As with Metro Vancouver, Kelowna, Penticton are out of reach of locals
Michael Kane
Sun
Average home prices across Metro Vancouver are expected to surpass $600,000 next year — and that’s in a market supposedly slowing down.
Kelowna-Central Okanagan is also a major front-runner for price appreciation, according to the Re/Max Housing Market Outlook 2008 released Wednesday.
Metro Vancouver prices are forecast to rise seven per cent next year from an estimated average of $560,000 for 2007. Kelowna-area prices are expected to climb nine per cent in 2008 to an average of $408,750.
While the Metro Vancouver market is slowing because fewer people can afford to buy, the Central Okanagan market is being turbocharged by retirees and buyers of recreational property, said Kelowna-based Re/Max executive Elton Ash.
Rising prices are squeezing out local residents and encouraging some to move to Alberta where they can earn more, Penticton Coun. Randy Manuel said in an interview.
Manuel still has two adult children, aged 24 and 27, living in his home because they can’t afford to buy in the region.
“Our young people can’t save up enough to put a down payment on anything because even a cheap motel in the wintertime is going to cost $900 to $1,100.”
To try to encourage construction of rental units, Penticton council is reducing charges and appealing for federal GST relief, but Mayor Jake Kimberley said the strong market is encouraging developers to build condos for sale.
“We’ve estimated in our community that there is a requirement for about 300 to 400 units immediately to accommodate families,” Kimberley said in an interview. “I think we’re all well aware that the cost of getting in to purchase a home now is beyond the means of most wage earners.”
The Re/Max report, which examines trends in 18 markets across the country, says higher mortgage rates and increased inventory levels failed to materialize in most major centres this year.
By year-end, housing values are expected to shatter existing records, with the highest increases forecast for Saskatoon (49 per cent), Edmonton (31.5 per cent), Regina (21 per cent), Calgary (20 per cent), Kelowna (19.5 per cent), Saint John (17 per cent), St. John’s (12 per cent), and Metro Vancouver (10 per cent).
While economic prospects are expected to continue to improve, the report says few major markets will exceed record sales levels set in 2007.
About half a million homes are expected to be sold next year, down from an estimated 545,000 this year.
The average Canadian home price is projected to rise nine per cent this year to $303,000, up about $25,000 over 2006 levels. Next year, prices are forecast to rise six per cent to an average $321,000.
Ash said the housing market cannot continue to sustain double-digit inflationary pricing.
“It’s not healthy. And then the Bank of Canada becomes concerned, and that could affect interest rates,” he said. “I think a stabilizing of overall unit sales which will stabilize prices next year is very healthy.”
As in 2007, inventory will be the major wild card next year, he added.
“A return to tight market conditions could mean all bets are off as buyers are forced to compete, creating increased market pressure.”
© The Vancouver Sun 2007
