Invermere's Rocky Road
On Oct. 3, 2009, a crowd buzzing in anticipation packed the large ballroom at the Calgary Westin hotel. The auction attracted so many people – more than 400 were pre-qualified to bid – that, despite chairs being brought in from other rooms, it was standing room only. With the ingredients of a traditional auction, motor-mouthed auctioneer included, the scene could have been mistaken for an estate sale or police auction, except that the products up for sale weren’t stolen bicycles or Grandma’s china but 40 recreational condos in Invermere, a small town in the East Kootenays.
To some back in Invermere, the real estate auction – a first in Canada, according to organizer Kennedy Wilson – seemed like a desperate attempt to move inventory after months of virtually no sales at Lake Windermere Pointe. The three four-storey buildings, which sit at the end of Lake Windermere on Invermere’s eastern edge, contain 224 mid-range recreational units that went to market in 2006, a significant housing boost for a town of only 3,200 permanent residents. But by early 2009, only 97 had been sold, so Douglas McIntosh – who, in partnership with Calgary developer Pointe of View, built the project – was on the search for a new approach. He settled on the auction and selected a mixed bag of 40 condos, a number he determined acceptable to sell at what he calls “wholesale prices.”
Media reports of the auction portrayed Alberta buyers as “scooping up” units at deeply discounted prices, like vultures feasting on the remains of what was once a red-hot recreational real estate market. McIntosh, in contrast, characterizes the event as a creative and successful marketing move. “In times like this, you have to think outside of the box,” he says, noting that 38 of the 40 units were bid on and that 32 sales closed within a month of the auction.
The difficult market McIntosh is now dealing with is very different from what he first envisioned for Lake Windermere Pointe. Invermere has long been a summer playground for wealthy Albertans (70 per cent of all residential properties in the area are owned by Albertans), and with Alberta’s economy booming in the decade before the recession hit, new families and young professionals could afford to get in on the action. McIntosh saw great potential for lower-priced recreational property aimed at this group. When his sales office opened in 2006, one- to three-bedroom condos were going for between $267,000 and $590,000, a score for recreational buyers in a market typified by lakefront luxury cabins worth $2 million plus. But McIntosh and Pointe of View held off on aggressively pushing the units, since prices and demand were still on the rise. “In hindsight, we’ve learned a lesson,” McIntosh says now. By October 2009, prices had plummeted, and the 32 units sold at auction went for an average of $242,000. As of December 2009, 89 condos remained up for sale.
Discounted prices and stale inventory represent a dramatic turnaround for Invermere. In the decade preceding the recession, the local real estate market had reached prices common in Kelowna or Banff; a modest single-family residential home that sold for $100,000 in 1990 was going for $450,000 in late 2007. It was, according to almost everyone interviewed for this article, a market that was greatly overvalued. Contractor Rick Luyendyk, who specializes in custom-made and timber-frame homes, says things had reached the point where homes he had built in 2007 were being flipped six months later for $40,000 or $50,000 above the original selling price. The labour market was so tight that some employees were able to dictate the terms of their employment. Have a dispute with your boss? You could walk away and have another job by that afternoon. “Everyone needed to feel and taste a recession,” he says.
But the market correction turned out to be much more significant than even Luyendyk had hoped for. In 2006 his company built 53 homes; in 2008 he completed only three, using employees to do some work previously subcontracted and having to lay off six. By November 2009, the unemployment rate in the East Kootenays region was 8.4 per cent, a point above the provincial average and 2.5 per cent higher than a year before. All across the area, construction on new developments had ground to a halt, leaving the small town dotted with half-finished recreational properties. And nowhere is the economic slowdown more apparent than at Lake Windermere Pointe, where Invermere’s tallest buildings still sit half empty, three years after being built.
Save over 50% off the newsstand price with a subscription to BCBusiness Magazine
