By Ron Seymour
Tuesday, February 26, 2008

An attempt to formalize a long-standing city practice aimed at encouraging affordable housing was defeated Monday by Kelowna city councillors.
Council voted 6-2 not to formally endorse the policy, which grants higher-densities to new projects if the builder provides some affordable housing units or provides a cash-in-lieu contribution.
Coun. Carol Gran was among the critics of the approach, which she said amounted to a form of “blackmail and extortion” against developers, and which has been nothing but a “dismal failure.”
Less than 60 affordable housing units have been created in recent years through agreements between the city and developers, and most have been studio or one-bedroom suites.
Gran said she‘d heard that many of the units had been bought by wealthy people on behalf of their children attending UBC Okanagan. “That kind of speaks to how wrongheaded this whole exercise is,” she said.
Other councillors said it‘s up to the provincial and federal governments to provide more affordable housing, particularly rental accommodation.
“We don‘t have the power or the resources,” Coun. Barrie Clark said. “It‘s time to admit we have not solved the problem and we never will.”
Since 2000, the city‘s official community plan has contained a provision that allows for a so-called density bump, which allows developers to build more units than would normally be provided, so long as some provision is made for affordable housing in the project.
But the details of how that should be achieved have never been written down. Planning staff‘s practice has been to encourage builders to set aside 50 per cent of the extra units for affordable housing, and the cash-in-lieu option has always been subject to negotiation.
The proposal defeated Monday by council would have specified exactly how the OCP objective would be achieved. If a density bump was sought through an OCP amendment, five per cent of a building‘s total living space would have to have been for affordable housing units. Alternatively, a new formula could be used to come up with a cash-in-lieu payment.
Social planner Theresa Eichler described the proposal as “nice, clean and easy” and an improvement over the current practice of having staff negotiate with developers and then council ratify each arrangement.
With the defeat of the policy, affordable housing arrangements will continue to be struck on a case-by-case basis.
Mayor Sharon Shepherd and Coun. Michele Rule voted to introduce the standardized policy, saying it would help to provide at least a few affordable housing units.
Couns. Gran, Clark, Colin Day, Andre Blanleil, Brian Given and Norm Letnick voted against it.
Given said the city should focus on getting new rental projects built.

Kelowna, BC (February 21, 2008) – Pent-up demand, population growth, tight inventory levels, and the longest economic expansion since World War II collectively fueled one of the best decades on record for residential real estate in Canada, according to a report released today by RE/MAX.

RE/MAX Decade in Review 1997 – 2007 found that major housing centres across the country experienced strong consecutive growth between 1997 and 2007. Average price spiraled upward while unit sales climbed in tandem as more and more Canadians bought into homeownership. Nationally, average price almost doubled in the 10-year period, rising from $154,606 in 1997 to $307,265 in 2007, for a 7.1 per cent annually compounded rate of return. Home sales across the country increased just over 57 per cent from 331,092 units in 1997 to more than half a million sales last year. Edmonton led the country in terms of percentage increase in average price. The city saw a 203 per cent upswing in housing values – or an 11.7 per cent increase annually – with average price rising from $111,587 a decade ago to $338,636 in 2007. Prince Edward Island experienced the highest percentage increase in unit sales, with the number of homes sold up 119 per cent in the 10-year period.

“Immigration and in-migration have played a serious role in jumpstarting residential housing markets, particularly in British Columbia, Alberta, and to some extent, Saskatchewan over the past decade,” says Elton Ash, Executive Regional Vice President, RE/MAX of Western Canada. “At first, there was an influx of American buyers, especially in Canada’s coastal regions and recreational hot spots, as our southern neighbours took advantage of the almighty US greenback. Then the European and Middle Eastern purchasers flooded the market, buying up real estate considered ‘cheap’ by international standards. In recent years, there have been a growing number of purchasers from Mainland China. From a global perspective, there’s no question that Canadian real estate brings good value to the table.”

Percentage increases in home sales varied across the country, with Prince Edward Island experiencing the greatest upswing over the past decade, followed by St. John’s at 106 per cent, Kelowna at 84 per cent, and Saint John at 77 per cent. Most markets (12 of the 19 surveyed) reported increases between 40 and 60 per cent. Average price has also seen substantial escalation over the 10-year period, with posted gains ranging from a low of 54.4 per cent in London-St.Thomas to a high of 203 per cent in Edmonton. Appreciation in Western Canadian markets surpassed all others between 1997 and 2007, with Calgary ranking second in terms of price appreciation at 189 per cent, Kelowna at 179 per cent, Saskatoon at 137 per cent, Winnipeg at 118 per cent, Victoria at 114 per cent and Greater Vancouver at 99 per cent.

In 2006, homeownership rates in the country were the highest on record at 68.4 per cent. Population growth has contributed to heated market conditions – especially in Calgary (+31.4 per cent), Edmonton (+20 per cent), Toronto (+20 per cent), and Vancouver (+15 per cent) where percentage increases have hovered in the double-digit range. Overall, Canada’s population rose to almost 33 million in the 2006 census, up approximately 10 per cent from 1996 figures.

“The non-cyclical nature of the decade comes as some surprise,” says Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. “Never before have we seen such a continuous run up in Canadian real estate. Clearly, strength in all markets has been directly linked to solid growth in local, provincial and national economies. Low interest rates, job security, and consumer confidence have all served to further bolster home-buying activity across the nation.”

Robust economic performance in Western Canada has also drawn job seekers from across the country, looking to capitalize on employment opportunities.

As demand for housing increased across the country, the supply of homes listed for sale began to contract. Multiple offers were commonplace in many areas, some with sales-to-listings ratios as tight as 80 to 90 per cent. Nationally, 1997 marked the first year since 1988 that the sales-to-listings ratio hit 50 per cent. The sales-to-listings ratio would remain above 60 per cent from 2001 onward – rising to as high as 68 per cent in 2002.

The decade was not without its obstacles – the high-tech meltdown, a US recession, 9/11, SARS, Mad Cow, a blackout that affected the entire Northeastern seaboard, natural disasters such as ice storms, hurricanes, and forest fires and more recently, the credit crunch south of the border. Given the continuation of sound economic fundamentals, it’s expected that residential real estate markets across the country will continue to experience healthy activity, albeit at a more moderate pace.

RE/MAX is Canada’s leading real estate organization with over 17,600 sales associates in more than 650 independently-owned and operated offices. The RE/MAX franchise network is a global real estate system operating in over 65 countries. More than 7,000 independently-owned offices engage nearly 115,000 member sales associates who lead the industry in professional designations, experience and production while providing real estate services in residential, commercial, referral and asset management. For more information, visit: www.remax.ca

Bankers don‘t foresee more construction shutdowns
Daily Courier Staff
2008-10-17

One of the larger condo projects in Kelowna was shut down Wednesday, but local bankers aren‘t predicting doom for the construction industry.

Workers at Lucaya, which was to be a 21-storey highrise on Sunset Drive, were told to go home after it was reported that the builder couldn‘t raise money to complete the project.

Canadian ICI Capital was said to have put $17 million into the planned 93-unit building, although no one could be reached from the company for comment Thursday.

Bob Peressini, vice-president of credit for Interior Savings Credit Union, said construction has slowed, but there is still money available to be borrowed.

“It‘s not as busy and robust as it was, but we haven‘t made any major changes in our (credit) policies,” said Peressini. “We‘re still seeing some quality applications. We still have quality projects on the go.”

Peressini said the credit problem is primarily in the U.S., but “people‘s mindsets are that if they feel it‘s affecting them, they‘ll be cautious.”

David Trask, regional manager of commercial banking for Valley First Credit Union, said the Lucaya downfall might be unique to that development.

“My understanding from what I‘ve heard is that Lucaya didn‘t meet the criteria that was set by their lender going in,” said Trask.

Most of the major projects in Kelowna have been financed by companies in Vancouver or Calgary.

“From a local standpoint, we tend to focus on the smaller projects,” said Trask.

“There has been a slowdown in the marketplace in terms of absorption. A lot of our clients are taking a look at the market and saying maybe it‘s time to hold off and see what the market is going to do over the next six months or so.

“There‘s definitely reason for caution, but most of what‘s underway seems to be pretty well committed. I don‘t suspect there are going to be too many surprises.”

The Lucaya sales centre has remained open, although its website has been shut down.

There were no condo starts in Kelowna in August or September.