It’s a tough world out there for renters, and Kelowna is no exception with rental vacancy rates below 1%. If you’ve been searching for rental accommodations at all in the last year or so, you are likely already aware of how real the struggle can be.
It’s impossible to put a finger on one single cause for the current state of the rental market. There are several contributing factors, some more obvious than others, and some of these factors set off a chain of events that continue to deepen the difficulties for renters in Kelowna today.
One major factor contributing to the tough rental market is a simple issue of supply and demand. As Kelowna’s reputation continues to flourish, more and more people are deciding that this is the place they want to live, and we really can’t blame them. Kelowna is becoming known as a thriving city surrounded by beautiful mountains and lakes; a four-season playground burgeoning with opportunities.
According to Statistics Canada’s 2016 Census Profile of Kelowna, our city’s population increased by 8.4% between 2011 and 2016, from 179,839 people to 194,882. As Kelowna becomes an increasingly popular place to live, this trend is not likely to slow down. According to the 2016 Kelowna Rental Report by the Canada Mortgage and Housing Corporation, Kelowna’s population growth of 3.2% in 2015 was the greatest of any census metropolitan area in Canada.
People aren’t just moving here for the great weather. Kelowna is lucky to host two esteemed post-secondary schools, UBC Okanagan and the Okanagan College. It’s amazing that residents do not need to leave town to receive an excellent education, and that so many students choose to move here from other cities to pursue their studies; however, those coming from out of town need someplace to live, and rentals are usually the best option for them.
Housing developments simply can’t keep up, and demand is surpassing supply. As with all goods and services, when the demand is greater than the supply, prices tend to go up. This issue is likely to improve as time goes on and more houses and apartments are built, but it could take a while.
This brings us to another factor - the market is getting more expensive. This has been a hot topic in the realty world for some time now. As the costs of buying and mortgages go up, so do rental charges.
According to the 2016 Kelowna Rental Report, rental vacancy rates in older and less expensive buildings are lowest, which means that renters are likely migrating towards lower cost rental options. These are becoming harder and harder to find. A search on Kijiji for rental properties in Kelowna comes up very few options below $1,000 per month.
That’s not the only way that the expensive housing market is affecting renters in Kelowna. The market is hot for sellers right now, and therefore many homeowners are forcing their tenants out in order to sell and make a profit.
Also, it is taking most people longer to save up for a down payment, and so they continue to rent while they save their money or wait in hopes of the market going back down, adding to the overcrowded renter population.
Summers in Kelowna present a whole other issue. The Okanagan is a popular vacation destination between June and September, and gone are the days of a hotel room being your only option with the introduction of short-term rental facilitators like Airbnb and VRBO. These websites offer homeowners a place to advertise their homes, suites, carriage-houses or spare rooms to vacationers, often offering better pricing and amenities than most hotels.
Though this isn’t always a perfect system, it’s an easy way for homeowners to make more money off of their property than they would if they rented it out long-term, and it’s clear that Kelowna is taking advantage. A search on Airbnb on August 2nd for an accommodation for two guests in Kelowna between August 21st to August 27th yielded 240 properties to choose from. This is contributing to the lack of long-term rental housing in Kelowna.
Take a fast-growing population, add vacationers in the summer and students the rest of the year, toss in a lack of housing (and the little that there is being rented out short-term) and what do you get? One tough market for renters. With supply down and costs and demand up, those hoping to find the perfect place to rent might feel discouraged, but things are looking up for the future. The city currently has two incentive programs running to help encourage the development of more rental housing.
"One is our rental housing grant program which provides a direct grant to projects that are providing purposeful rental housing through the city," said James Moore, a Planning Manager with the City of Kelowna. "The second is a tax release program for purposeful rental projects throughout the city as well."
According to Moore, both of these programs have been put to good use over the past couple of years and over a thousand grants have already been approved for the development of new rental units, some of which have already started being built.
"We're hoping that it does provide the nudge needed to encourage both the non-profit and for-profit sectors to engage in construction of rental housing," said Moore. "We do expect that the rental housing coming on stream over the next year or two will provide some relief to the vacancy rate."
The city has also begun updating their housing strategy, and they plan to incorporate a focus on rental housing. "Over the next 12 months we will be working on bringing forward some new strategies and policies that will help bring some further relief for years to come in the rental market," said Moore.
In the meantime, online resources like Happipad, a new Kelowna-based website that helps people find trustworthy rentals that suit their needs and assists with the rental process from start to finish, make it a lot easier. Being able to search sites like this regularly means you won't miss out when the right place pops up, and it makes it easy to compare with other rentals in the area, so you know you're making the right choice.
"Happipad's vision is to make renting as easy as a handshake, making properties more accessible to tenants," says the company's founders. "We believe a lot of housing in Kelowna is underutilized - think vacant summer homes, unrented suites, and empty nesters in large homes - and that building trust into the rental community will also help increase inventory in the market."
So hang in there, renters, and make use of the resources available to you! It's not always easy, but finding the perfect place is worth it, and you don't have to figure it all out on your own.
Happipad is a Canadian company based out of Kelowna, British Columbia, offering innovative services for tenants and landlords. Happipad is a full service rental site that lets authenticated users connect like never before. List, search, screen, sign, review - all in a few clicks. Head to www.happipad.com to learn more.
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