What does a recession mean for homebuyers?

Jonathan Russell
CMP

A recession usually signals volatility in the housing market. While experts agree the current market is unlikely to lead to another Great Depression, it is likely to continue impacting home prices. For some, it will mean a loss; for others, it may even create an opportunity. Here is what you need to know about what a recession could mean for homebuyers.

The housing market is not always in danger of collapsing during a recession. For instance, experts agree about the unlikelihood that the current market will lead to a crash on the scale of the Great Recession. In fact, it is possible that a recession will lead to opportunities for some potential buyers to climb onto the property ladder.

One of the reasons for this is that the federal government usually attempts to stimulate the economy by lowering interest rates. When this happens, major banks tend to follow suit by lowering mortgage rates. With a lower mortgage rate, you would end up paying less for your house in the long run. And depending on how low the mortgage rate goes, you are also likely to earn significant savings.

Another benefit is that there are usually fewer homebuyers during a recession, meaning homes stay on the market for longer. To make their properties easier to sell, owners usually drop their listing prices. You could even end up securing your dream home with a lucky bid at an auction.

Typically, recessions drive down house prices. One reason for this is that poor economic conditions usually mean there are fewer potential home buyers with disposable income. Home prices often drop when demand for properties drops, and any income generated from real estate stalls. While this is a common scenario, it is not always a foregone conclusion. During a recession, house prices can experience volatility in either direction, by rising or falling.

Historically, financial experts have not done a great job predicting future crashes to the housing market. For example, for most of 2020 and 2021, home prices spiked significantly. However, when the federal government then hiked interest rates, the calculations for home buyers changed and home prices depressed. Rising interest rates force homebuyers to save money on their property purchases, where possible.

If house prices drop during a recession, potential homebuyers could get a better deal on a home. This is due, in part, to the increasing number of homeowners or foreclosures being forced to sell their properties in order to stay financially viable.

What are some tips for buying a home during a recession?

Regardless of whether Canada is in a recession or not, it is always critical, when buying a home, to ensure you are prepared. One of the best ways to be prepared is to get your finances in order. You will need a steady household income and solid job security. In the best-case scenario, you will also have a good credit score. Knowing all the costs associated with homeownership such as home insurance, taxes, and maintenance is also critical.

Working with a knowledgeable real estate agent who is familiar with the area is another good idea, whether in a recession or not. A knowledgeable real estate agent will know home values and tell you if the list price is accurate. They will also know if there is a lot of competition for a property or whether the homeowner is in a hurry to sell.

In Canada, recessionary periods can devalue property by 6.1% on average, according to data from the Organization for Economic Co-operation and Development (OECD), which studied the price of houses over four recessions. In real terms, that means a decline of $6,100 per $100,000. The long-term growth rate of price appreciation suffers the more recessions the economy has to endure.

In the worst-case scenario, during a recession, an average Canadian home could cost the average homeowner about three years of salary in losses. On average, however, the loss endured by an average Canadian homeowner would be equivalent to one year’s worth of salary for an average-priced house.

 

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B.C. real estate: Housing sales slump, but prices not declining in all markets

Joanne Lee-Young
The Vancouver Sun

The steepest sales decline occurred in Chilliwack (61%), followed by the Fraser Valley, where sales dipped 54%. Greater Vancouver saw residential sales drop by nearly 46%.
Home sales across B.C. slid 45 per cent in October compared to the same month last year, said the B.C. Real Estate Association. Photo by Tyler Anderson /National Post files
B.C.’s housing sales downturn deepened in October as interest rate hikes and economic uncertainty sidelined potential buyers.
There were 5,242 residential home sales recorded by the Multiple Listing Service (MLS) last month, according to the latest report from the B.C. Real Estate Association — a 45 per cent year-over-year decline.
Sales have dropped since peaking in 2021 when low interest rates and remote working trends during the COVID-19 pandemic drove demand for larger spaces and properties outside major metropolitan areas.
The sales slow down means prices are also taking a hit.
“Sales activity remains slow across the province and inventories appear to be plateauing,” said BCREA chief economist Brendon Ogmundson in a news release. “While prices have fallen from peak levels reached in early 2022, average prices have recently levelled off.”

While monthly industry reports show sales and prices falling, some real-time gauges of median prices show sharper falls.
And even in areas such as Powell River that were outliers and showed a significant year-on-year price increase of 9.3 per cent, according to benchmark prices used by real estate boards, real estate agents on the ground say that prices are now falling as buyers face tougher conditions.
“Our prices are falling like all other markets in the province,” said Warren Behan, a Powell River-based real estate agent.
Another real estate agent in Powell River said the area had been behind in prices for many years. In the spring of 2021 and even until earlier this year, buyers from other areas, who had cashed out of their properties elsewhere, came to Powell River.
“It drove our market upwards,” said Cory Burnett. “Many of them were from Squamish coming to look. It was sort of the same thing that happened to Squamish 10 years ago, and now they were coming here.”
Now, he is noticing that many deals are “subject to sale” of another property. He said there are still “outside” buyers, but it’s mostly local ones who are downsizing or moving.
Behan said the market has always had a mix of local buyers and ones from elsewhere. He said that with a low number of total sales, it’s easy for a relatively small number to skew percentage increases.
The steepest year-on-year sales decline for October was 61 per cent in Chilliwack where year-on-year prices for all property types fell by 11.9 per cent. The next sharpest decrease in benchmark price was seen in the Fraser Valley where it was 8.3 per cent, according to the real estate board.
It uses the MLS Home Price Index (HPI), which it describes as a “composite benchmark price for all residential properties” in an area. This HPI is modelled after the consumer price index and was introduced because averages can be skewed by higher or lower-end property sales and fluctuate more dramatically because of this. Instead, the HPI tracks so-called “typical” homes that are picked about annually for being “in the middle of the pack” over a long period when it comes “quantitative” attributes, such as number of rooms or square footage, as well as having “qualitative” features, such as access to a garage or a fireplace.
Proponents of median prices, which is the middle price in a list of sales numbers from high to low, say these can be a more accurate reflection of a market where prices are moving quickly.

The October 2022 median price in Chilliwack for all property types, for example, was $617,500, which is a 25 per cent year-on-year decrease in median price, according to HouseSigma.
The Greater Vancouver area in October posted a slight 0.7 per cent increase in benchmark price to $1,231,805 compared to the previous year, according to the real estate board.
Meanwhile, the median price for Greater Vancouver in October was $978,000, which is a decrease of 5.7 per cent compared to the previous year, according to HouseSigma.
Within Greater Vancouver, however, the median price for all properties in North Vancouver increased by 13.6 per cent and in Burnaby by 4.4 per cent and in Coquitlam by 5.8 per cent, according to HouseSigma.

© 2022 Vancouver Sun

Victoria construction boom underlines CRE strength

Andrew Duffy
Western Investor

With commercial properties flirting with the highest demand and prices in the country, developers and builders are scrambling to keep up

Work continues on the mixed-use Brio development in Victoria, Nov. 4, 2022. The Victoria construction industry’s employment increased to 19,600 tradespeople in October from 12,700 at the same time last year. | Adrian Lam, Times Colonist

Victoria’s unemployment rate improved to 4.3 per cent in October, driven by a booming construction industry that appears immune, so far, to the prevailing economic headwinds and ongoing labour shortage.

According to recent numbers released by Statistics Canada, Victoria’s labour force increased by 4.8 per cent to 225,600 between October of this year and last, while the number of people employed here increased 5.2 per cent to 216,000.

The biggest increase year over year was in the construction industry, which saw its total employment increase to 19,600 in October from 12,700 at the same time last year.

The wholesale and retail trade sector also saw a significant improvement with 3,700 more positions in October compared with last year, while the transport and warehousing sector saw an increase of 2,600 jobs.

The business, building and support services sector, which covers contracted administration and human resources services as well as cleaning services, saw the biggest decrease year-over-year, shedding 5,100 positions, while educational services dropped 1,900 jobs over the last 12 months.

“It’s not surprising the numbers in construction are high,” said Chris Atchison, president of the B.C. Construction Association, who added the numbers have increased over the last three years. “There’s been steady growth in construction both in terms of activity and attraction to the workforce.”

He said the construction labour force in the province now numbers about 236,000, ranking it the number-one employer in the goods-producing sector.

Atchison said the growth comes down to demand. “Home building, industrial and institutional builds have been part of what’s carried our economy throughout the pandemic.”

With rising interest rates and high supply and labour costs, however, the private sector has started to pull back on spending, though public investment in institutional projects remains fairly steady and the labour shortage is still the industry’s biggest problem.

Atchison said while they are still riding a wave of investments that have already been made in big projects, there are challenging times ahead.

He also noted that while the Statistics Canada numbers show an overall increase, the number of skilled trades continues to drop.

Rory Kulmala, chief executive of the Vancouver Island Construction Association, said the province will be short 27,000 to 30,000 skilled trades workers by 2027, which on the Island could translate into a shortage of 10,000 to 15,000 in the next five years.

“The demand for [skilled trades] is still there notwithstanding the reports that we’re heading for a recession,” he said.

Kulmala agrees with Atchison that construction spending could tighten up as a result of increased interest rates, but says there is still heavy demand for new housing.

Casey Edge, executive director of the Victoria Residential Builders Association, said his membership continues to struggle with a tight labour market and supply issues.

He said mortgage costs and the stress test for new home buyers will get tougher with higher interest rates, which will make new development more challenging.

“But builders are a very resilient group — it is an industry with ebb and flow and to be successful in this business, you really have to know how to adapt to varying economic conditions,” he said.

Meanwhile, optimism has returned to Victoria’s commercial real estate market, according to a market outlook from CBRE.

The outlook from the commercial real estate company, which looked at industrial, office and retail real estate as well as multi-family residential development, suggests there is plenty of demand in the region.

The outlook noted the industrial sector is limited only by available land, though there is land development underway that should result in an additional 220,000 square feet of space established by the end of this year. The lack of land is expected to drive up the sale price of industrial land to $400 per square foot.

“The market is effectively out of industrial-zoned parcels,” the report said.

A  third-quarter market “snapshot” from Colliers pegged Victoria’s office vacancy rate at 5.9 per cent, second lowest in Canada, and an average lease rate at $24.01 per square foot, third highest in the country.

Greater Victoria has Canada’s tightest industrial sector, with a 0.1 per cent vacancy rate, according to Colliers, which noted owner-occupiers may be wise to make a move during what is currently a mild dip in the market. One industrial project was put on hold in Q3 2022 due to rising construction costs, despite leasing rates averaging more than. $17 per square foot, second highest in the country.

“With an industrial vacancy rate still near zero, rents have increased and will likely continue to climb this year. Users will likely want to still get their foot in the door sooner rather than later, because nobody knows when or even if a price reduction will come,” Colliers cautioned.

© 2022 Western Investor

Edmonton Condo Prices On the Upswing As Demand Surges for More Affordability

Peter Mitham
ZOOCASA

The Edmonton real estate market has experienced a cooldown in sales volume this fall after a relatively strong summer, driven by strong oil prices and greater affordability of homes. Prices of single-family, condo, and duplex/row homes experienced marginal changes month-over-month in October, but the number of new residential listings across all property types saw a sharp decrease of 13% compared to September.

Condo Selling Prices Remain Strong

Condo units have held their value in many cities across the country as the cost of borrowing has increased six times so far this year. However, the property type experienced the largest decrease in number of sales month-over-month, down 13.9% from September. The significant drop in new listings is the major culprit. In comparison, single-family home sales were down by only 2.8% month-over-month, and duplex/rowhouse sales were down 12.4% from September. According to the Realtors Association of Edmonton, new listings dropped 13% in October month-over-month. Nationally, the number of new listings edged down another 1% month-over-month but in some areas like the GTA, new listings are at historically low rates not seen since 2010, according to the Toronto Regional Real Estate Board (TRREB).

• Read: Hidden Gems for Sale in Edmonton, Alberta Under $325,000

Although the number of sales is declining, down 6.7% from September, the value of condos remains strong. Condos sold for an average of $224,252, a decrease of only 0.3% year-over-year and an increase of 1.7% from September. Prices of single-family homes averaged $462,858, down only 0.3% month-over-month and still up by 2.7% year-over-year. Duplexes followed suit with single-family home price trends, still up by 3.7% year-over-year, but the average price of $372,027 decreased by 1% from September. 

 

 

Even as Inventory Tightens, Days on Market are Consistent 

As we move into the colder months, it’s normal to see a bit of a decline in inventory. Although still up by 0.8% from October 2021, prospective buyers may spend more time in the market as residential listings experienced that sharp decline from September. 

• Read: A Guide to the Real Estate Cycles for Buyers & Sellers

The decline in inventory hasn’t yet affected the days on market. Sellers can expect inventory to still move in line with previous months. Single-family and condo inventory is still moving consistently, averaging 44 and 55 days on market respectively. A decrease of one-day month-over-month for condos, while single-family average days on market remain the same. Duplexes are experiencing slightly longer listing periods, up by three days month-over-month to an average of 48 days on market.

 

Zoocasa © 2007–2022.

Coquitlam industrial strata project bucks headwinds as buyers line up

Peter Mitham
Western Investor

But strong demand for lease product prompts some developers to shift focus

IntraUrban Eagle Ridge, a 149,000-square-foot strata industrial project on Barnet Hwy. in Coquitlam, has received letters of intent from potential purchasers months before a formal marketing campaign starts.PC Urban Properties Corp.

Strong pre-construction demand is buoying hopes for PC Urban’s planned strata industrial project on Barnet Highway in Coquitlam, though the official marketing launch remains months away.

“We have received a handful of unsolicited [letters of intent] before going to the market,” said Brent Sawchyn, CEO with PC Urban Properties Corp. “There’s seemingly pent-up demand for our offering that we’re very excited about.”

IntraUrban Eagle Ridge, as the project is known, will deliver 149,000 square feet of small-bay space in two buildings when it completes in the final quarter of 2024. It will be one of just a few new strata developments in an area leasing brokerage Avison Young describes as “underserved.”

PC Urban bought the property in partnership with Nicola Wealth Real Estate for $24 million in May. While interest rates had started to rise, Colliers International was bullish on the project in its second-quarter market report.

“With increasing lease rates and perpetually low availability, this industrial strata project could very well still experience record-breaking pricing, even amidst rising interest rates,” it said, noting that lease rates were heading north of $20 a square foot.

But the strata industrial market has cooled since June, as interest rates combined with high construction costs tamped down demand. Deals have taken longer to do as buyers became more cautious, and some developers have suggested offering strata-titled projects for lease rather than sale.

Sawchyn said pricing for the space has yet to be determined, but the fundamentals of Metro Vancouver’s industrial market have not changed.

“We’re still seeing activity. Is it as robust as it was eight, nine months ago? No,” he said. “The underlying requirements are still the same. The vacancy rates are effectively zero for industrial space, and only getting worse, if that was possible.”

Similarly strong demand is in evidence at its IntraUrban Cornerstone development in Langford, which saw five sales in September. The project is now 80 per cent sold out, with three buildings totalling 165,000 square feet set for completion in the second half of 2023.

But the uncertainties have many buyers holding off.

“On a short-term basis, when we don’t know when the Bank of Canada is going to stop increasing interest rates, for someone who is going to close 12 months from now, pegging what your cost is going to be at that point in time is a little uncertain,” said Beth Berry, vice-president with Beedie Industrial, which recently launched strata-titled projects in Langford and Kelowna.

Presale pricing on Pacific Ridge Business Centre begins at $460 a square foot, while Stratosphere in Kelowna starts at $465 a square foot.

But all offers are welcome, from both buyers and tenants, with offers to lease leading the way.

“When interest rates go up, that has a big impact on [affordability], so switching to lease allows those same businesses to grow but not lock into an interest rate at this point in time,” Berry said. “What we’re trying to do is address the demand that is there.”

And the demand remains, and is likely to intensify as some developers delay new strata projects after the surge in activity of the past few years. Speakers at the Vancouver Real Estate Strategy and Leasing Conference on November 3 said a lack of strata construction will up the pressure on lease space in a market where industrial space availability averages 0.8 per cent and asking rents are $20.67 a square foot.

“With interest rates going up, existing strata projects aren’t selling, strata projects coming up are getting delayed or pushed back, so I think that’s just going to put more pressure on the leasing inventory,” said Peter McFetridge, vice-president, leasing with the Onni Group of Companies.

Developers to keep their options open to meet demand, according to Irene Au, director of leasing with QuadReal Property Group, which is partnering with Hungerford Properties to build and lease Xchange Business Park in Abbotsford.

“The conversion of strata into more lease product, that’s probably one of the things that would help availability,” she said.

© 2022 Western Investor

$15m funding announced for more BC housing supply

Ephraim Vecina
other

A new affordable housing complex is set to arise in Gibsons, BC

Federal and provincial governments have announced an investment of over $15 million to construct a new tranche of affordable rental homes in Gibsons, British Columbia.

The funding, which will go towards the development of a four-storey housing complex offering 40 affordable rental homes at 571 Shaw Road, is a joint effort between the government of Canada (through Canada Mortgage and Housing Corporation), the BC government (through BC Housing), the Gibsons municipal government, and the Sunshine Coast Affordable Housing Society (SCAHS).

“The homes include a mix of bachelor, one-, two- and three-bedroom units, with nine units completely accessible and the remaining 31 adaptable to suit individual needs,” CMHC said.

Read more: BC to replace Mortgage Brokers Act with new legislation

“This project goes back eight years to when [Gibsons] council partnered with an earlier incarnation of the Housing Society to identify town land for affordable housing,” said Mayor Silas White. “We are grateful to the Society for their perseverance, and to BC Housing and the federal government for making this vision happen. These units will make a significant impact on our community.”

The Sunshine Coast Affordable Housing Society will own and operate the project. Construction is slated for completion by fall 2023.

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Cadillac Fairview, Hopewell acquire 146-acre Calgary industrial park

Western Investor Staff
Western Investor

Joint venture eyes future development of 2.3 million square feet of industrial at the Rosemount Business Park in Balzac

Cadillac Fairview (CF), of Toronto, has announced the purchase of the 146-acre Rosemont Business Park in Balzac, Alberta through a joint venture with Calgary-based Hopewell Development LP (Hopewell) for an undisclosed price.

The business park site is close to the Calgary airport in the Balzac Industrial sector and will be developed into 2.3 million square feet of industrial gross leasable area, according to a Cadillac Fairview-Hopewell joint statement issued November 7.

CF and Hopewell confirmed plans for the construction of up to five buildings, occupying 45 per cent of available land area and featuring 40-foot clear height, to be built in phases between 2024 and 2029. The project is aimed at the distribution and logistics industrial sector.

“The Rosemont Business Park is attractively situated in a high-potential market area, served with solid transportation links,” said Wayne Barwise, executive vice-president of development for Cadillac Fairview, in the announcement. “Major players such as Walmart, Sobeys and Home Depot all have distribution hubs nearby and Calgary is emerging as a robust-growth, up-and-coming market for key logistics uses, with limited inventory available in the foreseeable future to meet increased demand.”

Calgary could welcome the new space. The Calgary region now has a tight industrial vacancy rate of 2.2 per cent, according to Colliers, and lease rates increased to an average of $11.65 per square foot, as of the third quarter of 2023.

Financial details of the purchase have not been released, nor has information about the structure of their partnership. 

© 2022 Western Investor

B.C. home sales to fall a further 11.4 per cent in 2023: BCREA

Frank O’ Brien
Western Investor

Real estate association forecast says record-setting market is “unwinding”

British Columbia home sales will fall 34.4 per cent this year from the record-setting pace of 2021 and stumble down a further 11.4 per cent in 2023, according to the most recent forecast from the BC Real Estate Association (BCREA).

The factors that led to unprecedented sale and price increases since the pandemic began two years ago are “unwinding” said BCREA Chief Economist Brendon Ogmundson.

Record low mortgage rates and a buyer preference for extra space, which helped drive sales higher across the province, have collided with six interest rates hikes so far this year as the government tries to tame high inflation.

“As a result, there has been a significant shift in the housing market, which we anticipate will continue through 2023,” Ogmundson added.

The BCREA released its 2022 Fourth Quarter Housing Forecast November 8. Multiple Listing Service residential sales in the province are forecast to decline to 82,345 units this year and fall to 72,960 next year. This is down from 124,800 transactions in 2021 and nearly 100,000 in 2020.

“With continued high-interest rates and what looks like a difficult 2023 ahead for the Canadian economy, we anticipate that market activity is going to fall below normal levels next year. On the supply side, slow sales activity has led to an increase in inventory, but from record lows,” the BCREA forecast noted.

The average price of a home in B.C. will increase 4.6 per cent this year to $970,000 compared to a year earlier, but prices are already down about 12 per cent from the peak in February of 2022.

The average B.C. home price will decline a further 5.4 per cent to $917,900 in 2023.

In Greater Vancouver, the composite home price will drop 5.2 per cent to just over $1.16 million, while the Fraser Valley will see the biggest year-over-year decline, at 7.8 per cent, to an average home price of $959,200 in 2023, according to the BCREA.

© 2022 Western Investor

B.C. hotel operators hopeful after successful season

Peter Mitham
Western Investor

Despite labour shortages, cost pressures and a still-slow conference trade, rising occupancies and revenues point to a “remarkable recovery “

 Most B.C. hotel sales this year are in outlier markets, such as the Kanata Hotel & Conference Centre, Kelowna, which sold in June for what is said to have been a record price for the Okanagan. | Submitted

A wildly successful tourism season has Western Canadian hoteliers looking to build on the lessons of the past three years as a recession looms.

Occupancies rose 60 per cent nationally in the nine months ended September versus a year ago, pushing average daily room rates to $183.76, or 34 per cent above last year. This boosted revenue per available room (RevPAR) to $110.11, up 113 per cent versus a year ago.

“It’s been a remarkable recovery, and for us it’s been right across the country,” said Brian Leon, CEO of Choice Hotels Canada, speaking at the Western Canada Lodging Conference in Vancouver on October 25. “We’re going to end this year with RevPAR probably a little more than 10 per cent higher than it was in 2019. We would never have expected that.”

Vancouver led the country, with an average occupancy rate of 70.3 per cent in the period. Room rates followed suit, rising 49 per cent to a nation-leading $243.72 a night. RevPAR increased a stunning 153 per cent to $171.34 from just $67.69 a year earlier despite ongoing border closures.

“This market has really seen great recovery over the past year,” said Jim Chu, executive vice-president and chief growth officer of Hyatt Hotels Corp. “And that’s without China.”

The strength of demand in Vancouver stands out next to Calgary, where hotel performance continues to lag Western Canada. Occupancies averaged 57.1 per cent in the first nine months of 2022 while room rates are also below average at $153.63 a night. This compares to 62.5 per cent occupancy in the same period of 2019 when rates averaged $145.92.

RevPAR in most major markets has yet to return to pre-pandemic levels but hoteliers have also reopened with an eye to keeping costs in check. Shorter wine lists, smaller menus, and offerings tailored to visitors  – primarily leisure and group stays – have been critical.

“A lot of job-sharing, a lot of engineering of processes and tasks” took place, said Jiri Rumlena, president of SilverBirch Hotels & Resorts, which saw its workforce fall to 18 per cent of normal during the pandemic. It rebuilt its staff to 80 per cent of normal this summer, but guest experiences took longer to recover.

“Standards didn’t come back in certain areas as they normally should have,” Rumlena acknowledged.

Labour woes

While consolidation of roles has helped address the labour shortage, and cutbacks in housekeeping helped control costs, Cindy Schoenauer, vice-president, hospitality and gaming with Cushman & Wakefield, isn’t sure it’s a strategy for long-term success.

“I don’t know if that’s something hotels want to keep doing because at the same time you’re talking about really rapid [room rate] growth,” she said. “There needs to be value to what you’re paying as well.”

The sector’s revival should be good news for workers after two years of turmoil.

“We’re not blind to the fact that the entire hospitality industry, ski included, have been in the forefront of media over the past two years and the basic narrative has been lack of stability,” said Christopher Nicolson, CEO of the Canada West Ski Areas Association, based in Kelowna. “As stability returns, that will definitely help recruiting as well.”

It won’t be easy, though. The sector was down 400,000 workers during the pandemic but recouped about 200,000 people this summer before returning to a deficit of 300,000 workers this fall.

While the federal Temporary Foreign Workers program has been tweaked to allow the sector to bring in up to 30 per cent of the workers it needs, the sector needs to continue working to secure domestic workers.

“We have to get out and tell our story,” said Susie Grynol, president and CEO of the Hotels Association of Canada.

Part of that story is that 90 per cent of hoteliers increased wages this past summer to attract workers.

“We want to be the sector people want to work in,” she said.

“We’ve seen leisure recover, but we have yet to see corporate [incentive travel] and meeting, conference group demand recover,” Schoenauer added. “It’s started, it’s just taking a little longer.”

Asset sales

Leon believes this year’s recovery will support fresh investment in properties that will improve the guest experience and position hotels for the future.

“Our hotels this summer, from a financial perspective, are in a lot better shape than they were a year ago,” he said.

The market is also benefitting from the removal of 6,800 rooms, primarily older product, since 2020, when governments stepped in at the onset of the pandemic to snap up properties for alternative uses, primarily social housing.

“You have rooms coming out that’s going to help our recovery,” McCluskie said.

However, with urban hotel markets still challenged by a lack of business travel, many of the 15 sales seen in B.C. this year have been in smaller, secondary markets outside the main centres. An example is the Kanata Hotel & Conference Centre in Kelowna, which sold this year for what is said to be highest price paid for a hotel in the region.

Just one hotel property changed hands in Vancouver, that was not purchased for redevelopment or an alternative use.

© 2022 Western Investor