The COVID-19 pandemic is causing a frenzy in the real estate market, and the demand is driving record construction activity in the South Okanagan, according to insiders.
The City of Penticton issued 273 building permits for projects valued at $50.4 million in the first quarter of 2021.
That’s compared to the construction value of $19.7 million and 156 permits issued in the first quarter of 2020, and $46.8 million in construction activity in 2019.
Data provided to Global News dating back to 2006 shows construction values are now at an all-time high.
Digital records do not go back further, but Blake Laven, the city’s director of development services, said it’s safe to say it’s a new record in value.
“Council, over the past few years, has created an incredible environment for investment, through the adoption of our new Official Community Plan and support for continuous process improvement in our development services division,” Laven said in an email.
“I also think the historically low-interest rates and historically high regional real estate prices are contributing factors (particularly on the residential side). Our region has also experienced much less unemployment than other areas and COVID is driving investment into real estate, as opposed to travel or other pursuits.”
Sarah Taylor, executive officer of the South Okanagan branch of the Canadian Home Builders’ Association, said the pandemic is prompting more people to work remotely and choosing to move to smaller centres for enhanced lifestyle opportunities.
“The market is going crazy all across smaller centres in Canada,” Taylor said in a phone interview. “People can work anywhere now and so they are choosing Penticton and they want to move away from the big cities, which is great for our economy. We just need to catch up our supply.”
Rising costs for construction materials and labour shortages are also contributing to the first-quarter increase in activity, Taylor added.
“Homebuilders in the South Okanagan are busier than ever before,” she said.
“Fluctuating prices in different supplies, like lumber and plumbing supplies, everything is fluctuating and all over the map. Lumber has skyrocketed. This is making it a lot harder for home builders and contractors to quote on projects.”
The demand, particularly for residential construction, is stretching the trades and sub-trades thin, she said, and causing waitlists for new custom home and renovation projects.
“We have a lot of demand for residential construction and multi-family builds and larger custom-built homes in the valley, but we have a major demand right now for more affordable housing in Penticton and we have a supply issue that we need to tackle,” she said, adding it’s hard to retain staff.
Laven said several large projects are currently under review, which are not included in the Q1 numbers. He said the high level of activity is anticipated to continue throughout the year.
“We have three new subdivisions that have been under planning for the past few years coming online over the next months, several large apartment projects coming in for permits, and the new hotel on Westminster Avenue, which we anticipate to begin construction by summer,” he said.
City council will receive an economic development update on April 20.