How unaffordable has housing become in Kelowna?

A report to city council examined the state of housing unaffordability in Kelowna. It looked at how the conversation is framed and what local governments can do to react. Kelowna10 is reporting on the document through a series of stories.

When Gale Given was elected to city council 11 years ago, what guided many of her decisions was a goal of creating a city her kids would want to call home.

Often, over the past decade, that involved conversations around economic and business development.

But more recently, and acutely over the past few months, soaring home prices have left her children, who are trying to save for a down payment, completely deflated.

“I know none of my kids could afford to buy a house here in Kelowna,” she told her council colleagues.

And her children are not alone.

Contained in a report put before lawmakers this week was a dire look at the drastic unaffordable state of housing in the city. Titled Housing unaffordability: crisis or crossroads?, it aimed to answer a few key questions about the state of housing in the city, how it is discussed, and how local governments play a part.

Kelowna Rivals Global Unaffordable Cities

The situation is not unique to Kelowna, but it is among the worst in the country.

Online rental listing aggregator Zummper.com ranks Kelowna as the fourth most expensive market in the country. Median home prices have soared over 30 per cent year-over-year.

According to the report, assembled by the city’s policy and planning department, Kelowna is as unaffordable as London, U.K, when using a common metric to measure affordability across the globe.

Much of it is driven by market forces, inflation, pandemic pressures, and stagnant wages – problems out of reach for local governments. But that doesn’t mean city hall can’t help.

At the core of the problem, the separation of wages and housing costs.

Researchers at UBC found that in Kelowna, average house prices would need to fall by half to return to a state of affordability. Alternatively, typical full-time wages would need to increase by $100,000.

Both are unrealistic outcomes.

Renters Fairing Worse

The same research found it would take the average rental household in Kelowna 13 years or more to save for a down payment. That was based on 2018 data. The median purchase price has since soared 35 per cent.

The proportion of renters in Kelowna spending more than 30 per cent of their gross income on housing costs is 47 per cent – higher than both Vancouver and Toronto. Tangibly, that means over 8,000 households could be struggling or are on the verge of homelessness every month, the report said.

Based on 2021 sales data, barely one in five renters could afford to purchase an apartment. In other words, almost 80 per cent of renters cannot afford to move into homeownership.

Many new purpose-built rentals are also not affordable to renters.

In September 2021, the median listed rental price for a new two-bedroom unit was $1,888. Less than 30 per cent of renters make enough to afford this. A household would need an annual before-tax income of $75,520 to keep this rent below 30 per cent of their income, which is significantly higher than the 2021 median renter household income of $50,300, the report said.

High rent can cause reduced mobility, greater inequality, lost productivity, have mental health impacts, and lead to eventual homelessness. It can also discourage people from moving to the city, becoming a drag on economic growth.

Overall, fewer than one in 10 households across the city can afford to purchase a detached home, fewer than one in five renters can afford to move into ownership, and only 30 per cent of renters in the city could afford current rental prices.

“This poses a significant problem which places us at a crossroads,” the report said.

Market Forces at Play

And while it may be hard to believe, the situation could be worse, the report’s authors said – a view shared by city councillors and staff.

The report details actions like the Healthy Housing Strategy, the Journey Home Strategy, incentives for purpose-built rentals, suites and carriage houses being insulated from the impacts of short-term rentals, new partnerships, and expanded housing with supports, as initiatives that have helped blunt the out-of-control spiral.

Citing this, the city has pulled every lever it can to quell the problem, Coun. Luke Stack said.

“I don’t think the city has missed any opportunity in the supportive housing area … that we have not taken advantage of,” he said. “The reality is that the market forces are just so big that we can’t out policy the market. When people come here and are prepared to pay 30 per cent more this year than they did last year for housing, that’s a market force that I know we can’t respond to.”

Coun. Brad Sieben agreed, drawing on an analogy to illustrate the point.

“I see this housing market as a big freighter, and we are like a little tug, and the propulsion of the market is pushing the freighter so fast our tugs can’t move it,” he said.

But there are solutions local governments can take to begin to sway the market, though the report maintains they are bold and unconventional.

The next story will focus on some policies being put in place around the country and world to address unaffordability.