September statistics from the Real Estate Board of Greater Vancouver showed a small lift in the overall benchmark price for a home in the region – now $577,174 – reversing four straight months of declines.
Disregard for a moment the fact that the gain was less than $600 – a gain is a gain.
The shift was enough for Vancouver agent Gary Serra to inform clients in a September 30 letter that new residential listings were declining and suggesting “that an end to the buyers’ market may be on the horizon.” He pointed to statistics from the B.C. Real Estate Association (BCREA), which shortly afterward issued its own release with the bullish headline, “Market Conditions Beginning to Improve.” Historically low interest rates and a declining number of listings were helping bring markets in balance, BCREA chief economist Cameron Muir said in the release.
Still, the market isn’t quite in the pink of health, as the latest Scotiabank housing report noted.
“While ultra-low interest rates remain highly supportive for the interest-sensitive housing market, moderate economic growth and hiring, debt-leery households and high home prices will keep many buyers on the sidelines for now,” wrote Adrienne Warren, Scotiabank senior economist. She doesn’t see anything that would push the market out of balance, either toward growth or contraction. “Look for a flattish fall national market from a sales and pricing perspective.”
As October winds down, homebuyers are conscious that tricks and treats are equally available in the market. This is driving the popularity of completed or near- completed projects, such as Burnaby’s TowneWalk and Abbotsford’s Pepin Brook (so long as prices meet expectations).
A sober attitude also prevailed during the closing session of the Western Canadian Hotel and Resort Investment Conference in Vancouver on October 19.
Session chairman Ed Pitoniak, formerly head of CHIP REIT (bought by the BC Investment Management Corp. in 2007), singled out Northland Properties Ltd. president Tom Gaglardi for discussing lessons learned from the dark days of the 1980s, when high interest rates wrought devastation across several sectors and sent more than a few investors reeling. Northland entered the latest round of financial turmoil savvy to the risks of carrying too much debt and avoided trouble.
“We were fortunate in that we never got ourselves into a position like we did 20 years ago where we really needed the banks to be there and the debt to be there,” Gaglardi told the conference while noting that events of the past three years were unprecedented for most players.
“I don’t think anyone in this room could legitimately say [in 2007] that we would see a correction of the size of what we did – the collapse of investment banks and the collapse of lenders,” he said. “So for certain people who were at the mercy of lenders and things, it was not a good place to be in ’08, ’09.”
However, to think that the good times are going to come back soon would be equally blind.
“We’re not banking on recovery,” Gaglardi said. “I don’t think we’re going to see a lot of growth going forward into 2011, so I think it’s back where it used to be like when I joined the business. You scrape your guts out and try to compete hard with the guy next to you and try to out-do him and try to get that 3% growth.”
On the other hand, not all areas are equally hobbled.
A paper by New York University professor Karl Storchmann in the current issue of the Journal of Wine Economics examines the correlation between the ascendance of premium wine-growing regions and hotel development.
The paper examines the case of Walla Walla, Washington, noting that 30% to 40% of hotel-room revenue in 2007-08 was attributable to the volume of wines from locally wineries receiving scores of 91 points or more from Wine Spectator magazine. The number of room nights has increased more than 25% in the past five years.
Similarly, the rise of the Okanagan Valley as a destination for wine aficionados has seen properties such as Spirit Ridge Vineyard Resort and Spa and Watermark Beach Resort in Osoyoos, the guesthouse at Burrowing Owl Estate Winery near Oliver and a host of smaller properties from Penticton north open in the past three years. The number of rooms available in the Okanagan-Similkameen tourist region averaged 3,574 in the first half of 2010, up from less than 3,000 between 2005 and 2007.
Additional properties are planned, including Bellstar Hotels and Resorts’ 20-unit Canyon Desert Resort in Oliver and the expansion of the Coast hotel in Penticton.