The Effect of Geoarbitrage on Kelowna’s Real Estate Market

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In Kelowna, we’re being exploited. You read that right. How is this happening? Well, there is this little concept called geoarbitrage, popularized by Tim Ferris, that explains how you can leverage the disparity between two different markets in order to create a financial gain.

Obviously, this is what China and other countries have been doing to the Vancouver real estate market for the last 20 years - driving property values up to the point where four walls and a roof sell for $1.2 million in places like Richmond and White Rock.

What does this mean for us? There are a massive number of people living in the lower mainland who’ve owned real estate for multiple decades who bought their properties for maybe $150,000 or $200,000 and have seen those same properties increase in worth to anywhere from $1.2 to $1.5 million due to the pressure on their real estate market and international demand.

Now these same people who’ve always been interested in Kelowna are getting on the MLS and seeing palatial homes for $600,000 or $700,000 sitting on vineyards, or golf courses, or overlooking a beautiful lake. Of course they’re going to cash in their chips and come here. They won’t just buy a house, they’ll also buy an investment property to fund their retirement. It makes sense - you would do it too.

Now, think about the massive size of the population of Vancouver. If one out of every 1,000 people in the lower mainland gets the memo that their house is worth a ton of money and there’s a disparity between the market there and the market in Kelowna, and they can not only upgrade their house and lifestyle but also put a half million dollars in the bank, you know they’ll be coming.

So what are we going to do? Are we going to get upset that they’re driving our prices up? No! This is the world as it is, not how we want it to be. Getting on the right side of this equation means arming yourself with a bunch of real estate. If you want to benefit from a boom, you have to own the stuff. So what I’m saying is buy cash flow property. The market is wonderful for that. Then when the market goes crazy and prices go up, you can sell your own Kelowna real estate and perform your own geoarbitrage on any market you like. Whatever you want to do, you can take advantage and leverage the disparity between the markets here and wherever it is you’d like to go.

To reiterate, we are being exploited, but that’s a good thing. If you have any questions about what your home might be worth or want to see a list of properties that might provide cash flow, by all means call me or shoot me an email.

What Are the Rules About Putting in a Carriage Home in Kelowna?

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Today, we continue answering the great questions many of you have submitted! Let's jump right in.

What are the rules about putting in a carriage home? 

There are three things you want to look for: the right zoning, the right size land, and a lot with rear-lane access. The zoning you're looking for is RU6, which allows you to have two different dwellings or a legal suite. Next, the land needs to be a certain size - small, 33-foot lots aren't going to cut it. You need at least 50 feet across and 20 feet or so in depth. There are some great lots in the Kelowna area with these dimensions. Lastly, you need a lot with rear-lane access. They used to allow carriage homes with side-yard access, but that's now frowned upon because it causes parking issues. 

With the current house that exists on the lot, it needs to be a decent size. It can't be a small, 700-square foot home. You need at least 1,000-1,200 square feet because you can only go up to 80% the size of the existing home. If you have the right size lot, you shouldn't have to worry about this.

How are low oil prices affecting our market? 

Anyone who is reading the headlines right now understands the coal mining market is on fire. We're up leaps and bounds over where we were last year, and there are certain segments of the market that are doing very well. The $500K-$700K market, which has been sluggish over the past few years, has really come alive recently. The one section of the market is really affected by the low-priced oil are the $1.1-$1.2 million homes; however, we've sold more homes this year, year-to-date, than we did last year. All things considered, it's fair to say that everything going on in Alberta hasn't taken the wind out of our sales!