Discount pricing in the Okanagan

Saturday, May 30th, 2009

Supply has caught up with demand after years of go-go growth in the second-home market

Steven Threndyle

Six of the Cottages at Secret Point remain unsold at Okanagan Lake. Two years ago, $829,000 was the top selling price. Today, the last homes are for sale for less than $500,000, including morage. At Kelowna Mountain, a ‘blowout’ approach to the market generated the sale of nine 2,700 – square-foot residences on one-lots with prices starting at $599,000. ‘Everyone is adjusting their expectations somewhat,’ a recreational property specialist in Kelowna comments.

The 24-lot Sheerwater property is located across from downtown Kelowna. A waterfront lot that attracted little attention at $2.2 Million is now for sale at $1.59 million.

As sure as the yellow arrowleaf balsamroot blooms in May in the Okanagan Valley, the Victoria Day weekend ushers in the tourist — and second-home –season. This year, along with apple and cherry blossoms and placid lakes perfect for waterskiing and wakeboarding, visitors looking for vacation property or a retirement home will see a significant drop in real estate prices year over year.

Albertans and Lower Mainlanders alike are in love with the long, lazy summer days out on the boat or the golf course. Improvements to the Coquihalla Connector, the twinning of a stretch of the highway just east of Merritt, and elimination of the toll booth at the top of the Coquihalla Highway have shortened the drive, from the Port Mann, to less than 3 1/2 hours.

After the five years of go-go growth that ironically followed the Okanagan Mountain Park fire in 2003, supply has finally caught up with demand. And while there haven’t been any significant cancellations, there certainly has been some upheaval in the second-home market and several high-profile projects are on hold for now.

At this point, primarily high-rise projects near the downtown core and along the waterfront in Okanagan Mission have been affected. With projects from the boom years nearing completion and abundant inventory available from now through the end of next year, several developments touted in billboards last year won’t likely be breaking ground until 2011 at the earliest. All of which is good news if you sat out the bubble and hoarded cash. Right now, buying real estate in the Okanagan is like buying last year’s surf shorts on the discount rack.

“Everyone is adjusting their expectations somewhat,” says Mark Jennings-Bates, a recreational property specialist in Kelowna.

Some developers have dropped prices fairly dramatically on the last few units in a complex, usually the least desirable ones.

Others have changed the product.

At Timber Ridge on the West Side Road near Fintry, what was once scheduled to be a low-key cottage resort is now being marketed as an upscale RV park. Which is actually a pretty good proposition, given that many RV parks along heavily-travelled Highway 97 have been turned into recreational condo/lifestyle resorts themselves.

Jennings-Bates reports that holiday weekend traffic at La Casa was brisk. There, 11 fully-furnished cottages starting at $279,000 are for sale on a waterfront development on West Side Road.

There are advertisements for Kelowna Mountain, a new development near the successful Kettle Valley neighbourhood and surrounded by an enormous playground of mountain biking and hiking trails.

Well-known B.C. developer Mark Consiglio and the marketing team at LandLaunch created to promote the new Kelowna Mountain project.

Similar to successful marketing strategies proven on the Lower Mainland, LandLaunch was able to quickly sell out nine one-acre fully-serviced lots complete with 2,700-square-foot homes for prices starting at $599,000.

“We wanted to really kick-start this project; it wasn’t until fairly recently that Mark got the approvals from the city to go ahead and start selling,” says LandLaunch’s Greg Lowe.

The nine lower lots, close to Kelowna and a new elementary school slated to open in 2010, sold out on May 21. The next phase of 18 lots are higher up the mountainside, where a finished home on a half acre lot will start at the same price, $599,000.

“There will be some lake view lots in this next phase,” says Consiglio, who also owns a massive 640-acre parcel above the Kelowna Mountain.

“We’ve had interest locally and from both the Vancouver area and Alberta.” These homes will be close to the new Kelowna Mountain Snow Park, a small ski hill that is slated to open next winter.

Another Consiglio project, the Cottages at Secret Point, has six out of 20 waterfront cabins left in a strata-title project on West Side Road.

At their height in 2007, these properties sold for as high as $829,000, and some are currently priced at under $500,000 — complete with boat moorage.

The only catch is that Secret Point is quite a ways up Westside Road; great if you love seclusion, maybe not so if you want to hit the casino at the Delta Grand Okanagan on Kelowna’s waterfront.

Speaking of waterfront, prices have also plummeted at Sheerwater, a gated waterview and waterfront community bordering on Knox Mountain. The Mission Group’s Bob Anderson says that seven out of 24 lots are still for sale.

“Due to the rugged nature of the building site, this is one place where lakeview lots actually sold better than lakefront.”

A waterfront homesite that listed for $2.2 million is now down to $1.59 million.

One unique aspect to Sheerwater is that prospective purchasers can “buy and hold” their property. Another is the absence of design guidelines.

A high-end waterfront spec house is expected to fetch more than $5 million when it’s completed later this summer.

One thing is for sure, the days of the deposit-paying flipper are over. “Today’s purchaser had better be prepared to use their property or put it into a rental pool,” Jennings-Bates says.

The days of easy profit-taking between first deposit and construction-completion are also over.

What that means is that a lot of people who actually intended on relocating to the Okanagan to either retire early or for recreational purposes will have an even wider range of prices and options, though CHMC analyst Paul Fabbri expects that resale prices will remain soft as increasing supply is absorbed into the market.

It’s not all cut-rate pricing and bargain hunting, however.

Up in uber-prestigious Woodland Hills in Kelowna‘s Okanagan Mission, developer Gaby Wager still has a $7.9 million house on the market.

Wager has found a unique vehicle for marketing this property — it’s going to be featured in Relationships, a TV series being produced by Antares Media.

So, while some dramatic cost cutting has happened over the past year, living the Okanagan dream is still within reach.

After all, everyone has their fantasy vacation home, don’t they?

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