Full Breakdown
Kelowna Faces Record High Vacancy Rates Amid Rising Rents
12/13/2025, 10:02:16 PM
Overview of the Current Rental Market
Kelowna, British Columbia, has recently reported the highest vacancy rate among Canadian metropolitan areas, reaching 6.4% according to the Canadian Mortgage and Housing Corporation (CMHC). This marks a significant increase from 3.8% the previous year. The rise in vacancy rates is attributed to a combination of factors, including an outflow of residents, particularly non-permanent residents, and increased rental supply. Shiva Moshtari Doust, B.C. lead economist with CMHC, noted that many renters are leaving due to affordability issues and changes in immigration policies, which have particularly affected international students and temporary foreign workers.
Contributing Factors to Vacancy Rates
The rental market in Kelowna is experiencing a notable shift, with a reported unemployment rate of over 11%, the highest in Canada. This economic downturn has contributed to the increased vacancy rates, as many residents are unable to afford rent. Additionally, the rental supply has surged, with 1,300 new units added to the market in the past year. Landlords are now competing for tenants, leading to various incentives being offered, such as free rent and parking promotions.
Rising Rent Prices Despite Increased Vacancies
Contrary to typical economic expectations, rental prices in Kelowna have not decreased but have instead seen a slight increase. The average rent for a one-bedroom unit has risen to $1,596 from $1,509, while two-bedroom units now average $2,118, up from $1,935. Moshtari Doust explained that this phenomenon is largely due to low renter turnover and the higher costs associated with newly constructed rental buildings, which necessitate higher rents.
Construction Trends and Future Implications
The construction of new housing units in Kelowna has slowed significantly, with only 2,314 units started from January to October 2025, compared to 3,719 units during the same period in 2024. This decline in construction aligns with a decrease in residential building permits, which dropped over 60% from the previous year. The City of Kelowna aims to add between 1,870 to 2,650 units annually to meet housing needs, but the current slowdown may hinder this goal.
Criticism and Concerns
Critics have raised concerns about the rising rents amid increasing vacancy rates, questioning the effectiveness of local housing policies. The disparity between the high vacancy rates and rising rents has led to skepticism regarding the market's dynamics. Local residents and advocacy groups are calling for more comprehensive strategies to address housing affordability and availability.
Verbatim Quotes
- “Supply increased, demand decreased and as a result, we are seeing a softer rental market,” — Shiva Moshtari Doust, B.C. lead economist, CMHC
- “We need to continue to keep up and and not take our foot off the gas,” — Jeff Kennedy, CFO of Troika
Conclusion
Kelowna's rental market is at a crossroads, facing the highest vacancy rates in Canada while grappling with rising rents. The interplay of economic factors, construction trends, and local policies will be crucial in shaping the future of housing in this rapidly growing city.
