While Griffiths acknowledges Kelowna's median housing prices may appear high, she stresses there's a significant difference in the cost of owning a home in the Central Okanagan versus an equivalent dwelling in Vancouver.
"It's important to recognize that 44 per cent of the people who own a home within the Kelowna CMA do not have a mortgage."
The recently revealed HST transition rules have also had an immediate and dramatic impact on the Okanagan's stalled condo/resort market.
HST ended
"The new $850,000 HST rebate threshold on recreational properties and second homes located outside the GVRD and CRD was like drawing a bull's eye around the Okanagan and the area surrounding Victoria on Vancouver Island, then marking them with a "buy here" sign, said a delighted Renee Wasylyk, president of the Kelowna chapter of the Urban Development Institute and CEO of Troika Group.
"Since the announcement we've seen the activity in sales centres explode. The ripple effect is huge. We've written more contracts this March, after the threshold was raised, than in the previous four Marches combined."
And it's not only out-of-town buyers who are getting out their chequebooks and getting off the fence.
"I believe now is the perfect time to buy into the Okanagan market," said Vince Taylor, partner at Pilothouse Real Estate Inc., the company that masterminded the wildly successful one-day receivership sellout at Tuscany Villas.
"The fabulous lakes, pristine mountains and unparalleled lifestyles that our various communities have to offer have not gone away," he added. "Tuscany Villas was an indication Kelowna buyers are still out there and are anxious to stay in the community they love … if given good options. I think Tuscany represented a turning point in awareness of market conditions and signalled a turn in the Okanagan market in general."
Taylor adds it's his view the cause of the past few years' decline is "glaring and obvious with hindsight. The collapse of the U.S. market and U.S. dollar, the collapse of the Alberta tarsands business and corresponding erosion of the Calgary and Edmonton cash pipeline to B.C.'s recreational markets, and over-heated prices.
Now, we're seeing the U.S. slowly rebound, Alberta again in full swing and prices in Vancouver exceeding the highs of 2007 - this all bodes well for the Okanagan."
However, he cautions new developments will need to respond to customer needs and ability to pay.
"Grade A waterfront still costs between $7,000 and $10,000 per foot in the Central Okanagan. A million dollars for 100 feet doesn't sound like a depressed market to me."
Randy Shier, principal of the Mission Group, agrees. "Nothing has changed about this destination. We hit an economic downturn and many Canadians put the decision to purchase on hold - especially the Albertans who were put off by the HST. Now we have transition rules in place, they're coming back. I'd estimate the Alberta market is now 5 to 10 per cent of our business."
Shier also notes there are exceptional values to be found for those who act now. "Unlike other urban markets that have posted year-over-year pricing gains, Kelowna has held relatively stable. But we're on the cusp now. More traffic in sales centres translates into more offers. We're already seeing existing inventory dwindling and predictions suggest supply from 2007-08 will soon be completely absorbed."
He adds that for the first time in some years Mission Group is totally sold out of condominium product, although it has two new townhouse projects underway: Winsome Hill and Dwell.
Job growth
Paul Fabris, senior market analyst with Canada Mortgage and Housing Corp. in Kelowna, predicts the local housing market can expect to see modest housing-price gains throughout 2012 and into 2013. "The 2011 resale market picked up, plus we're seeing higher levels of migration and personal employment."
Rising employment is one of the factors Wasylyk says is fuelling the resurgence of consumer confidence. "Yes, we were lacking in that area, but no more. There's a renewed optimism. Businesses are firing on all cylinders, especially those tapping into the global markets - businesses like Reidco Metal Industries, who went from eight to 85 employees in less than a year. One of our own companies, Rise and Run, has shown a 25 per cent increase in our gross revenues so far this year. Let's face it: when you start seeing more people getting jobs and/or people with jobs getting raises, it translates directly into renewed consumer confidence."
Two of the newest employment superstars are Kelowna General Hospital (KGH) and Kelowna International Airport.
Pumping $880 million into the local economy is an ambitious P3 addition to KGH. The project includes a new 360,000-square-foot patient-care tower with a new emergency department located on the ground floor that's four times the size of the existing facility. KGH will also become home to a 34,000-square-foot clinical academic campus of the University of BC Medical School, which it's hoped will encourage the next generation of doctors to train and, more importantly, stay within the Central Okanagan when they take up practice. Interior Health will gain more space and be able to consolidate services.
Arguably even more significant is Phase 2, the International Heart and Surgical Project. This will be the province's first full cardiac center located outside the Lower Mainland or Victoria. When operational, the centre is anticipated to create a minimum of 80 new jobs, increase the survival rate of heart-attack victims to 98 out of 100 and reduce the wait time for angioplasty surgery from almost four days to 12 hours or less. For people who live in Kelowna and the surrounding area it will also eliminate the expense, stress and potentially life-threatening time delay of travelling to Vancouver for surgical procedures.
Ranked the ninth-busiest airport in the country, Kelowna International Airport is in the midst of an ongoing multimillion-dollar makeover succinctly named the "Drive to 1.6 Million Passengers Program."
"We are currently at 1.39 million passengers, but we expect to reach 1.6 by 2015 or 2016 and this program will ensure our assets are ready to handle that growth," said Sam Samaddar, airport director, noting that overall traffic for the first two months of 2012 was already up 4 per cent over 2011 levels.
The program will see $50 million invested over five years. Now underway, with a completion estimated for September 2012, Phase 1 will see a new customs hall and increased footprint for the arrivals area of the airport's international area. Phase 2 will increase the outbound baggage system, improve the self-service options and incorporate new ways to reduce energy consumption, including a geothermal system. The final phase will further increase the domestic arrivals level.
"Is now a good time to buy a home or a second home in Kelowna? Absolutely," Wasylyk said. "This is a pivotal period in a fantastic market. Purchase prices are great, interest rates are low and, if you don't buy now, you're missing out on an opportunity that's unlikely to be repeated. It's just that simple."
from Western Investor May 2012
