Okanagan-Shuswap Market Update
The Vancouver Market Skews BC Stats
Once again the most important characteristic in predicting the Real Estate market is continually overlooked by some of the most prominent authorities. That important characteristic is that the Real Estate market unlike the stock market is incredibly local. It seems when there is a major event in the world it affects the stock markets in the same way all over the world. The stock market is something that is globally controlled by global factors. The Real Estate Market, although it is not immune to global factors is much more controlled by local factors. There are countless articles that describe how BC Real Estate is in correction and continuing to drop this year. There are also numerous articles that say this year is going to be a year of recovery and the markets are going to rise again. How could there be such diverse opinions? The answer is that it depends on which market you look at. Vancouver has just come off a 4 year rise in prices and therefore they have entered a period of rebound and correction. The size of the Vancouver market is what skews our BC stats.
Prince George and BC North on the other hand continue to lead the province because of a recovering forest industry and increased oil and gas exploration. Sparwood has just signed 10 year deals with Teck Coal so their market is picking up as well. The Okanagan Shuswap is coming off a period of time where the market has been correcting for the last few years so we are now recovering and will continue to recover for the next few years. Sales are picking up, inventory is creeping down and absorption is rising. The rate of this improvement continues to be very slow and gradual. That means that our recovery will continue to be slow and gradual. But once again that is the best market to be in; a slow and gradual recovery.
Finally Cash Flow Real Estate Available Again in the Okanagan
Buying investment properties based on the idea that the market will increase is a risky venture at best. You are counting on the market to rise for your return on investment. Not only does it have to rise but it has to rise at a rate that covers your costs and in the end gives you with some kind profit. Over the long term Real Estate has been shown to do that better than every other investment. However, in some cases "over the long term" is a very long term. It is a much safer and smarter investment to consider not only value appreciation but also cash flow. That has been extremely difficult to do in the residential investment market in the Okanagan, Shuswap for many years.
In the boom of 2004 to 2008 residential prices rose so dramatically and rents lagged so far behind that it has been very difficult if not impossible to buy a residential investment property that would actually have positive cash flow after debt servicing and show a profit; until now. After all if you are going to put 20% down on an investment property you would want a return on your cash investment wouldn't you? It has taken a while for sellers to realize that we are in a very different market with very different prices but it seems we are there. There are good solid investments in the Central Okanagan, the North Okanagan and the Shuswap that will show positive cash flow after all expenses and debt servicing; not a lot of them but some. The market is recovering and the better properties are being absorbed out of the market. There is an old saying that still remains true today when considering investing in Real Estate ....Cash is King.