It was another big year for South Okanagan real estate, as sales made another record, while construction value of building permits approved at Penticton City Hall was a sliver below the record.
Though the total number of building permits approved by the city increased by a quarter, also showing an increase in new residential units approved for creation, the total construction value of $197,878,905 fell just 0.02 per cent below the record, set in 2016.
“Our single-family was up from last year, as well as our two-family,” building manager Ken Kunka said. “We use single-family and two-family as our kind of benchmark on permit turnarounds and kind of what’s been going on with the industry.”
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An increase in residential building permits appears congruent with what the South Okanagan Real Estate Board is seeing in real estate sales, with former president Garry Gratton noting another record year in sales.
In 2017, the South Okanagan totalled just shy of $1.2 billion in sales, making it the second year in a row for the region to clear the billion mark, and clearing the year previous by seven per cent.
That increase was driven by sale prices, with the total number of actual sales down over 2016, and the average sale price increasing by 10 per cent.
Related: Penticton’s property values leap 16 per cent in 2017
Gratton credited the growth to a growing construction industry and large employers like the new jail in Oliver, as well as baby boomers beginning to retire, with many looking to places like the Okanagan for milder climates.
Kunka said a big part of the boom in permits, beginning in 2016, has been the fruits of the labour of city councils dating back since the late-2000s and early-2010s, who put a focus on economic development.
“Looking at attracting and particularly retaining businesses here in town, our zoning bylaw has been significantly changed. It’s become more permissible on certain aspects of development, which has really encouraged the mid-market development of duplexes and small multi-family,” Kunka said
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He added that a big chunk of the building boom came from the Penticton Regional Hospital’s upcoming patient tower, with building permits in 2015 totalling just $30 million, but construction on that is set to finish in the coming months.
“But we still see, based on the development permits that are coming in, the subdivisions that are coming online, we still see a very strong 2018, going into 2019,” he said. “We really don’t know what’s going to happen after that.”
While some, such as Penticton developer Bruce Schoenne, have suggested the region has hit or is nearing a peak, Gratton cast some doubt on that prognosis.
Related: Cost of housing continues to skyrocket in South Okanagan
Though Kunka acknowledged the city could be seeing the peak coming up soon, he, too, was confident in the market, saying he has spoken to developers in Kelowna who were seeing plenty of interest in the Okanagan.
But Schoenne told the Western News in December he was working more carefully to avoid being spurned if the city sees this cycle come to an end in the coming months.
“If you pay attention to the history of the long-term cycle, we really are in the very first year, because it’s only since early last year that this market has taken off where every house in the Penticton area has increased in value by $50-100,000,” Gratton countered.
“Bruce is certainly a really smart guy, and he’s a friend of mine and I certainly have a lot of respect for his insight into the market. I think anybody as smart as Bruce, particularly in the development and building industry is very wise to hedge their bets when they feel that it is necessary to do so.
“I, personally, think that’s very wise and very smart on his part, but I don’t necessarily think that it’s going to change my professional opinion as to what the market’s going to do.”
Related: Many motel sales signal strong real estate market
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