Community - Vacancy rate in Okotoks is zero

Average home in Okotoks reaches $216,000, rentals almost impossible

By Laurel Nadon
Staff Reporter

With a zero per cent rental occupancy rate and home prices increasing an average of six per cent each year since 1997, people may find it increasingly hard to find their dream home in Okotoks.
Okotoks is now tied with Fort McMurray for having the lowest occupancy rate in the province at zero per cent.
Ryck Flemmer, a real estate agent in Okotoks with Century 21, said his four rental properties never go empty. Despite the zero per cent occupancy rate, there is always turnover. As for purchasing a home, there are currently 45 homes, townhouses or condos on the market in Okotoks.
“People may have to be more flexible and end up with a smaller house than what they’d hoped for, not get a garage or get a townhouse instead of a house,” Flemmer said, adding that one positive is that the price jumps attract investors to town.
Flemmer said occupancy rates in Okotoks, which have always been low, show that the community is a very desirable place to live. It also means that people looking to rent or own have less to choose from and need to act quickly if they’re interested in a property.
The occupancy rate has also been impacted by the busy construction business. Safety Codes Services in Okotoks is anticipating another strong year of construction activity with more than 450 new dwelling units under construction. Year-end projections for 2005 place value of construction approaching $100 million, as compared to $64 million in 2004 and almost $67 million in 2003. Of this, approximately 30 per cent of the 2005 construction activity was commercial and institutional and the remaining 70 per cent will be largely residential.
Okotoks Mayor Bill McAlpine noted that 2005 was the biggest year ever for development permits and housing sales in the community, which may be why the occupancy rate is so low.
“It’s a little scary that the market is that hot,” McAlpine said.
Residents are currently waiting six to nine months for their homes to be built and many rent in the meantime.
Flemmer noted that because homes are so expensive, people end up renting until they can afford to buy.
The price for an average home has increased substantially in Okotoks since 1997.
In that year, the assessment for a typical single detached house was $128,500 while in 2006 that same home will cost $216,070. The biggest jump in home prices occurred from 1998 to 1999, when a home jumped from $138,780 to $154,740, an increase of 11.5 per cent. Another big jump was from 2003 to 2004, when average home prices rose from $177,200 to $195,310, which was a 10.2 per cent increase.
Based on a five per cent mortgage rate, residents need an annual income of $50,000 to qualify for a mortgage for the typical $216,070 house. Flemmer estimates that same house would rent for $1,150 to $1,200.
“A lot of people require a double income now to sustain that mortgage,” Flemmer said. “I think people are carrying more debt, but they’re still buying what they want.”
McAlpine credits the price jumps with a hot economy across the province and said the home prices in town aren’t overly burdensome.
“It’s such a popular place. People are coming to town and buying houses at an unprecedented rate,” McAlpine said. “The economy is very good and there are lots of jobs out here. I see it as a continuing growth pattern in the province.”
He added that he doesn’t see the end of growth in sight, as interest rates are still good and job opportunities are available.
“The future looks very bright to me,” McAlpine said.
He said he hasn’t noticed that residents are more “house broke” than before and that the municipal development plan requires developers to build entry level homes.
But do the house price increases mean owners will be ahead when they sell? Not necessarily so, McAlpine said.
“You have to live somewhere and when you go to buy a house, it will cost more as well,” McAlpine said.
One plus for the community is that the municipal tax rate has decreased for 2006.
The municipal tax rate was 0.777 per cent in 1997 and declined for several years until climbing back to 0.775 per cent in 2003. The tax rate for 2006, set at council’s meeting on Dec. 12 for 0.7081, is the lowest it has been since it was 0.707 per cent in 2000. The municipal tax rate went from 0.7303 per cent in 2005 to 0.7081 per cent in 2006.
Homeowners can expect to pay $35 to $40 more or approximately $3.10 more per month in property taxes in 2006 than in 2005 based on an increase in market value assessment.
“Because of our growth, our total viability keeps increasing,” McAlpine said. “It’s a plus that we’re able to do all the extra things with recreation, library expansion and wastewater treatment plant upgrades and still not raise the tax rate.”
In 2006, the town projects approximately 1,500 new residents will move to Okotoks.

Cutline: Ryck Flemmer posts a conditional sale sign on a house along Lock Crescent in Okotoks in August. Flemmer says a zero per cent rental occupancy rate in town means people have to be flexible about where they live. Wheel file photo