faithwilson | Christie’s International Real Estate’s exclusive and comprehensive Market Analyses September 2021 have arrived for both the South Okanagan and the Combined Okanagan areas.
September came in like a lamb compared to the roaring residential market that characterized the entire Okanagan through the spring and early summer, but the price increase in some regions remains spectacular.
The Association of Interior Realtors, whose members serve a huge swath of B.C. from Revelstoke to Eastgate Manning Park close to the eastern fringe of the Lower Mainland, is using the terms like “healthy” and “normalcy” to describe the current activity, which is marked by an overall decline in housing sales from a month and a year earlier and dramatic fall off in active listings.
September residential sales for the entire Okanagan region reached 1,067 transactions, down marginally from 1,140 in August, but a steep 29% drop from September 2020, when 1,513 homes sold.
The supply of active residential listings dropped 40% across the region compared to the 4,781 active listings during the same month last year, while new listings in September were down 18% compared to the 1,729 units in September 2020.
Prices, however, have continued their upward trajectory and waterfront values have skyrocketed, particularly in and around Kelowna, the largest Okanagan city.
Across the entire Okanagan region, the composite home price in September reached $803,126, 15.4% higher than in the same month a year earlier and up 2.2%, or a healthy $18,000, from August of this year.
Highlights of this report
- Farmland sales in the Central Okanagan have soared 400% this year compared to 2020 – and a love of farming may not be sole reason.
- The Vernon and the North Okanagan condo market may present the best opportunity for rental investors to achieve positive cash flow.
- Why buyers of rural acreage properties should hire a professional survey team to map out exactly what they are paying for.
- The average detached house price in Kelowna is more than $1 million, but you can still find houses priced at half of that.
- The average condominium apartment price in the Central Okanagan increased by $30,000 from August to September.
Kelowna and Central Okanagan
The average price of a detached house in the Central Okanagan, which is dominated by Kelowna, was $1,034,238 in September, up 22.5% from September of last year and just slightly above the $1,003,279 average in August 2021. Detached housing sales totalled 244, down 31% from a year earlier.
Dedicated buyers of detached house buyers in Kelowna should not be discouraged by the million-dollar plus average price. While there are certainly many houses in this higher-priced category, there are also a score of Kelowna houses currently listed for less than $600,000, even for less than $500,000. Buyers from big-cities like Vancouver, Calgary and Toronto should realize that any neighbourhood in Kelowna is still close to the beaches of Okanagan Lake, the superb wineries and the hiking, biking, boating and ski hills that making living in the Okanagan so popular and priceless.
Waterfront: Lakefront homes in the Central Okanagan homes are now selling for an average of $2,604,486, as of September. This is 23.6% higher than in September 2020 and up a startling $520,000, or 30%, from August of this year. This is not based on some single fantastical sale: 69 waterfront houses sold in September, just a bit above the 64 transactions a month earlier.
Condominiums: Sales of condominium apartments in September were down 5.2% from September 2020, while townhouse sales slipped 38.5% to 161. The average condo in the Central Okanagan now sells for $476,547,up 21% from September of last year and $30,000 more than in August 2021.
Townhouses: Townhouses are in very short supply, with just 103 new listings in September, 75 of which sold and helped drive the townhouse average price to $675,248, 19% higher than a year earlier.
Farmland: Farm sales in the Central Okanagan are an interesting sector to watch this year. There may be an explanation for the 400% increase in farmland sales so far 2021, compared to a year earlier. The reason may go deeper than the conventional search for a vineyard, an orchard or a bucolic place to raise goats or other livestock.
In June of 2021, the B.C. government eased the restrictions on land in the Agricultural Land Reserve (ALR), which may have an oversized effect on Kelowna, because 40% of the city’s huge land base -or about 20,000 acres – is within the ALR.
The change, which comes into effect on December 31, 2021, allows secondary houses to be added to an ALR farmland property. The building can be used for rentals, or even for commercial use, such as agri-tourism. As well, owners of the land need receive approval only from the local municipality to build the extra structure, not the Agricultural Land Commission which has regulated the use of ALR land for more than 40 years.
So far in 2021, the total sales volume of farms sold in the Central Okanagan has increased 518% from the same period in 2020 to more than $21 million and 97% of the farms listed have sold. We don’t think it is a coincidence. The intense interest in farmland, especially close to a fast-growing city like Kelowna, could represent a belief among some investors that the recent changes are the edge of a wedge that could eventually open the ALR lands to some form of future development. It is something to keep an eye on.
We have had a lot of investors ask us about Kelowna’s RU7 zoning, which provides for higher-density development in certain single-family and commercial areas near the city’s core. RU7 zoning allows between two and four units, depending on the width of the lot. The RU7 zone applies to over 700 parcels in Kelowna’s central neighbourhoods. The zoning change came in five years ago and, we must inform readers, sales and prices already reflect the speculation that has taken place. Still, there are pockets, particularly in North Kelowna, where those with long-range aspirations could still find opportunity with single house buys, or perhaps even a land assembly.
Vernon and the North Okanagan
Vernon: With a population of more than 43,000, Vernon is the major centre in the North Okanagan, which is also seeing a strong residential market this year, with home prices consistently lower than in the Central Okanagan.
The September the composite residential price in the North Okanagan was $646,529, up 7.3% from a year earlier, and up from $602,509 in August of this year. Yes, that is a about a $40,000 month-over-month increase and an indication of the broad-based demand across every residential sector.
Detached houses sold in September for an average of $727,094, up from $685,081 in August 2021 and 6.4% higher than September 2020. Detached house sales, at 80 transactions, however, are down 50% from a year ago and below August of this year, which saw 97 house transactions. Part of this could be due to a shortage of active listings, which are down 52% from a year ago to just 172 houses available for sale as of September. Many potential sellers may be hesitant to list because they aren’t sure they can find another house to buy. This could also explain the sharp price increase, since the current sales-to-new-listing ratio is running close to 100%.
Townhouses: There are more townhouses on the market in the Vernon area than condo apartments, which is rare in most of B.C. In September, 42 townhouses came to the market and there were a total of 65 active listings. Of these, 32 townhouses sold for an average price of $468,229, compared to $415,684 a month earlier – an average increase of more than $50,000 – and up about 5% from September of last year. Still, the shortage is acute in the townhouse sector. This year, the average monthly sales-to-new-listing ratio was running close to 99%, to give an idea of how tight the townhouse market is.
Condo investor alert: The North Okanagan-Vernon market certainly must looks tantalizing to condo investors, particularly those from Greater Vancouver who find it hard to turn positive rental cash flow in a market where the benchmark condo price is north of $720,000. In the North Okanagan, the average condo apartment price in September was $283,983. Yet the average apartment rent in Vernon is $1,065 and condo apartments can rent for around $1,200, even more. The rental vacancy rate is around 1%. This means that, with a 20% down payment and today’s historically low mortgage rates, the typical Vernon condo rent could potentially deliver positive cash flow, month after month.
It appears condo investors have not twigged to this opportunity, at least not yet. We find most buyers in Vernon and the North Okanagan, where just 20 condos sold in September, are locals who plan to live in the apartment. The lack of selection may also be keeping condo sales muted. There are only 47 active condo listings available – down 43% from a year earlier – and a mere 15 were added in September.
Waterfront homes: Vernon and the North Okanagan are blessed with two large lakes and waterfront home prices are relatively low, compared to the Central or South Okanagan.
Waterfront homes are precious in the North Okanagan and the low monthly sales don’t provide a good vantage for the market: there were only 3 sales in September for instance. But so far this year, a total of 41 waterfront homes have sold in the North Okanagan, up 13% from a year earlier, out of total of 42 active listings. The average sale price was $1,580,552.
Shuswap / Revelstoke
The composite residential property price in the Shuswap-Revelstoke area, which reaches east to the west Kootenays, was $605,8245 in September, up 17.3% from a month earlier.
This is one of the smaller markets in the Okanagan region, which of course is what many buyers are seeking these days. It can be hard to find the perfect property, however because, as of September, there only 325 active residential listings in the entire region, down 25% from a year ago because of the rapid sales so far in 2021.
You can find condo apartments in this market for an average of $422,000; townhouses for $569,000; and detached houses, often on large lots, for an average of $673,914.
Waterfront: There were 11 waterfront homes listed in September, up from 8 in the same month a year earlier . The average price of the 6 that sold was $816,000. This was down 10.8% from September of last year, but the average waterfront price for all of 2020 was more than $1.1 million, which is probably more reflective to true values. Still, with a bit of looking, including at water-access parcels, buyers can find the lowest priced waterfront in the Okanagan.
The South Okanagan includes the popular lakefront towns of Penticton and Osoyoos and Princeton, where two rivers converge, plus smaller resort and winery/farming communities such as Kaleden, Keremeos, Naramata, Summerland, Okanagan Falls and Oliver.
The composite residential price in the South Okanagan in September was $642,247, up 19.2% from September 2020. The average price of a detached house, which account for most of the sales with 996 transactions so far this year, was $632,833 in September, up 7.8% from a year earlier.
Sales of condo apartments – 510 sales this year – are up 78% from the first 10 months of 2020. The average condo price in September was $394,608, down nearly 8% from September 2020, despite the sales surge.
There have also been 290 townhouse transactions in the South Okanagan so far this year, out of 339 active listings. In September, townhouse buyers paid an average of $548,047, up 11.4% from the same month a year earlier.
Waterfront: The average price paid for a waterfront house in the South Okanagan this year is $1.86 million, up 33% from 2020, but this September 3 buyers paid an average of $2,983,333 for South Okanagan waterfront, a 141% increase from the same month a year earlier. This shows how hard it is to price waterfront, because of the wide variety available, even with only 61 waterfront listings this year in the entire South Okanagan.
Buying acreages. While many South Okanagan buyers are looking for a lakefront or water view property, there has been substantial increase in sales of acreages in the South Okanagan this year, with 114 sales, up 142% from a year earlier. Sales of acreages with a house on it jumped 77%, year-over-year, to 124 transactions.
We suspect that a number of these sales were to those seeking a bucolic retreat from the city, perhaps planning a small organic farm.
For these nascent buyers, we strongly advise they hire a professional surveyor to find exactly where the boundaries of the property are. Every legal title in B.C. for all seven land title districts, including Kamloops, which includes the Okanagan, are registered under B.C.’s Land Titles Act . But in many rural locations, the boundary markers get lost over the years. The survey pins can be a foot underground or may have been shifted by land clearing, road access or other changes over decades. The current owner of the land may simply have an estimate the size of the rural land he or she is selling. A professional survey team, armed with GPS and title documents, however, will triangulate and mark all the boundary points of a property with total accuracy. If a survey crew cannot locate a property pin, they have the authority to calculate and replace it and ensure that new boundary coordinates are legally registered with the Kamloops Title Office. With this you know precisely how much acreage you are buying and can apply for a Certificate of Indefeasible Title. Investing in a professional survey is inexpensive insurance that is often overlooked when buying rural acreages.
Likewise, if you are new to Okanagan real estate, it is best to work with a local agent who has an intimate knowledge of this vast and diverse market.