Rental-rate hikes on a slowdown in Kelowna
Kelowna’s status as one of the most expensive cities in Canada in which to pay rent is under threat.
Rental listing companies that track the data are finding rents in Kelowna are not skyrocketing like they did in years past, and the city is dropping down on lists of Canada’s most expensive places to rent.
In its latest national rent report, Rentals.ca reported: “Kelowna annual average rents not rising as fast as other B.C. cities.”
Zumper.com, in its monthly report, observed Kelowna had dropped three spots to No. 8 with a one-bedroom rent declining 5.3 per cent to $1,800.
“This is definitely good news,” responded James Moore, Kelowna’s infill housing planning manager. “Although the year-over-year increases are still higher than we would like.”
Zumper analyst Crystal Chen said people should look at the year-to-year totals rather than month-to-month changes to discern a trend in rental rates.
“Kelowna one-bedroom rent is flat yearover-year and two-bedrooms are up about eight per cent. Most of the other Canadian cities on this report are experiencing double-digit growth rates on a yearly basis so I think this shows that while there is demand in Kelowna, it’s not as strong as other markets.
“The flat growth rate for one-bedrooms signals a relatively balanced market, which is good news for renters there,” she wrote in an e-mail to The Daily Courier.
In Zumper’s monthly reports, Kelowna was often No. 3 or 4 on the list behind Vancouver and Toronto and jockeying with Victoria for third place. In recent months, however, cities such as Kitchener and Barrie, Ont., and Halifax have moved ahead. Kelowna is tied with Hamilton for one-bedroom rents at $1,800. Kelowna is seventh on Zumper’s list for two-bedroom units at $2,380.
Rentals.ca puts Kelowna in 13th place with one-bedroom rents at $1,953, a monthly increase of 0.8 per cent and an annual hike of 14.3 per cent. Two-bedroom units are $2,597, down 1.9 per cent over the month and up 2.6 per cent over a year. Their list includes more Toronto-area bedroom communities.
The numbers provided the rental websites and others like them aren’t exactly the same. They differ too at times on what’s going up and down, but they are in the same ballpark and reveal similar results – in this case, Kelowna’s rent increases are slowing down.
“Rents are not increasing as much in Kelowna as they are in Burnaby,
Vancouver, Surrey and Langley,” said Rentals.ca’s Paul Danison.
Zumper’s Chen says the economy is affecting the rental market.
“I think one of the factors that may be at play in the Kelowna market is the uncertainty of the current economy. With high inflation rates and a recession looming, many people are putting off any big decisions so there may be less of a demand since people are staying put at their current place until more confidence is restored,” she wrote.
Danison was hesitant to declare a trend with Kelowna’s rents, but said: “I’d wager that rents will continue to increase in Kelowna through the summer, but only slightly and not nearly as much as in Metro Vancouver.”
He noted Kelowna’s supply of rentals is increasing, “but that will cool down late 2023 and early 2024.”
The city’s Moore filled in the numbers: “In terms of existing units, there are approximately 8,800 units of market purpose-built rental housing, 1,800 of which were built between 2018-2022,” he wrote in an email. “There are also additional units of secondary rental, non-market housing, and supportive housing.
“With approximately 6,600 more units instream at various stages of the development application approvals process, we are hopeful this rental rate trend will continue.”
Vacancy rates appear to be slowly rising. “Vacancy rates per CMHC are tight at
1.9 per cent,” Danison said, “but that’s better than a year ago.” Last fall, in an annual rental report, CMHC had Kelowna’s rate at 1.3 per cent.
It looks like even more rental units are on the way. On May 15, city council gave preliminary approval to apartment buildings in Glenmore and Rutland with a total of 171 units.
Earlier in the month, a 107-unit building proposed for Wilkinson Street was sent to public hearing, although councillors indicated they’ll need some convincing to approve that one.
The city offers tax incentives to encourage
the building of rental units.
In April, the province unveiled a housing plan that commits $4 billion over three years to boost the housing supply, including rentals.
A $400 renter tax credit, intended to be a renter’s version of the Home Owner Grant, was also introduced.
The plan promises thousands of new rental units will be built among the 108,000 homes to be completed or under construction by 2027-28.
“If you’ve scrolled through rental listings or seen the prices of homes in your community, you know how tough it is to find an affordable, decent place to live,” said Premier David Eby in a news release.
“This plan will take us to the next level with unprecedented actions to tackle the challenges head on, delivering even more homes for people, faster.”