Home Month and Year April 2023 Reality check for rec property market

Reality check for rec property market

Yet experts still point to many opportunities on both sides of B.C. border

Kokanee Springs Resort in Crawford Bay, B.C., features both RV lots and cabins for sale alongside bucket-list-worthy golf, 10-kilometres of onsite trails and more. Photo courtesy of Pinnacle Lifestyles

After a two-year sprint, Western Canada’s recreation and investment real estate market has returned to what many experts are calling “normal” levels.

Yet they still point to an ongoing wealth of opportunities throughout Alberta and interior British Columbia.

Pinnacle Lifestyles CEO Darvin Zurfluh notes that while market activity has slowed somewhat overall, he’s still seeing healthy interest throughout the two provinces.

“After breaking records over the last few years, we anticipate they’re naturally going to come down a bit, but still be well above pre-COVID levels,” says Zurfluh of Pinnacle’s portfolio of RV and cabin-style resorts in Edson, Alta., as well as Mara Lake, Sicamous, Revelstoke, White Lake and Crawford Bay, B.C.

“Our early season booking numbers are quite a bit higher this year already than they were for last year. So, we believe it going to be a great summer.”

Zurfluh credits this ongoing interest to many buyers who still haven’t forgotten that feeling of being cooped up during the pandemic, coupled with rising interest rates that is impacting many people’s bottom line.

“It’s no secret that rising interest rates have increased Canadians’ debt costs, which has many looking at something more affordable,” he says. “And then they realize, there are so many options in their backyard – opportunities to get away with the family, de-stress and reconnect.”

In the Kootenay Rockies, Bruce Seitz of Royal LePage East Kootenay Realty says he’s seen housing market activity return to a more balanced conditions after a whirlwind few years.

Of note, he points to buyers of all types being slightly more cautious before pulling the trigger, while sellers are subsequently resetting their overall expectations.

“Both parties are having to go through a bit of a reality check,” he says. “For buyers, they are coming to the realization that higher interest rates are going to be around for a while. So, they are being a little more cognizant of what they can afford.

“And for sellers, it is coming down to they’re not seeing as many showings coming through. That then generates less offers being presented. Things are still selling, and at close to asking price. It’s just taking slightly longer than 2021 and 2022.”

He notes sales in the Kootenays were down around 39 per cent to start the year. Meanwhile, inventory levels have started to recover, with active listings up more than 42 per cent.

“We are seeing those listing numbers come back up, but they’re still not nearly what we want to see it,” he says, noting new listings to start the year were down 3.5 per cent compared with 2022 and nearly 30 per cent off 2020 levels.

Seitz singles out Sparwood as a recent rec property hot spot within the Kootenays. The community near the Alberta-B.C. border is coming off one of its busiest years on record. He credits that to higher prices and limited opportunities in nearby Fernie.

Specifically, Seitz has seen interest from Alberta buyers remain relatively steady over the past few years – albeit still a small portion of overall sales.

“Only about 2.7 per cent of sales can be traced back to Alberta buyers, which is consistent with past years,” he says. “We’re actually seeing more people from the west coast or central B.C. coming to the Kootenays. Buyers from Vancouver/Fraser Valley account for around 12 per cent of sales, while Okanagan buyers represent 10 per cent.”

In the Okanagan, Sarah Johnston of CIR Realty notes the slower resale housing market has caught many people off-guard. After hitting a peak in March, she says the market has since stagnated. Sales so far in 2023 through central, south and north Okanagan were down upward of 59 per cent year over year.

“And prices have come down substantially – anywhere from 15 to 25 per cent, depending on where you are in the Okanagan,” says Johnston.

It’s a similar story in the Shuswap/Revelstoke area where sales are down by nearly 30 per cent to start the year, while price drops have been slightly more modest.

“I think this is absolutely needed. I think that the prices needed to come down so that people … could actually afford to be here,” says Johnston. “Nobody’s panicking. Prices are still higher than before COVID hit. There was just an absolute time of crazy pandemonium where things spiked, and that spike has come down again.”

Unlike the Kootenays, the Okanagan is flush with listings so far in 2023 – including in the coveted sub $1-million detached market. In mid-February, active listings sat at more than 3,000, which was nearly double the same time in 2022. That has had a swelling effect on inventory levels – a jump upward of 162 per cent depending on housing type and location.

“We actually have a lot of inventory to choose from. And people are absolutely being picky right now, because they have the ability,” says Johnston, with days on market doubling in some areas.

In the Shuswap/Revelstoke area, active listings are also up, albeit more akin to the pace seen in the Kootenays. This has improved inventory levels in categories such as detached by nearly 60 per cent.

Representatives from both the B.C. Real Estate Association and the Interior Association of Realtors declined requests for interviews.

Like Seitz, Johnston attributes the normalization in the market to rising interest rates, adding that the freedom to travel again has also been an influencing factor.

“The number of people coming from Alberta has actually dropped due to the fact that Alberta is doing so well,” she says. “Alberta is always doing ‘ying’ when the rest of Canada is doing ‘yang,’ which is exactly what’s happening right now.

“I have some clients who I helped purchase out here less than two years ago and they’re actually now moving back to Alberta. And then there are others who are absolutely loving it. So, it depends where you are in your life.”

Closer to home, rec property hot spots in Alberta such as the Bow Valley are seeing similar situations play out to nearby Calgary. Sales activity peaked mid-way through 2022 and have slowed since then. While sales so far this year have been relatively consistent year-over-year, inventory has yet to catch up and is creating tighter-than-usual market conditions.

For example, Canmore recorded just 77 residential and 25 short-term rental listings in January. While up from the year prior, it still represented less than half of inventory levels recorded in 2020.

“Looking at sales activity, their trends have been consistent with what I’ve seen elsewhere,” says Anne-Marie Lurie, chief economist for the Alberta Real Estate Association.

“Sales activity was strong in the first half of last, slowed in the second half and has remained that way through the first few months of 2023. In general, higher interest rates are impacting all markets, including places like Canmore.”