Kelowna housing market needs to become more affordable

While Mother Nature is taking her time with the outward signs of spring, the Kelowna housing market is rising to the occasion with more activity.

Despite steady increases in new listings over the past several months, housing supply is light as we head into the spring market. This trend is concerning and points to a problem we’ve been stressing for a while: a generalized lack of housing supply.

The Government has solely focused on dampening housing demand through measures such as stricter mortgage rules, higher interest rates and even the speculation tax. There has been little to no attention paid to helping attain a sustainable supply of affordable housing.

Millennials are currently the largest first-time home buying group. If they are not able to buy, they will be forced to stay renting longer, spelling bad news for rental markets already facing plenty of competition for few vacancies. If housing supply stays low, even those who still qualify under the new, stricter mortgage rules may find increased competition for scarce housing, often a catalyst that drives up pricing.

Those hoping to upgrade, which could free up affordable homes for sale, may find their own difficulties. Prospective purchasers will be chased away by stricter mortgage rules under which they no longer qualify. Even if a buyer can be found, the homeowners may be challenged to find an upgrade they can now afford. They face the same challenges (harder mortgage qualifying rules, higher interest rates, competition for scarce suitable homes) as their prospective buyers. The seller of the affordable home may opt to stay put and therefore, no starter home options open up to first-time buyers.

In Closing

Both the BC and Federal Government must come up with resolutions to solve the affordable housing issue. They cannot solely focus on dampening the housing demand so that first-time home buyers for generations to come can afford to purchase a home.