The outlook is bleak for middle and low-income earners hoping to break into the Central Okanagan housing market says a real estate development consultant.
Andrew Ramlo, vice-president of advisory services for Rennie Group in the Lower Mainland, says the Kelowna metro area is moving through a period of constrained supply coupled with a growing inflow pressure of people moving here.
“It is going to place pressure upward prices and widen the generational divide both in local and national housing markets.
“These are going to be challenging times for housing supply, availability and affordability.”
As the keynote speaker for the Okanagan chapter of the Urban Development Institute luncheon on Thursday (Feb. 24), Ramlo said Kelowna’s housing scenario is not unique – the same characteristics are playing out in other B.C. cities such as Kamloops, Victoria and the Lower Mainland.
He said new housing starts have not kept up with potential demand for the past decade, and now the problems forecast about that imbalance of supply and demand are coming home to roost.
“If you are owning a house now than this is all great. But for those trying to get into the market, that gap of affordability is going to widen,” he said.
Ramlo revealed statistical data that generally all revolves around the supply and demand relationship, and with the federal government opening up immigration numbers held back due to COVID the last two years combined with an in-country migration from Eastern Canada, the pressure on the inequity of that relationship expected to only intensify.
“The message is people are heading west,” he said.
The other wildcard in the housing market has been the impact of billions of inheritance dollars flowing into the market to help younger generations buy homes. He said in Vancouver, there is about a 30 per cent rise in kids getting assistance from their parents to purchase a home. The average for first-time buyers is about $180,000 for about 10 per cent of that market group, “but the mindblower is for the moving up a level of home buyer, the assistance from mom and dad increases to $340,000.”
“For that percentage who can’t get help from mom and dad, the only way to provide a solution to affordability is to inject supply into the housing market. You can’t do it without adding supply.”
To put it in local perspective, Ramlo said conservative population growth predictions tend to lean on the conservative side, but he expects population growth in the Kelowna metro area.
He said estimates of 270,393 from studies in 2013 by 2041 have since been corrected upward to 289,000 and that is likely under-estimated growth. “There are 14,000 dwellings in West Kelowna according to the 2021 census. So you are looking at having to add 2.8 more West Kelowna within the next two decades to meet the housing demand,” he said.
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