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 Posted in    |  on June 27th, 2014  |  by

Real estate market in valley may not be stable, warns expert

By Steve Hubrecht
Pioneer Staff

The real estate market in the valley may not be as stable as some think, according to a prominent Canadian financial expert.

Last week, The Pioneer reported the median price of a single family home in the Upper Columbia Valley is so far $359,000 for 2014, was $394,000 for 2013 and was $400,000 for 2012, figures touted by BC Assessment and local realtors as a sign of stabilizing real estate prices, if not a harbinger of a coming rising trend in the market. But former Canadian Minster of National Revenue and current Turner Tomensen Wealth Management Group investment advisor Garth Turner isn’t convinced.

“A 10 per cent drop during the same period in which the Calgary and Vancouver markets advanced, while mortgage rates fell, is not exactly bullish news,” said Mr. Turner, adding that, in contrast with the opinions of the realtors quoted in last week’s real estate story, national real estate trends could have a local impact.

“A housing correction in Canada is not likely, it’s certain. This does not end well for vast numbers of people who bought in the last few years, either borrowing heavily to do so, or putting most of their net worth into their houses,” he said. “(House) prices can’t keep going up when wages don’t and the economy stutters. All gains in the last few years have been fuelled by debt, which means if anything happens — (mortgage) rates edge higher, jobs fade, or we get an external shock from deflating Europe or from China — families are in trouble.”

But according to local realtor Scott Sauermann, now is a good time to invest in the local housing market.

“The value of property here in the valley is unbelievably good. You can buy a nice house and live quite comfortably here in the valley, even on a lower income,” said Mr. Sauermann. “Now is a good time to buy, with lower interest rates. I also think we’re possibly going to see some growth in real estate in the near future.”

Canmore realtor Bob Truman has extensive experience selling second homes to Calgarians and says he’s not too worried about a housing correction any time soon.

“The chance of it happening here are a lot less than anywhere else in Canada,” he said, citing Alberta’s stronger economic growth.

“The world is going to be needing Alberta’s oil a long time yet,” said Mr. Truman, adding that from what he can see, home sales in Canmore have started to pick up, which could easily spur higher prices there.

“When people get priced out of Canmore, you know where they’re going to turn — the Columbia Valley and Invermere,” he added. “I think you’re going to see a lot of Calgarians move in soon.”

But according to Mr. Turner, the valley can’t forever count on a continued flow of money coming in from Alberta; and without Albertan visitors and second-homeowners, there would be significantly less cash flow in the valley, he said.

“That makes this a volatile real estate market, when external demand is a far greater factor than activity generated by the permanent population base,” said Mr. Turner.

“The Albertan economy is linked to one of the most volatile commodities on the planet, and the extremes are legion,” he said. “In any economic downturn, or a housing correction, it’s always the recreational properties that get jettisoned first…When people retrench, the chalet gets punted. And in a market like yours it doesn’t take a lot of listings to swamp the locals.”

The Lower Mainland-based Landcor Data Corporation has recently released its first quarter report and, according to its Kootenay region data, the average sale price of a detached home in the East Kootenay is so far $297,446 for 2014 (as of April), was $310,591 in 2013, 298,679 in 2012, and 288,872 in 2011. For an attached home it’s $251,081 so far in 2014, was 258,796 in 2013, $280,566 in 2012 and $268,504 in 2011. The average sale price of an East Kootenay condo is $152,817 so far in 2014, was $161,242 in 2013, $168,160 in 2012 and $169, 156 in 2011.

Steve Hubrecht
Email: steve@columbiavalleypioneer.com
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Reporter Steve Hubrecht arrived in the Columbia Valley after working for newspapers in Fernie, B.C., and Beijing, China. He spends as much time outside as possible – if he's not at the Pioneer and Echo office, he's probably out telemarking or hiking. He grew up in southern Ontario and graduated with an MA in Journalism from the University of Western Ontario in 2006.

One Response to Real estate market in valley may not be stable, warns expert

  1. Joe Davidson says:

    This got me wondering about the influx of people coming to BC for vacation housing, is that going to prop up this market longer?


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