South Okanagan Real Estate Market Trends Report
MLS statistics indicate that the overall level of sales recorded from the South Okanagan Market for 2019 had declined by 9.5% to 2,023 from 2,233 in 2018 and substantially from 2,870 sales reported for 2017.
With respect to 2020 the monthly sales declined to a total of 82 reported in April from 118 and 160 recorded in February & March respectively.
Although this number increased to 158 for May it is considerably less than the 228 reported for May 2019.
Average single family residential sale prices have however increased slightly. The South Okanagan wide year to date average sale price for May 2020 was $553,232, and 9.8% increase from $503,648 reported in May 2019.
The single family residential sales to listing ratio returned to 46% in May from 32% in April. The peak was 78% in December 2019 however statistics indicate 26% in January 2019 thereby suggesting the likelihood of cyclical trends.
For May, the number of single family residential sales was 35 indicating a return to the monthly average of 38 sales from 2019 and a sizable increase from 17 sales recorded in April.
The condominium market has however remained stable at an average of 19 sales per month. One measure of market trends, the number of listings has over-all, remained stable in 2020.
The single family residential sector indicated an average of about 64 new listings per month since January.
The sales ratio for May was 51%, a large increase from 17% in April and exceeding 26%, 29% and 32% as indicated for January, February and March but consistent with 54% recorded in May 2020.
Effective May 2020 the average year to date single family residential sale price was $533,416, an increase of 8% in relation to May 2019.
With respect to the condominium sector, year to date sales effective May 2020 were 95 vs. 127 reported in May 2019.
Along with an increase in the average market exposure from 66 days in May 2019 to 79 days for May 2020 it is evident that the condominium market has overall remained stable over the longer term.
Despite less favourable economic conditions resulting from reduced local employment and an unfavourable local economy, development and construction activity continues. At a recent meeting, the City Council approved the construction of two projects for a total of 240 new market rental units. Combined with a probable decline in demand the introduction of these units may help balance the vacancy rate.
A number of sales occurred during the 36 month period ending in 2019. In relation to prior years this level of activity was unprecedented.
A total of 11 building sales were recorded. Other than a higher value transaction of a Dawson Avenue property at $6,000,000 the average sale price was $1,914,950. These included disposal of the OK Builders properties after closure of the business. Vacant land sales indicated typical site values in the order of $16.26 to $21.75 per sq. ft.
For the most part rental rates in the Industrial area have remained stable at about $8.50 to $10.00 per sq. ft. depending on size and locational influences.
Our recent study of Industrial market trends prior to the COVID-19 onset indicated a low vacancy rate. Consistent with previous years the demand for smaller industrial rental units has remained strong thereby resulting in an overall vacancy factor of no more than 5%.
Despite the level of sales activity, consistent capitalization rate information, and specific examples from the industrial market are limited but tend to suggest rates of 5% to 6%.
Overall however, the majority of sales occurred prior to early 2020 and with the level of first quarter activity, indicating stable market conditions.
Penticton: Commercial & Multi-Residential
The level of downtown sales and rental activity has remained generally stable on a year to year basis since about 2017.
The core Main Street commercial area consisting of the 200 to 400 blocks of Main Street continues with some vacancies.
Most notable was the February 2020 closure of a high profile Starbucks outlet at the corner of Main Street and Westminster Avenue. This space has now been vacant for about 4 months and is listed for rent at $4,000 per month net.
Two major mixed commercial & multi-residential developments proposed for 123 Front Street and 32 Backstreet have been cancelled.
Both sites are now listed for sale. Despite this slowing trend, construction of a new Craft Beer Brewery is underway at the corner site of Westminster Avenue and Winnipeg Street.
Development of this nature is evidence of a competitive service/restaurant sector of the downtown commercial market. Otherwise there has been little change with respect to downtown retail & professional space resulting from limited demand.
A 75 rental unit mixed use 5-storey building is proposed for 285 Westminster Avenue W. and a 48 unit building at 110 Ellis Street is nearing completion.
Despite this activity the core Main Street commercial market is somewhat stagnant. The former 3 Gables site at 330 Main Street remains undeveloped and it is likely that some smaller businesses may not survive a prolonged COVID-19 downturn.
To date, downtown commercial rental rates have remained largely unchanged at about $9.50 to $12.00 per sq. ft. on an overall average.
The present vacancy factor at about 7% combined with a major downtown property tax increase proposed to commence in 2020, the outlook for the downtown market is at best, a continuation of present levels.
District of Summerland
Reporting the highest average single-family dwelling sale prices in the region at about $685,700 for 2019 with a significant increase from $613,783 reported for 2018, the Summerland market has had a smaller supply of moderately priced dwellings.
Effective May 2020 only 1.3% of the 52 total dwellings listed for sale are priced less than $500,000 in comparison to 22% in Penticton.
On this basis the likely reason for higher average prices in Summerland may be due to the available supply.
Similar to other market centres the level of single family residential sales remained generally consistent at totals of 154 and 157 for 2019 and 2018 but less than 182 recorded for 2017.
The 2020 market began with 7 single family residential sales in January declining to 4 and 6 sales recorded for February and April. Recently however the level of sales for May increased to 12, but significantly less than 21 sales recorded in May 2019. Year to date single family residential sales effective May 2020 were reported at 43 vs. 63 for May 2019.
Notable commercial sales of Downtown commercial buildings in 2019 were 13216 Henry Avenue, a good quality 2-storey building sold at $895,000, and The Bank of Montreal building, an early heritage property, which sold for $600,000. Significant to future development in lower Summerland, 13415 Lakeshore Road, a 1.75 ac. site with 275’ frontage on Okanagan Lake sold at $5,500,000.
The downtown commercial market has continued to be sound with rental rates stable in the order of about $8.00 to $10.00 per sq. ft. with a nominal vacancy rate of 5% or less.
Town of Oliver
A monthly comparison of single family residential sale prices between May 2020 and May 2019 indicate an increase of about 10%.
The May 2020 average and year to date sale prices were $427,888 and $399,150 vs. $403,144 and $421,650 for May 2019.
Contrary to expected trends, year to date sales in the single family residential category were 45 for May 2020 representing a small increase from 43 as reported for May 2019. On a monthly basis sales increased from only 4 in April to 10 in May.
Despite the overall uncertainty, these figures when considered alone indicate stable market conditions to date.
The supply of both apartment/condo units and dwellings priced at less than $400,000 is sufficient to meet current demand thereby suggesting that no immediate price increases can be expected.
The 21-acre Oliver Heights development on the west side of Town will provide for good quality dwellings at prices less than $450,000 on a bare land strata basis.
The downtown Main Street commercial market has continued unchanged over the past 3 – 4 years with rentals ranging to a maximum of about $10.00 to $11.00 per sq. ft. but mostly in the lower range. Opening of the 80 room hotel on Station Street in 2018 was likely beneficial to the downtown.
Town of Osoyoos
MLS statistics indicate an average single-family residential sale price of $513,462 for 2019 indicating a 7.2% increase over $477,704 reported for 2018.
Although only 1 single-family residential sale was reported for April there were 14 sales recorded in May consistent with May 2019 & 2018. It is also notable the year to date sales for May 2020 are 44, consistent with 45 for May 2019.
Also indicating some degree of consistency the total single-family residential listings in effect for May 2020 are 194 in comparison with 199 for May 2019.
With respect to supply, the number of active listings effective May 2020 have remained unchanged from May 2019.
There are presently about 20 detached dwellings listed for sale at asking prices of $450,000 or less, and about 13 dwellings with listed prices ranging to $550,000.
With about 5 significant trans actions since early 2019 the Osoyoos Commercial market has remained attractive from an investment perspective. These sales include the 6-unit neighbourhood style shopping centre at 8111 Main Street. At a price of $1,225,000 this sale indicated a capitalization rate of about 4.6%.
Generally consistent with prior years, 2 sales occurred in Osoyoos Industrial Park.
Some higher value winery sales were recorded in 2019.
These transactions were inclusive of land, buildings, business & equipment with differing allocations to the various components.
Some transactions included significant business values.
On a very broad average 2020 sales and listing activity indicates base vineyard/orchard values in the order of $135,000 to $160,000 per acre as a base range with respect to typical 10 – 15 acre parcels in the Oliver & Osoyoos area.
Higher values are evident in relation to smaller parcels and in areas with locational influences.
Some higher value purchases occurred as a result of special requirements sometimes by wineries wishing to have greater control over grape production.
Although by all reports the retail wine market continues to be favourable, sales at the restaurant or tourism levels may be affected by Covid-19 limitations.
Projection for 2020
Market conditions indicate some return to moderate levels however pre-Covid 19 levels in some sectors may not be expected for some as there will be an adjustment to changes in local retail & services.
Some sectors such as food service may suffer greater impacts. Favourable mortgage rates continue to encourage refinancing however employment levels may limit some purchaser demand.
On balance, the retirement oriented sector of the condo market will likely continue to be stable.
Certainly the downtown commercial market will be affected by changes in retail activity.
Tenancies and small businesses may be negatively affected by the upcoming property tax increases and overall economic uncertainty.