kelowna real (estate) talk | September 2024

We’ve commented extensively in past rennie reviews on the provincial government’s new short-term rental restrictions, which came into effect on May 1st, and how they have led to more listings in the Central Okanagan. At the end of August, active listings in the region were at 3,014—their highest level since 2013, and up 37% year-over-year and 39% relative to the prior 10-year August average. 

For the rest of the Okanagan economy, however, it appears the restrictions led to less and fewer this summer (or at least they’ve been criticized for such)—fewer visitors, less foot traffic, fewer bookings, and fewer home sales. All those would-be visitors who were hoping to enjoy the Okanagan this summer couldn’t necessarily find suitable accommodations—especially of the reasonably priced variety—so they stayed home or went somewhere else.

In a rather timely manner, Statistics Canada recently released one of the most comprehensive studies to-date on Canada’s short-term rental market. In 2023, 83,457 homes were used as short-term rentals in BC, equivalent to 3.9% of the total housing stock. At the community level, the scale of short-term rentals was quite diverse. For example, short-term rentals were much more prevalent in tourist towns, reaching as high as 65% in Sun Peaks, 60% in Whistler, and 42% in Tofino. In contrast, the figures in larger markets like Vancouver (2.8%), Burnaby (2.0%), and Surrey (0.9%) were considerably lower. In the Central Okanagan, where tourism is a significant part of the local economy, 6.7% of homes in Peachland were short-term rentals, 5.8% in Lake Country, 4.7% in West Kelowna, and 4.1% in Kelowna. In absolute terms, there were 3,773 short-term rentals in the Central Okanagan, equivalent to about 84% of the region’s hotel stock (estimated at 4,500, courtesy of Tourism Kelowna).

What was most unique about the study, however, was that it went beyond just tabulating the number of short-term rentals and estimated the number of these that might actually be viable as long-term housing. The results were quite interesting: only about a third of short-term rentals in BC could be considered suitable long-term dwellings, equivalent to 1.4% of the province’s housing stock (or 29,643 homes). In Peachland, the number was 3.1%, in Lake Country 1.8%, in West Kelowna 1.5%, and in Kelowna 1.2%. This translated to 1,133 homes across the Central Okanagan, equivalent to about four months of housing starts (the three-year moving average for annual starts in the region is 3,206).

In the midst of a housing supply and affordability crisis, the short-term rental restrictions were well-intended policy—to return homes being used as short-term rentals back to the long-term housing market. But even with certain exclusions—such as a complete exemption in West Kelowna and the primary residence exemption—the policy has had a considerable impact on the availability of accommodation. In regions heavily reliant on tourism, such as the Central Okanagan, this could have negative consequences for the local economy. In an effort to inject a few months of housing supply into the province, perhaps the government would be better off placing even more attention on new policies aimed at ramping up the construction of new homes. Unfortunately for the Okanagan economy, a course correction at this point won’t do anything to save this past summer.

The kelowna rennie review is a monthly publication that includes our take on the latest MLS data for Kelowna. In addition to presenting neighbourhood-level stats, it includes information on current rennie projects, a selection of featured listings, and insightful commentary on how and why the market is changing.

Our rennie intelligence team comprises our senior economist, market analysts, and business intelligence analysts. Together, they empower individuals, organizations, and institutions with data-driven market insight and analysis. Experts in real estate dynamics, urban land economics, the macroeconomy, shifting demographics, and data science, their industry-leading data acquisition, analytical systems, and strategic research supports a comprehensive advisory service and forms the basis of frequent reports and public presentations, covering the Vancouver, Kelowna, Victoria, and Seattle marketplaces. Their thoughtful and objective approach embodies the core values of rennie.