced market conditions are a welcome change for purchasers."
His counterpart in the Ontario-Atlantic regions, Michael Polzler, echoes Ash's comments, but says: "Market conditions have shifted, but don't expect to see bargain basement prices or fire sales. The recreational market continues to experience solid demand -- a trend that is expected to continue throughout 2008."