The greater Kelowna, B.C., area has a growing number of vacant apartment units on offer, potentially tipping the market in favour of buyers.
In a recent analysis of MLS listings, Andrew Smith of Royal LePage in Kelowna said the region has 264 apartments, from Peachland to Oyama, currently for sale and vacant. When townhouses are added to the mix there are 391 vacant homes listed and when single detached homes and duplexes get added in, there’s a total of 670 units.
“I’ve never seen this many vacant places for sale and I think it’s primarily provincial government policies,” Smith said.
He attributed the glut of unoccupied apartments for sale to two government policy changes that have recently taken effect.
The first was Airbnb regulations that came into effect in March. The rules limit short-term rentals, such as those offered on Airbnb, to within a host’s home, or a basement suite or laneway home on the property where they reside. The rules apply in more than 60 communities across the province.
The second is new legislation that came into effect July 18. Among other things, it requires landlords to provide B.C. renters with a four-month notice period to end the tenancy, a significant increase from the previous two-month requirement. This change is part of a broader effort to safeguard tenants’ rights and ensure a smoother process for everyone involved.
Smith said both together mean that anyone who was once renting out a unit for the sake of making some money is finding ample cause to sell.
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“There’s a glut of condominiums on the market, and you would think it would push prices down but it isn’t,” he said.
Smith said he believes that most sellers remain confident.
“We are at a stalemate. There’s a disconnect between buyers and sellers, from a realtor’s view,” he said.
He will ask a client if they want to put in an offer and they’ll say they’d rather wait a few days and see. There are enough units on the market to create some comfort.
That said, sellers are just not dropping.
“Say you have a condo you paid $600,000 for and it’s assessed at $600,000 and you have yours listed at $625,000 and it’s not selling,” he said.
In that scenario, he said it’s difficult to get people to sell at $575,000 which is what buyers are interested in.
“Buyers usually win these wars,” he said. “At some point, you’re a business person, you’re still paying insurance and property taxes and strata fees, it’s a non-performing asset if nobody is living in it and it’s not going up in value.”
But that’s not happening just yet, given how recently these changes have come into effect.
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Ryan Smith, director of planning and development for the City of Kelowna, said that the supply of units for sale has increased and that’s as planned.
“I think seeing more supply out there for sale is exactly what we need to see …and then prices will start coming down,” he said.
City staff in recent years have tried to incentivize the development of multi-unit buildings to meet affordable housing demands, but Smith said their focus could change if it started to look like owner occupiers started to soak up the supply and needs were met.
“We may see, in a few years, more demand for two or three-bedroom townhouse-style homes or more family-oriented buildings,” he said.
“I don’t know for sure. I think that when we dig into our housing needs assessment we will try and do some tracking on these types of things and figure out again, where we see the biggest demand,” he said.
That said, change in housing affordability and supply has yet to come in any real way.
“There’s so many layers of change that it’ll probably be supportive of all the policy changes that have happened,” he said.
City staff intend to bring a report to council this fall discussing the impact on short-term rentals and the housing supply.