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Kelowna  

Housing affordability in Kelowna spiralled out of control in 2021

2021: year of the squeeze

While Kelowna experienced a record-breaking building boom, the cost of housing in 2021 increased at a pace some can’t keep up with.

Four-month eviction notices were issued this week to tenants at Fairview Apartments on Lakeshore Road. The 23-unit complex is being demolished to make way for the second phase of a townhouse development.

The Whitworth Holdings development received blessing from the city earlier this month, but has been in the works for years.

Resident Jim Hamilton says residents at Fairview Apartments, many of them low-income, are paying around $1,000 for a two bedroom. Hamilton says he’s paying $1,200 and moved in three years ago.

He’s now faced with a rental market that is asking for $2,000 for a two bedroom unit in Kelowna, according to Castanet Classifieds data.

The first phase of The Arbour development next door, which will soon grow to replace the Fairview Apartments, is renting two-bedroom units for $1,850.

“What are we going to do?” Hamilton said, suggesting many tenants will have to leave the community completely.

“All these people are gonna have to move and I don't know where they're all gonna move. It's just gonna add into either the homeless or the working poor,” he said.

“When you're gonna pay 60-70% of your monthly income towards rent. That's getting crazy.”

Financial advisors and CMHC consider people who spend more than 33% of their gross income on housing overextended or “house poor.”

Stats Canada says 43% of Kelowna renters are beyond that threshold while 21% spend more than half their gross income on rent. Those figures, however, are using year-old data and have likely grown alongside rents.

Rent in Kelowna has gone up 14% this year, said a recent national report, one of the highest increases in Canada.

With a one-bedroom unit renting for an average of $1,450 in the Central Okanagan (Castanet data), a person needs to make $53,000 a year, or about $25 an hour, to afford it.

Anything less, and a person is stuck in the “rental trap” and will unlikely be unable to save to buy a home, a prospect that on its own is rapidly growing out of reach.

The benchmark price for a home in the Central Okanagan is flirting with the $1 million mark, up more than 30% in a year. It’s a trend playing out right across Canada, but the Central Okanagan market is closely tied to the Lower Mainland.

Last week the Royal Bank released a report called the “Great Affordability Squeeze” in which it labelled Greater Vancouver as the least affordable market in Canada for home buyers.

“An average household would need to allocate a stunning 64.3% of its income to cover ownership costs of an average home — clearly impossible,” the report stated.

GOVERNMENT RESPONSE

Nationally, home prices rose 21% this year, leading the federal government to consider a ban on blind bidding — when sellers opt not to reveal the details of competing bids — or the right to a home inspection prior to purchase.

A temporary ban on foreign buyers of non-recreational residential properties is also being floated, but Prime Minister Justin Trudeau's recent mandate letter to the Housing Minister had little support for renters.

The City of Kelowna has tried to push back against rising rents and low vacancy rates by encouraging density in new developments — one of the only levers a local government can pull on housing.

Mayor Colin Basran told Castanet earlier this year he is proud of what the city has accomplished in encouraging private development of housing.

“When compared to other municipalities, we have a very good track record of getting approvals through the process in a timely manner in order to get that housing under construction and to market," he said.

But when many of those projects are completed, they are at the upper end of the market. Or in the case of Fairview Apartments, replaces more affordable units.

That leaves the provincial government, which is most able to subsidize housing at below-market rates.

B.C. Housing Minister David Eby said earlier this year 350 units of subsidized housing are under construction in Kelowna.

"A lot of people predicted that this moment would come, that we would be in a situation of incredibly scarce rental housing if governments didn't step up. And, of course, here we are,” he told the CBC in an interview.

Increasingly in 2021, residents of Kelowna were being priced out of the community they may have grown up in or spent many years in as salaries simply don’t keep pace with rising housing costs.

“Well, we're all gonna have to move on to different places, I don’t know where we all spread out,” said Hamilton, who will be 65 by the time his eviction notice comes due at the end of April.

“We want to stay, but obviously we're gonna have to move.”



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