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Summerland Mayor Toni Boot stands on the edge of Giants Head Mountain Park, overlooking the Hillcrest Village rental property.Lucas Oleniuk/The Globe and Mail

As people migrate from urban centres to smaller communities, land values in those communities are rising, putting a new kind of pressure on the small towns of B.C.

People are relocating to small-town B.C. from the Lower Mainland, as well as Alberta, the Prairie provinces, Ontario and Quebec. In the Okanagan this summer, anybody in real estate will tell you how the market has been climbing, with buyers snapping up desirable properties in towns such as Vernon, Peachland, Penticton, Naramata and Summerland. Vancouver Island has seen a robust housing market, too. The year-over-year benchmark home price in B.C. grew 12.5 per cent compared with the previous July, at $768,061, according to the Canadian Real Estate Association.

On a recent weekend in sleepy Summerland, population 11,615, film crews had converted the downtown into some Christmas-decorated place in New Mexico for a Hallmark movie. The location was an easy fit, what with the semi-arid climate and rolling hills that frame the town, surrounded by orchards and vineyards. The film was a kick to the local economy, with the crews frequenting places such as the local bakery that sells cookies and freshly milled flour. City types have also discovered the charms of small-town living, especially during a pandemic. There has only been one reported case of COVID-19 in town so far. And properties are a bargain compared to Vancouver.

A sign of the times, an old lakefront cannery site has been sold to a developer, poised to become 24 “resort condos.” The initial plan for the terraced complex presented to council last year included a saltwater infinity pool for each of the units, an indication of the wealthy market the developer plans to target.

The boon in taxes from such high-end development is a plus, but luxury housing for a wealthy demographic comes at a cost, a fact not lost on Mayor Toni Boot. People who otherwise might have bought into the market are getting pushed out and the need for rental is growing. Summerland used to be a retirement community, but it’s now pretty balanced in terms of the under-34 demographic, Ms. Boot says. The kindergarten classes have notably grown. She sees a lot more young people on the street. The need for purpose built rental is growing.

“Just walking around, you see a lot more young people,” she says. “It’s not that we want to have the balance go the other way, but it makes for a healthier community, I think, when you have a diversity in age demographics, and also in other demographics.”

In 2017, the district hired a consultant to prepare an affordable housing report and found they had a “missing middle” problem, that sweet spot of affordable housing. Facing a vacancy rate of less than 1 per cent, they responded by putting out a request for rental development proposals to developers. The result is a new 88-unit rental building downtown, across the street from a large park with a playground and small outdoor theatre. Nearby is a bus stop that takes passengers to nearby Penticton, or Kelowna, about 45 minutes away.

The rental building sits on former district-owned land. The developer is Seymour Pacific Developments, a Campbell River-based company that has done a number of projects in small communities in the province. It includes one-, two- and three-bedroom units, and some retail at ground level. It opened in May and it is almost at capacity.

“We specifically wanted to have it rental properties,” Ms. Boot says. “That’s what we were looking for. But really, it’s the whole spectrum of affordable housing [needed], from shelters and transition housing right through to missing middle housing, where both parents are working with children and still cannot afford to get into the housing market.”

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The Hillcrest Village rental property sits in the downtown core of Summerland.Lucas Oleniuk/The Globe and Mail

But the new building is market rate, she adds. It isn’t subsidized housing, and rents start at around $1,300 for a one bedroom – not far from city prices.

“There is big demand,” Ms. Boot says. “I think we could already use another rental building.”

Kelowna developer Randy Shier says he jumped at the chance to build a rental project in Penticton, population 34,000, where, by his estimate, rents are about 15-per-cent lower than in Vancouver. A Penticton landowner had approached his firm, the Mission Group, and asked if they’d be interested in purchasing the property. Mr. Shier says he jumped at the chance because it is located in downtown Penticton amid an emerging trendy hub – near Bad Tattoo pizza, Slackwater Brewing, The Angry Vegan and a new communal coffee spot called Wayne and Freda’s, opened by Vancouverites who now live in Summerland. Savvy developers know to follow the hip, young-entrepreneur food and drink scene.

“It’s an interesting little mix of local entrepreneurs creating a vibe that a national brand could never do,” Mr. Shier says.

He’s planning to build 75 units of rental appealing to the two demographics that usually rent, those between 25 and 34, and people older than 55. His company, which also does construction and property management, plans to break ground in September. They’re seizing rental opportunities for the same reason cited by other developers: to create a recession proof business model.

“As a company we made a decision about five years ago that instead of just building and selling we would also build and hold. So we have been reinvesting profits that we’ve earned out of our condo sales into building rentals, as a way to stabilize the organization, so you are not fluctuating with the vagaries of the real estate market going up and down.”

Because they are condo builders, they are creating rentals that look and feel a lot like condos, with dog washes, bike maintenance rooms, high-speed internet, in-suite laundry with full-size side-by-side machines and a locker room area for deliveries. After all, the pandemic has proven the need for safe keeping of one’s deliverables. And Mr. Shier says renters are willing to pay $100 to $200 a month extra for such perks. Remote workers, as well as downsizers, are coming from Vancouver, Toronto and Montreal, as well. He says he’s never seen so many people from Montreal moving to the region.

“It’s not a mass exodus but it is a small exodus,” he says of the market. “They know that they could live anywhere, and I think that’s accelerated with COVID, because so many are working from home, and many more online, and businesses are much more amenable to that, because they’ve been forced to. Productivity didn’t go down as much as they thought it would go down, and so they are okay with people working remotely and that has accelerated some of the growth as well.”

And the condo market is ticking along, buoyed in part by investors who have plans to rent out their properties. In Kelowna, he is relaunching a 33-storey, 257 unit condo high-rise that was put on hold because of COVID. The response, he says, has been a surprise. The region is booming not just because people are fleeing urban areas, but because of job opportunities and a growing student population, Mr. Shier says.

Mr. Shier’s company has a partnership deal with University of B.C., to co-own a downtown property near UBC’s downtown Kelowna campus. The university will build student residences and the developer will build office and rental apartments.

Kelowna-based developer Renee Merrifield says the growing student population is definitely driving the rental market in the Okanagan, with Okanagan College campuses also in Vernon and Penticton. However, her company is currently targeting the older renter demographic, with new market and non-market rental units in the northern city of Prince George, contributing enough housing for about 500 people. Ms. Merrifield discovered that seniors are being displaced, or cashing out, from an increasingly expensive property market in smaller communities, and her company is responding to that market.

“Our research showed that there is a large number of seniors coming out of farms and rural communities, and the significant other has died, and they don’t have pensions – there is huge need and we are looking to fill it,” says Ms. Merrifield, who’s chief executive officer of Troika Developments, a 20-year-old company.

An appealing feature of small town life for seniors is that during a pandemic, in terms of livability, they tend to fare better. A lot of 80-somethings are in good health and want to stay independent.

“We have more seniors than ever before, and that’s the market we have been targeting. They don’t want that long-term senior living situation. I would say during COVID, they have done better in these smaller communities, and they also had a higher standard of living – they were able to go outside and go for walks, and socially distance, and not be reliant on transit, or ‘tubes of doom,‘ as I call them.

“We are trying to figure it out as we go.”

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