ISSN 1913-0759
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| Reimagining Design: Sustainable Solutions |
Shelter Speculation |
Is the Okanagan Becoming an Unaffordable Housing Market?
The Okanagan has seen a dramatic increase in
house prices in recent years, rising as much as 150% while income
has averaged an increase of over 7 per cent. This rise has resulted in concerns in affordability. In a
recent survey of all municipalities in the Okanagan, all have identified this
as an important issue to be addressed in their communities.
Affordability of housing is a function of two variables the
cost of housing and household incomes.
When globally comparing the average house price compared
to the projected household income for 2008, you get a median multiple
of 6.9 for the Okanagan. Demographia, an organization
that does an annual international survey on housing affordability,
suggest this ratio should be 3.0 or less.
House Pricing in the Okanagan
House pricing is a function
of demand for housing and the
supply of units. Demand in the Okanagan has been high the
last few years. According to Canada Mortgage and Housing
Corporation, housing starts, a proxy used to measure demand, have
been more than doubled 2001 levels since 2004.
Supply of housing is influenced by two factors. First, there is
a limited amount of land available for development in the Valley. Much
of it that is easily developed for housing has been utilized,
therefore increasing the price of existing land inventory. Second, the cost
of construction has increased significantly in B.C., driving house
prices upwards.
The result of high demand with limited supply is upward pressure
on price. Significant increases like this often attract speculators to
the market who buy up lower-priced housing and rental units to
convert them into to higher-priced luxury units, therefore contributing
to further price increases.
To address the pricing side of affordable housing, we must:
n protect the current inventory of lower priced houses and rental units
n maximize the use of existing land inventory by providing as
many units as possible per lot of land (increase density)
n actively look for productivity improvements to reduce
the construction costs of each housing unit.
Incomes in the Okanagan
Affordability of housing is also a function of household incomes.
The projected average annual household income in the Okanagan for 2008
is $62,333, 14% lower than the B.C. average. Over 36% of
the Okanagan labour force are employed in the four lowest
paying industries retail and wholesale, health and social services,
construction and manufacturing.
To address the income side of housing affordability, we
must actively work to improve the average household income
by encouraging development in industries that provide a
higher wage.
The Link Between Housing Affordability and the
Labour Market
There is a strong link between
the lack of affordable housing and labour supply. The Federation
of Canadian Municipalities makes the point that the economic success
of cities is reinforced by a supply of affordable labour that in turn
is linked to the availability of affordable housing. As the price
of homes rise, and affordable rental and purchase units are
replaced with higher-priced units, mid to low-income wage earners find
it increasingly more difficult to secure housing.
In the Okanagan, we are beginning to feel a negative
impact on business. Many businesses are finding it difficult to attract
labour. Some are beginning to cut back production of goods and services
as a result. Others are locating elsewhere.
The business development community is citing the
housing market as a deterrent for new businesses to relocate to
the Okanagan. This challenge is one that is affecting the entire Valley.
What Can Be Done About
Housing Affordability?
Municipal governments have
a series of tools they can use to address the house pricing side
of the affordability equation. These include everything from a
detailed plan to address its growth to restriction on conversion of
rental units to strata to support for development of rental units.
While some of these tools have been employed by Okanagan
municipalities, none of the communities' identified strategies or
policies included increasing household income as of January, 2008. In
fact, none of the articles reviewed on affordable housing
mentioned increasing household income as a strategy to address
affordable housing.
Of all the municipalities in the Valley, Vernon appears to
be addressing the issue the best. A collection of community
service organizations established Partners for a Safe and Healthy
Community. This group then created a Housing Action Team to identify
initiatives that the community, outside of City Hall, might take as part of a
broader effort. The Housing Action Team then collaborated with the
City's Affordable Housing Committee and developed the Attainable
Housing Strategy. The strategy was developed in collaboration with the
City, developers, non-profits housing organizations, business and
the residence of Vernon. The outcome was a comprehensive strategy
that was adopted by Council. The result of their effort is the planning and approval of three separate
affordable multi-family housing developments to be constructed in 2008.
The Need for Valley Wide Collaboration
The current affordable housing situation in the Okanagan is
the result of many influences over a period of years. Addressing
this situation will be difficult and will take time. In order to address
the problem effectively a collaborative effort between
governments (municipal, regional, provincial
and federal), non-profit housing organizations, developers,
businesses and the communities of the Okanagan to establish a
Valley-wide sustainable housing strategy with measurable targets will
be required. This coordination will ensure efficient use of resources
as well as lead to solutions that can be implemented and lead
to results.
Resources:
A copy of the City of
Vernon housing report can be downloaded from their website:
www.vernon.ca/news/index.html#reports
To view the 4th Annual Demographia International
Housing Survey 2008 visit:
www.demographia.com
For information on the Okanagan Partnership:
www.okanaganpartnership.ca
The Okanagan Partnership is a community-led, non-profit
society dedicated to the vision of a prosperous and sustainable
Okanagan region that provides a high quality of life for all inhabitants.
Aspects of this Okanagan Partnership report
were presented at the Okanagan Institute Thursday
Express event Design for Density: Planning
Community Futures.
Copyright © 2008 Wheat King Publishing and the authors. All rights reserved. No part of this publication may be copied or reprinted without the written consent of the publisher. The opinions expressed in Okanagan Home are those of the writers and editors, and do not represent the official position of the Canadian Home
Builders' Association, Central Okanagan, or of its members.
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