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MCDONALD: Rising tide of house prices lifting Okanagan homeownership out of reach

January 05, 2018 - 2:00 PM

 


OPINION


It’s like being able to peek into their bank account. All you need is your neigbhour’s address, or your brother-in-law, or your co-worker, and you can find out the value of their house.

B.C. Assessment provides this annual voyeuristic glimpse into the financial lives of everyone who owns property in the province. Given most people are banking on their house as part of their retirement, it’s a surprisingly frank look at someone’s potential net worth.

While it’s all meaningless until you sell, there’s a lot of people gloating right now in the Okanagan, homeowners who have seen their potential net worth rise, in some cases by many thousands of dollars just by doing nothing at all other than paying the mortgage (if there is one) and making sure the roof doesn’t leak.

A waterfront mansion on Hobson Road in Kelowna just cracked the Ten-Million-Dollar Club, seven figures, going up a half-a million dollars in one year, just for sitting there looking pretty. The increase alone is enough to buy an average house in most Okanagan communities (often with a good chunk of change left over).

Of course, it’s all relative. The priciest home in the province is a Point Grey pile worth $78 million, owned by Lululemon founder Chip Wilson. You would have to sell the Hobson Drive mansion and the next nine properties on the Okanagan’s top 100 list just to have enough cash to bid on Wilson’s oceanfront shack.

These heady valuations sorta seem great in a rising-tide-lifts-all-boats kinda way but what if you don’t own a boat? That’s when those increases can be seen in a more sinister light as a symptom of increasing inequality.

Wilson’s house is in another world but even in Kelowna, where the average house is worth $725,000, it would take a worker making B.C.’s minimum wage of $11.20 about 64,000 hours, 1,600 weeks or about 32 years to cover the initial purchase price of the house.

That doesn’t include the hundreds of thousands of dollars interest that would have accumulated during those 32-year or the possibility our would-be homeowners would like to eat or enjoy some semblance of a life.

And during that time, they would have to find their way in Kelowna’s cutthroat rental accommodation market, scrapping along at 0.2 per cent vacancy and where it’s now quite common to see ads for $1,500-a-month one-bedroom apartments.

It was 2012 when Kelowna introduced an array of incentives for developers who agreed to build purpose-built rental housing but it was 2015 before any major developer took them up on the offer.

Since then, the city has issued permits for well over 2,000 rental units, which began appearing on the market in early 2017 and will continue to roll out for a few more years.

Yes, it’s great the city has been pushing purpose-built rental housing and I guess it’s good that developers have taken up the challenge, although I know they aren’t doing it because of altruism.

Hopefully ever-rising house prices do not make the rental pool a place where young people can never emerge, bound by impossible real estate prices to spend eternity in rental limbo.

Home ownership should always been in reach, even just as a choice. I think city council could do a lot more to encourage this, starting with the a zoning change that would give homeowners the ability to subdivide and sell off carriage houses and self-contained suites inside what are currently single family homes.

Kelowna has a problem with demographics. Older, large homes that once would have sheltered a family of five or six are now occupied by families of three or four. Or a couple of empty nesters knock about in a massive house, sometimes leaving entire floors unused.

Allowing the subdivision and sale of what would be much smaller units would have the immediate effect of providing starter homes for about half the price they go for now. It would also mesh well with the city’s stated goal of increasing density without destroying the essential character of neighbourhoods.

Rising valuations are making many current Okanagan homeowners rich. Let's make sure the next generation aren't left behind.

— John McDonald is a long-time reporter, editor and photographer from the Central Okanagan with a strong curiosity about local affairs. You can reach him at jmcdonald@infonews.ca.


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