With the arrival of summer, the dream of cabin ownership is top of mind. REW took a look at what’s cooking in the BC recreational property market
Susan M Boyce
Other
Summer’s here, and it’s not just the mercury that’s rising throughout BC. After a long slump, the market for recreational properties is heating up… rapidly. “This is the busiest start to a year that I’ve seen in a long, long time,” says recreational property guru Rudy Nielsen, president of Niho Land & Cattle Company and Landcor Data Corporation.
The recent annual recreational property report by Royal LePage and the one issue this week by Re/Max both shared the same message, citing increased interest from overseas and domestic buyers because of the low Canadian dollar.
The good news for buyers? Now’s the time to snag some good deals while properties are still attempting to rebound from previous lulls and interest rates remain low.
Market Rebounds
“In an economic downturn, recreational properties are always the first to feel the pressure and the last to come back,” says Curt Jansen, vice president of sales and marketing with Skaha Hills in Penticton. He adds that sales are now so strong, Skaha Hills’ initial phase sold out in just over two months — a far cry from the predicted two and a half years.
He notes the 2008 financial meltdown lured many British Columbians to invest in desert locations like Scottsdale or Phoenix when the Canadian dollar was at par and American recreational property was readily available at 40 cents on the dollar. Now, as the loonie loses ground against the US greenback and bottom-line travel costs – especially airfare – skyrocket, many property owners see a new opportunity in Canadian markets.
“You’ll likely be able to sell your US property at a profit, plus you’re making 20 per cent on the dollar when you convert to Canadian funds,” says James Askew, president of rareEarth Project Marketing. “Meaning you can purchase a property somewhere like Vancouver Island or parts of the Okanagan that are still undervalued by 10 or 20 per cent, and often still keeping money in your pocket.”
One question mark is the Alberta buyer. Don Campbell, founding partner of the Real Estate Investment Network (REIN), believes the combination of falling oil prices and a new provincial government will keep some Albertans sitting on the fence for the immediate future. And Nielsen says they are still coming but acknowledges they are now less of a primary market driver.
Heat Indicators: The Decision to Buy
Access remains a key driver in the decision to purchase recreational property, but proximity to services and amenities is gaining strength as a major consideration. “While there will always be people who want the pure solitude of being somewhere out in the bush, the majority of buyers still want the convenience of things like a grocery store, coffee shop and somewhere to eat out,” says Campbell. “They also want to be able to get there in three or four hours after work on Friday – even if they’re arriving at midnight, it’s OK.”
Nielsen agrees. He’s nicknamed it the “golden circle” – an informal but remarkably accurate price predictor based on proximity to the urban hubs where most recreational property buyers live. “For example, you’ll likely spend $600,000 to $700,000 for a lakefront property in Merritt — about a two-hour drive from Vancouver. If you’re willing to drive five hours to Williams Lake, you can find the same kind of property for half that amount. And in Prince George, a 12-hour drive from Vancouver, there are lots of lakefront deals to be had for around $100,000 — but you can’t spontaneously drive there for the weekend.”
Hot Spot Snapshots
So where are the hot deals to be had? Apparently, lots of places.
Vancouver Island: According to most insiders, Vancouver Island is one of the top hotspots when it comes to value for money – especially in Courtney/Comox, where reliable WestJet flights simplified commuting from Vancouver or other urban centres.
Gulf Islands: A bargain hunter’s delight with waterfront lots as low $50,000 on islands with boat access, according to the report by Royal LePage. Even islands served by BC Ferries have deals – like a lowbank, waterfront acreage for $400,000 or $500,000 with a residence already built.
Penticton: WestJet and Air Canada flights from Vancouver or Alberta are also being hailed as a game-changer for this Okanagan destination. Plus there’s the allure of owning in the heart of wine country.
South Cariboo: Particularly appealing to families in their late 40s and 50s or early retirees, waterfront properties average $260,000 and non-waterfront can be found for under $100,000 according to Royal LePage 100 Mile Realty statistics.
Kelowna: Now emerging from a prolonged and severe case of the doldrums, Kelowna is once again attracting attention from a diverse range of buyers whose motivations range from enjoying more vacation time, create a family legacy, or owing a property that can be rented out now and become a full-time residence in retirement. Lakefront properties commanding as much as $2 million-plus are once again moving steadily if not rapidly. Gated communities – especially when associated with amenities like a golf course, luxury spa, or winery – continue to gain attention.
Whistler: Inventory is down, demand is up, and Whistler’s now well-established status as a four-season resort are all contributing to a resurgence of demand including an increasing number of ex-pats who are delighted to spend some of the US dollars they’ve earned working abroad on a summer recreational property for their family.
Non-Traditional Alternatives
Fractional properties: Often mistaken for a timeshare, the fractional ownership model has been steadily declining in value for almost half a decade – meaning opportunity for investors willing to ride it out or gamble that the market has hit bottom. One quarter-share owner in Currents at Otter Bay on Pender Island saw a single buyer happily fork over $75,000 all three remaining fractions – shares that had originally sold for upwards of $95,000 each. More on fractional ownership here.
Condo hotel properties: Also hard hit in the economic downturn, many of these properties are now selling below replacement cost. And while owners can only use their condo hotel unit for a certain number of days per year, owners can use hotel amenities like pool and gym 365 days per year – a little-known benefit that’s wowed more than one savvy buyer.
The full 2015 Royal LePage Recreational Property Report can be found via here.
© 2015 Real Estate Weekly
