Five years ago, a block of townhouses were built on Centre Street, in Revelstoke’s Southside neighbourhood.
Built by Shire Properties, when the Rivendell Townhomes came on the market three years ago, they were listed at more than $450,000 – a whopping amount that reflected the excitement in the Revelstoke real estate market when construction began.
I was sitting in the Revy Realty office, talking to Zakary about the Revelstoke real estate market five years since the global economy crashed. He pulled out a sale sheet for one of the town homes that sold just a few days earlier. The sale price was $240,000 – barely half the original asking price.
“They missed the market. They didn’t finish until 2010,” said Zakary. “They were on the downside of the market and when they finished building, they had already missed the market.”
The “market” was the huge spike in real estate prices that accompanied the development of Revelstoke Mountain Resort. It has been followed by a drop of almost 40 per cent ever since the global economy crashed and the money stopped flowing into the resort market.
Ten years ago, real estate in Revelstoke was a bargain compared to many other towns in the area. The average sale price in 2003 was $150,980, according to MLS statistics provided by Uldis Bokis, the managing broker at Royal LePage. That was for all real estate categories – homes, lots, businesses and trailers.
The market started to warm up two years later. In 2005, the average selling price jumped to about $180,000 – almost a 20 per cent increase. It jumped again in 2006 to $220,796.
“The market was very depressed then,” said Bokis, who has spent decades in the Revelstoke real estate industry as an appraiser and, since 1998, as a broker. “There was talk of something happening, so it started to go up.”
And up it did. Way, way up.
On January 17, 2007, a big press conference was held in Grizzly Plaza announcing the development of Revelstoke Mountain Resort. A group of investors had bought a gondola and high speed quad and were going to start building the biggest ski resort in North America.
They put on a big marketing blitz, getting international media attention. They hyped the resort as the next big thing. When condos went on sale that February, they sold out in days, despite the high asking prices that were comparable to more established resorts.
“It was a well-orchestrated campaign that brought in a good number of buyers from throughout the United States, Europe and Canada,” said Joe Verbalis with Stoke Realty.
In town, the hype followed. People from all over the world bought up what they could. Single-family homes, condos, lots and sub-divisions were snapped up. The average sale price almost doubled in a year, to almost $400,000.
“There was absolutely no reason for it,” Zakary told me. “It was mass speculation and mass greed and the luckiest people are the ones who sold and moved on to another town.”
Some people did take advantage of the spike and sold their homes so they could leave town. Before that, prices were so low that it was impossible to leave. The boom meant they could.
In 2008, the global economy crashed, and the Revelstoke real estate market went with it. It was a slow decline at first, but when the shine came off and people realized there was no more demand, prices dropped rapidly.
The market stalled between 2008 and 2010 as a glut of over-valued properties sat on the market. People still tried to sell for the high prices their neighbours got, but no one was buying anymore. The speculators, investors and secondary home buyers that had flooded the market had left, leaving only locals left to buy. It took a few years for people to realize the good days were over.
“Things really started slowing down in 2011. People realized that the bloom was over,” said Zakary. “The market stalled, but it didn’t really fall. People were holding out hope of getting high prices for everything. They saw what their neighbours got and wanted to get more. It took a while for reality to set in.”
So far this year, the average sale price has been $252,000 – almost a 40 per cent drop from the 2007 highs.
Examples of the crash abound. The beautiful home at the corner of Mackenzie and Ninth that was once listed for around $1 million, is now on the market at a little more than $500,000. There’s the Centre Street development that Zakary talked about. He also mentioned a new, large house in Arrow Heights that recently sold for about $525,000, less than it cost to build. Bokis told me about the resale of a lot at RMR for half it’s original price.
Some people watched their property value fall to where it was worth less than what they owed on the house. That has resulted in 12 bank foreclosures as people have gone to re-finance their mortgages, said Zakary.”You can’t get someone to give you a loan for a value that you don’t own,” he said.
What has been selling?
The most popular properties in Revelstoke lately have been homes downtown, particularly those for under $400,000. Young people, with or without children, have been buying homes close to the schools and downtown.
“It’s a steady, modest market that has largely been focused on houses in the $275-400,000 range,” said Verbalis.
What aren’t selling are vacant lots. High construction costs, driven by a variety of factors like high labour costs, expensive materials, high building code standards, servicing costs and development cost charges at city hall, have meant that it’s still cheaper to buy than to build something new.
“Why would you build something new when you can buy someone else’s dream home for less?” said Zakary.
According to the people I spoke to, empty lots aren’t being sold, and when they are, they’re going for less than $100,000, where at the market peak, they would have gone for more than twice that.
“You only have new construction when costs for land and construction are lower than existing market values of existing homes. That’s the only time you have construction of any volume,” said Bokis. “If you can build for less than an existing hoe, that’s when you build.”
The resort market has essentially stopped dead. While the condos at RMR initially sold out, many of those deals didn’t close and many remain for sale. By several accounts, sales there have been moribund for years, other than a few re-sales for well below the initial asking price.
“Real estate development in the resort environment dropped off significantly if not completely,” said Sally Carmichael, a market consultant for real estate development.
“Other resorts have slowed down and the majority of resorts ceased development.”
The urban real estate development market has been picking up lately, she said, but there’s still caution in the secondary home market that drives resort real estate.
“It took the biggest hit and It will take longer for it to come back around,” said Carmichael.
“I think the market would have to see the economy to continue to show positive signs of recovery. I also think the buyers have to have a level of confidence in the resorts, that they’ve been able to weather the storm and can maintain and enhance and improve their product.”
In that regard, the slow but steady improvements at RMR could be regarded as a good sign. Carmichael said the resort has built up a good buzz for itself to capitalize should the market rebound. “It has the terrain, the snowfall. It is harder to get to but the people that make the effort enjoy the pay off,” she said. “Revelstoke is still perceived as the new jewel in the resort crown.”
All three Realtors I spoke to said the market has bottomed out. That real estate prices in Revelstoke are now comparable to other towns and with interest rates at historic lows, now is the time to buy. Prices still might come down a little bit, but for the most part, barring some unforeseen circumstance, like the resort shutting down or CP Rail pulling out of town, the market has reached a point where its within reach of most people.
“The prices have come down to a point where there are some very good values available,” said Zakary. “I’ve given you doom and gloom for the last five years, but truthfully this is when people should be buying.”
While doing research for this article, I happened on the website of Brenda Ellis, a Vernon-based Realtor in the Okanagan. She writes a blog and, most handily, she publishes weekly sales reports showing the listing price and sale for properties within the Okanagan-Mainline Real Estate Board’s jurisdiction (OMREB).
She quickly produced some statistics for me. So far this year, there were nine lots sold at an average price of $164,000, five mobile homes sold for an average of $104,580, 41 single family homes sold at an average of $315,210, and nine apartments and townhomes at an average price of $219,944.
Looking at single-family homes, they sold in prices ranging from $142,500 to $620,000 and ranged in size from 789 to 2,608 square-feet. They sat on the market for 15 to 507 days. The selling price was generally about 10 per cent below asking price.
With 195 properties listed for sale, she said there was about a two a year supply of real estate for sale, and it was a buyers market.
The number of Albertans buying in the OMREB zone is up, which bodes well, said Ellis.
“We’re quite a bit beyond 2008. What I’ve noticed this summer is people are saying, ‘We’re tired of waiting, we want to get back to our lives and go back to living,’” she said. “The baby boomers only have so many quality days remaining.”
I mentioned these numbers to Bokis, and he somewhat agreed. He put the supply at about one-year and said properties would sell, as long as they were priced realistically.
“The market has stabilized and it’s going to have some normalcy, and will slowly, slowly grow, unless something happens – like someone pouring a billion dollars into the mountain and creating more excitement,” he said. “The market is a buyers market, but I’ve seen it much worse, where there was almost nothing moving.”
Real estate is always a hot topic, especially in a market that has experienced big swings. What’s your take on the local market? Where do you think it’s going from here? How should the real estate market factor into Revelstoke local government policy decisions? Is there another part of the Revelstoke real estate story you’d put the focus on? Please share your views by commenting below.
In the article From soaring highs to stable lows in the Sept. 25, 2013, issue of the Revelstoke Times Review, we wrote that according to Realtor Arvid Zakary, there were pre-sales of the Rivendell Townhomes for more than $500,000. A representative of Shire Properties, who built the townhomes, said the information we reported was erroneous and there were no pre-sales at the Rivendell Townhomes. We regret the error.
In our article on the Revelstoke real estate market, From soaring highs to stable lows (News, Sept. 25, 2013), we wrote, “All three Realtors I spoke to said the market has bottomed out.” The sentence summarized three long interviews about the Revelstoke market with different Realtors. Interviewee Joe Verbalis from Stoke Realty responded, saying he “asserts unequivocally that he did not state he was of the opinion the real estate market has bottomed out.”
He says he offered no opinion on the market, and that it was up to each individual to examine the market and draw their own conclusions.