A "two-speed" British Columbia housing market is forming, according to an analysis of property sales across the province. "We continue to observe a two-speed market in B.C., with surging consumer demand in Metro Vancouver overshadowing more moderate demand in other regions,” said Cameron Muir, chief economist with the BC Real Estate Association.  Muir notes that sales in the central Okanagan, for example, are off by 30 per cent this year compared to the first quarter of 2010.

The Central 1 Credit Union is even more bearish, suggesting that the “two-speeds” include reverse in some resort markets. Credit Union economist Brian Yu said the “weak links” in B.C.’s residential market are those with high exposure to external recreation and retiree market demand, suggesting the Okanagan and Kootenay areas will be the hardest hit this year. “Buyers are hesitant to make discretionary or luxury purchases,” Yu explained, noting that cut-rate prices in the U.S. Sunbelt are also drawing buyers away from B.C. resorts.

According to the Credit Union's most recent housing forecast, the Okanagan is expected to see overall residential price declines of 6 per cent this year, while Kootenay prices will drop by 5 per cent, compared to a not-so-rosy 2010.

However, the Credit Union is also confident of a recovery in resort markets in 2012 and 2013, as the economy improves and inventory declines.  

That would be a relief to some resort operators who have been slashing prices in an effort to kick start sales. Late last year, Rivendell Development chopped prices on suites at its Verana Okanagan project by as much as $60,000 and waived the harmonized sales tax in bid to attract buyers to the Penticton resort development. Fully complete and just a block and a half from Skaha Lake, Verana Okanagan is packed with high-end finishes and is built to maximize energy efficiency by using Low-E argon windows, high efficiency air source heat pumps and compact florescent lights. These energy efficient features, along with the first green roof in the South Okanagan, earned the project the FortisBC Power Sense’s Conservation Excellence Awards two years in a row.

With suites priced from $224,900, Verana Okanagan would have likely sold fast if it was being marketed four years ago.

But that was then, this is now.

When Rivendell started the discount sales blitz last winter, they had 17 units left to sell. Now, eight months later, they have 15 for sale.

“We have only sold one suite this year,” said Keith Hay, who is marketing Verana Okanagan. Hay doubts prices will be reduced even further, despite the slow take up. “It’s not the price, it’s the market,” he said.

According to Hay, there is simply too much resort product on the Okanagan market for the number of buyers. And, according to a buyer survey from the Okanagan Mainline Real Estate Board, the market is now dominated by domestic buyers, not the well-heeled Albertans and U.S. customers that some resorts first envisioned.