Why Purpose-Built Affordable Housing is Not Affordable
A comparative analysis of homes in Kelowna
There’s been a lot of media attention lately on the need for affordable housing in Kelowna. Developers have responded by offering a new breed of housing – ultra-small condos typically located in central locations throughout the city. Although the price points of these purpose-built affordable condos (some less than $200,000) are attractive to individual buyers who have been priced out of Kelowna’s rising property market, we wondered: are these homes truly affordable?
To gauge the affordability of these condos relative to other housing options, we took a sample of 5 different homes in Kelowna currently listed for sale on MLS and computed their price per square foot. Here’s our results.
Exhibit 1 is a purpose-built affordable studio suite located adjacent to Highway 97. The unit boasts 313 square feet of living space, consisting of a multi-functional central room with a separate bathroom. Located on the 4th floor of a low-rise development, this unit is listed for $185,900. The price per square foot of this unit is $593/sqft.
Exhibit 2 is a high-rise, lake-view 2 bed, 2 bath condo located in one of the Sunset Drive towers. The unit has 1256 square feet of living space, with a central living room, kitchen, and 2 balconies. Located on the 7th floor, this unit has great views of downtown and the lake and is listed for $589,900. The price per square foot of this unit is $469/sqft. That’s right, a lake-view condo on Sunset is less expensive than an “affordable” studio suite on Highway 97. Let that sink in for a moment.
Exhibit 3 is a 5 bed, 3.5 bath family home located in the Wilden neighbourhood. The home has 3450 square feet of living space, with an open concept floor plan and a double car garage. Located in a cul-de-sac, this home provides a quiet neighbourhood feel and is listed for $889,900. The price per square foot of this home is $257/sqft. Yup, this big home is less than half the cost per square foot of the studio suite.
Exhibit 4 is a multi-million dollar lake-front luxury home located on Poplar Point. This home pretty much has it all – wine cellar, movie theatre, gym, outdoor pool – you name it. It’s a beautiful, technologically advanced home located right in the heart of downtown Kelowna. It features 6149 square feet of living space and is listed for $5,995,000. The price per square foot of this massive home is $974/sqft, just 50% more expensive than the affordable studio suite.
Finally, Exhibit 5 is an older 3 bed, 3 bath home with a 1 bed, 1 bath suite. This home is located in Rutland, close to the YMCA. The extra suite is ideal as a mortgage helper. The home features 2208 square feet of living space and is listed at $549,000. The price per square foot of this home is $248/sqft, just slightly under the larger, newer family home in Wilden.
In terms of price per area, your best bets for affordable housing are larger homes located outside of the city core. Somewhat surprisingly, smaller homes in older neighbourhoods are comparable in cost to larger homes in newer developments. Downtown lake-view condos are more affordable than the inner-city studio suite. In our small study, the studio suite is surpassed only by the multi-million dollar executive home in terms of cost per area. What’s the take-away message? When shopping for your home, make sure to consider not just the dollar cost, but also the value that you are getting in return. Affordable micro-suites might offer an attractive price point and easier entry into the market, but you sacrifice considerable living space.
As you can see, the cost of a property is not consistent with its value. While the capital cost to get into a larger property can be difficult, there is a simple solution. Co-living is an increasingly popular living arrangement where you can benefit from the space of a larger property while having a personal cost of less than a studio suite. By sharing the common spaces of your home, suddenly it becomes much more affordable to move into a larger home. You can read more about it here.
This post was written by Happipad