Short term rentals in Kelowna: blessing or curse?
One of the hot-button issues in the overheated Kelowna housing market is short-term rentals (STRs) being rented during peak tourist months.
Our city is increasing in popularity with total visitor count increasing from 1.2 million visitors in 2004, to over 1.9 million visitors in 2016.
Increasing tourism and business activity certainly benefit our local economy, but does this create further strain on the housing market and the rental market?
If so, do the benefits outweigh the costs?
In this three-part series, I will address key areas influencing the discussion and argue that in each case, the net effect of STR in our city has been an overall strong positive influence on the city.
Are short-term rentals permanently removing housing stock off the market?
Kelowna is a unique STR market, much different than a big city.
Our STR activity occurs primarily between May long weekend and Labour Day.
Unlike in many major cities, like Toronto and Vancouver, with year-round STR demand, in Kelowna there is simply no STR demand for more than half the year.
The housing stock is not completely removed, but rather repurposed towards STR during the warmest months and converted back to long-term, multi-month rentals in September.
I would suggest the only reason STR hosts would go through the trouble of this high turn over activity is because it is financially worth the extra-effort when the total annual income is considered.
Knowing that STR is only financially viable in the warm months, who do the STR hosts rent to during the off-season?
The answer is simple: they rent largely to students. It’s perfect match. The school year runs exactly the length of the off-season for STR and the rooms are all furnished.
The UBCO campus has been expanding rapidly since its inception in 2004. In the last 10 years, the student population has doubled from 4,164 in 2006 to 8,718 in 2016. There have simply not been enough housing units to meet this demand. Furthermore, most students want to live closer to the amenities in the city, so they seek housing options in town.
There are also other groups that are looking for shorter rental periods:
- people moving to Kelowna with the intention to buy or build a home;
- people in town temporarily for work;
- and a variety of others in unique situations where a year-long lease is not desirable.
If there was no market for off-season rentals in Kelowna, the STR market simply could not exist. If we lose the STR housing stock, we impair students, immigrants, builders and buyers by severely reducing their housing options.
On the housing and rental forums online, it is evident that there is a lot of rental pain in the market right now. Seniors and low-income families are being priced out, and good luck finding a place to live if you have a dog.
However, students, first-time residents looking to buy or build are a vulnerable sector in the rental housing market because they are seeking an a-typical housing arrangement.
The STR hosts are the best option for these groups.
Mark Ameerali is a local wealth manager with Raintree Financial
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