Housing construction slows
A slowdown in construction of multi-family dwellings is coming, Kelowna city councillors were warned last week.
In a year-end report, Ryan Smith, the city’s director of planning and development services, told council that building and development applications slowed as 2022 progressed.
Last year was the fourth highest over the last decade for the total number of residential building permits issued by the city, but that was nearly 20 per cent off “historic highs” of 2018 and 2019, Smith said.
Fourth-quarter activity was strong, but not record strong, Smith said. The number of building permits was down, but values were high, indicating a number of multi-family projects are now in the works.
“Most of those multi-family are multi-family rental right now and those multi-family rental are being built as a result of a layering of different incentives,” Smith said, citing efforts from all levels of government to encourage more rental housing construction.
In the city’s case, those efforts include relaxing rules for apartment buildings, such as parking requirements, reducing red tape around secondary suites, deregulating carriage houses and accommodating multigenerational families in single homes
But by late 2023 or early 2024, “those projects will start to tail off,” Smith said. “I think that we should be conservative in what we expect for development activity.”
The 250-400 single-family permits issued annually will remain steady, he said.
Kelowna issued 3,192 permits for housing units last year – 2,266 were for apartment units, Smith said.
The numbers included 332 single-family homes, 269 secondary suites and 35 carriage homes.
But Smith noted even with current construction how it’s still hard to find a rental in Kelowna.
“It is very, very challenging to find a place to rent or buy in Kelowna … That really hasn’t changed. When I moved here 21 years ago, I was in an illegal basement for the first seven months I was here,” he said.
Smith said the vacancy rate now is just over one per cent while five per cent would be ideal.
“CMHC did a report where they talked about restoring affordability in Canadian cities,” Smith said in response to questions about vacancy rates. “We were looking at the number of housing units that potentially meant, and it would have been probably a doubling of our last five years of housing approvals, so it would have been about 4,500 units a year of housing in Kelowna,” Smith said.
City Hall isn’t equipped to handle that level of housing construction, Smith said. Nor are there enough construction workers in the city.
Coun. Luke Stack said Kelowna may have to prepare for tougher times.
“Over the next few years with the higher interest rates, we may actually see quite a dip in the activity because it’s not affordable for developers to work in our community. Although we had a big boom for a few years, our federal government’s looking for a soft landing, but we don’t know if we’re gonna get a soft landing. We might get a hard landing,” he said.
Coun. Ron Cannan said incentives continue to be needed: “We know market housing is important, but we also have to realize the market is not attainable for many people. … Whatever, we can do in innovative and creative ways, I’m all for it.”
Kelowna is working on its Infill Options Program, which is exploring new types of housing that could be used in the city’s core areas. The plan is expected to be released in the late spring or summer.
West Kelowna also recently released year-end building statistics. The city issued 756 permits during 2022, the second highest total ever. Construction value in 2022 was $218 million, a record.
In the fourth quarter, nine permits were issued for multi-family dwellings, 11 for single-family homes, three for single-family homes with suites, three for carriage homes and eight for conversion to carriage homes, a report to council said.
West Kelowna is well into an official community plan review, in which new types of housing are being considered.
Vernon also reported a strong, but not a record, year in the number of building permits issued, but it was a record year for permit values.
“In 2022, 471 residential units were approved for construction – exceeding the total units approved for construction in 2017, 2019, 2020 and 2021,” a report to council said. “Contributing to this year’s increased number of residential approvals were growth in higher-density residential units (multi-family units and single-family dwelling with suites) and institutional units (senior care housing).”