Real Estate Investors Penticton Hotspots
Real Estate Investment BC: Penticton Property “Hotspots” for Investors
In its latest edition (11. February 2017), the Canadian Real Estate Wealth magazine has released the annual property forecast, that Penticton is the blue chip real estate investment in the province BC for 2017.
This South Okanagan city readies for record real estate sales as value of new homes reach $66.7 million.
With the new NDP government in British Columbia and their focus on escalating property values and tightening rental markets, some big changes are on the scene. Foreign investors and “satellite families” have been investing heavily in certain areas of British Columbia, contributing to double digit price increases per year over the past decade. This has been contributing to the problem of younger British Columbians not getting into the residential market, or paying for escalating rents due to people not being able to transition out of the rental market into home ownership.
The newly announced tax situation has a number of things to be aware of, but at the same time, this presents a number of areas of opportunity for those who act quickly. The “Foreign Investor Tax” has gone up from 15% on residential to 20% on residential, and has expanded from Greater Vancouver to also Greater Victoria, Greater Nanaimo, and Greater Kelowna areas. A separate “Speculation Tax” has also been added in these areas. It applies to owners who do not rent out a property for at least 6 months per year. It is levied at .5% of assessed value for British Columbia residents, 1% of assessed value for other Canadian residents, and 2% of assessed value for non-Canadian residents. British Columbia residents are also credited with no tax levied on the first $400,000 of property value and a $2000 British Columbia income tax credit on anything above that. Obviously the way to avoid the taxes as a foreign investor is to not buy residential in the above areas, or rent out your property for at least 6 months per year.
A “hotspot” we would like to bring to your attention is Penticton in the Okanagan wine country valley. It has been left out of the taxed areas because it is smaller and does not have the tight rental market that is experienced nowadays in Kelowna, 60 km north. It also does not have the big city feel of Kelowna with Penticton’s population of 50,000 versus 200,000 for Kelowna. The Okanagan valley, with its string of lakes populated by small towns and cities from one end to the other, has long been the fruit growing capital of Canada. Recently, it has also been referred to as “Napa north”, as it has gained accolades as a wine producing region. Being roughly equidistant from Vancouver and Alberta, the valley benefits from being an easy day’s drive from either.
Penticton itself is framed by beautiful swimming lakes on both the north and south ends, along with mountains and vineyards on both the west and east sides. The Okanagan and Penticton has long been a summer vacation destination for western Canada, with everything from award winning golf courses, to sunny beaches, to fabulous boating, as well as a host of other tourism related attractions. The fact that the thermometer can push 40 degrees Celsius in the summer is part of the allure of living in the only area in Canada that has parts of it classified as true desert. In the winter, the snows come and the valley has several world class mountain resorts with powder skiing and boarding. All of this adds to the opportunity of investing in a beautiful small town that has all of the amenities and services but none of the prices and congestion of nearby Kelowna. Not having to worry about the added taxes is cream on the top. However, because of its limited land space due to the lakes and mountains, the deals can’t last forever. In 2018 the average house price in Penticton is $525,000 and in Kelowna is $725,000. The average condo price in Penticton is $285,000 and in Kelowna is $375,000. We feel the 45 min drive between the two makes these places virtually identical in location but much different in terms of cost and feel.
A small waterfront city with the amenities of a larger centre, job opportunities, and new homes coming to market at an available price—those characteristics are what landed the City of Penticton on the Blue Chip List 2017.
“Penticton is one of those places where people want to live, with so many great amenities,” said Anthony Haddad, director of development services. “With land that has become available for development and significant infill redevelopment, we’ve seen a lot of growth in residential housing over this past year and we’re very pleased to be spotlighted as a prime spot in Canada for home ownership and investment.”
According to the magazine, Penticton’s many amenities and a six-month home price index growth of 4.7 per cent should be making new homeowners and real estate investors take a look at buying now. The editors also noted the $312 million expansion to the Penticton Regional Hospital should lead to job opportunities that will attract highly skilled residents.
The availability of work is always a consideration for potential new home buyers. However, just last fall, economic development staff headed to a Vancouver job fair with a list of nearly 100 vacant positions in skilled trades, engineering, healthcare, administration, finance, transportation, manufacturing and hospitality.
Developers are reporting sellouts of units prior to final construction and Skaha Hills, a $250 million master planned community on land owned by the Penticton Indian Band on the south slopes of the city, reported a $12-million sellout of their phase 3 in one day last summer.
In 2016, the number of new residential units in the city jumped to 387 up from 144 in 2015.
Those new units were valued at $66.7 million, an increase of 150 per cent from the 2015 building permit value of $26.4 million.
“Our efforts in recent years to reduce barriers for development and plan for sustainable growth has enabled the City to support new development at record levels in our community,“ says Haddad. “We’re very busy at the building department, and with the vacancy rate under one per cent, we’re expecting to see a similar pace in new building permits this year.”
The medium house price in Penticton is $469,900.
The City of Penticton is the hub of the South Okanagan, with over 2,500 businesses serving a trade area of 80,000 and 1.2 million visitors annually.