Housing costs rising

Recent figures show that Summerland has bucked the regional downward trend in real estate sales.

  • Jul. 19, 2011 4:00 p.m.

Recent figures show that Summerland has bucked the regional downward trend in real estate sales.

Various figures that track sales by units, average price and sales volume show that local real estate has sold better than its regional counterparts.

Residential real estate sales across the area covered by the South Okanagan Real Estate Board dropped 21 per cent during the period from May 2010 through May 2011, according to the figures from the British Columbia Real Estate Association (BCREA). Locally though, sales rose 11 per cent during the same period.

Other indicators also paint a promising picture, at least from the perspective of the real estate industry.

Whereas the average regional sale price dropped six per cent to $302,952 to $322,151, the average local price in Summerland rose to $420,576 from $398, 343.

Higher prices and unit sales also mean that the local sales volume has risen by 18 per cent to just over $29 million from $24.7 million. The regional figure, meanwhile, dropped 25 per cent.

So why has Summerland done better?

BCREA economist Brendon Ogmundson said it is not entirely clear why Summerland has performed SOREB. “Much of the positive performance in Summerland seems to be in the condo market and in particular among townhouses which  had a fairly weak start to the year in 2010.”

Whatever the reasons might be, they nonetheless place Summerland outside the broader regional trend line, whose trajectory remains flat, according to a new forecast released through the BCREA. It predicts that regional sales will increase by 0.3 per cent this year Which factors bears responsibility?

“While local economic conditions and associated employment growth have improved, the extraordinary strong demand levels experienced prior to the recession are not expected to return through 2012,” the report states.

The economy, in other words, has not yet returned to the strength it exhibited between 2004 and 2008 when the region experienced a real estate boom, much of it the product of wealthy outside buyers investing their fortunes in recreation and investment properties.

The near-collapse of the global financial industry has since significantly diminished the influence of this group of buyers. It has also created a glut of cheap recreational housing in the United States, where the effects of the decline were far more severe.

As the report notes, “relative bargains” in the United States are drawing a number of Canadian buyers, who might have invested in the South Okanagan before recent developments. But the report also contains a note of optimism for South Okanagan realtors in predicting a “modest increase” of three per cent in residential housing demand in 2012.

As for this year, the report notes that “market conditions in the South Okanagan remain tilted in favour of home-buyers” thanks to “relatively high inventories” of available housing and “moderate consumer demands.”

These factors will contribute to an “easing” of housing prices this year throughout the SOREB region — minus apparently Summerland.

 

 

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