Kelowna害羞草研究所檚 supply of micro suites has become a speculator害羞草研究所檚 haven.

Kevin Bird of K West, the developer of Cambridge House on Leon Avenue, said many of the building害羞草研究所檚 313-square-foot units have had multiple owners before it was even complete. Prior to registration, the complex害羞草研究所檚 units have changed owners more than 40 times.

Royal LePage real estate agent Andrew Smith said there have been 38 sales after its registration.

Nearby, Sole KLO, another property touting affordable micro homes for Kelowna害羞草研究所檚 residents, has also built significant interest from investors, with the property now 75 per cent sold.

While Smith said it害羞草研究所檚 not possible to see if speculators are eyeing up micro suites at Sole KLO until it is registered害羞草研究所� registration being the point when the building is complete and livable害羞草研究所� his suspicion is that building will follow the same trend.

害羞草研究所淢y guess is it would be over 50 per cent speculators,害羞草研究所� he said. 害羞草研究所淧eople are buying and renting them out, or people from outside of our market area are using them as an intro to the market, if you will. I doubt very much it will be (buyers) living there full time. I think it害羞草研究所檚 speculators, people who think the market is going to go up by the time it害羞草研究所檚 finished or at least people who are going to put renters in there.害羞草研究所�

Andrea Kelly, in sales at Sole KLO, said the building has gathered interest from investors who continue to sell units. There are some people who purchase with the intent to live there, but rent them out afterwards, she said. Investment properties are common, she added.

At Sole however, people can害羞草研究所檛 purchase and reassign their contract to make money, so flipping before registration isn害羞草研究所檛 possible, Kelly said.

害羞草研究所淚t has mostly been investors and there have been a few purchases from single males who are just looking to get into the market,害羞草研究所� she said.

Not an affordable housing solution

But for Kelowna resident Jack Vogt, who researched micro suites when his son Nico was looking for buy a home a few years ago, micro suites were more expensive than he initially thought And he found them impractical for his son害羞草研究所檚 needs.

害羞草研究所淚t seemed like we were lured in, or he was lured in with the price,害羞草研究所� said Jack Vogt. 害羞草研究所淏ut then you know you have to start considering (specialized) furniture, because you can害羞草研究所檛 put regular furniture in there, and there were all kinds of other costs that came up that ended up being significantly more.害羞草研究所�

害羞草研究所淭hey actually weren害羞草研究所檛 set up in a way you would want to live long-term. It was more of an investment for people, turned into long term rentals.害羞草研究所�

His son opted for a regular three-bedroom apartment that ended up being cheaper than the micro suites, he said.

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Kelowna city planner Ryan Smith said micro suites are filling the community害羞草研究所檚 need and there have been other projects in the past seven years that the city has been building in terms of townhomes and condos.

Those micro homes are good for people from places like Alberta who spend a small amount of time in the city, and there hasn害羞草研究所檛 been a negative impact on the city with the suites, he said.

Foreign buyers make up less than two per cent of Kelowna害羞草研究所檚 market, so Smith doesn害羞草研究所檛 think it will play a significant role in preventing speculators in micro suites.

The largest number of micro suites are being built near the university and are being used for students, he said. The project, Veda 2, was planned in 2016.

RELATED: Micro-suites put in their place by Kelowna council

There害羞草研究所檚 room for micro suites to be student rentals and investments, said Smith. But with the province害羞草研究所檚 new speculation tax coming into effect, he expects people will buy fewer for that purpose.

害羞草研究所淪lowing that trend down is good but certainly the micro suites are an important component that is filling a need in the market,害羞草研究所� Smith said.

While he feels it害羞草研究所檚 unlikely a micro suite would be more expensive to furnish害羞草研究所攁s there害羞草研究所檚 less furniture needed than for other larger homes害羞草研究所攖he challenge would be in the places that are unfurnished and where special furniture needs to be purchased.

Purchased at a good time

Chuck Spence, an owner at Cambridge House, said he bought a suite in 2016 for about $160,000 in order to downsize. He said the complex was in a good location and a decent price when he purchased it, but 害羞草研究所渁 lot of these places have been bought on speculation and a lot of them are for sale. They害羞草研究所檝e upped the price considerably.害羞草研究所�

害羞草研究所淚t害羞草研究所檚 small but it害羞草研究所檚 fine. It害羞草研究所檚 like a nice hotel room.害羞草研究所�

Spence said the units in his building are practical for young single individuals as they are close to downtown. But he said he wouldn害羞草研究所檛 buy a micro suite with today害羞草研究所檚 prices. A 313-square-foot one-bedroom was listed in the complex on Nov. 14 for $220,000.

RELATED: Kelowna city council shocked by micro suite rents

Kelowna Mayor Colin Basran said micro suites have a benefit to the community when they are rented, but he would like to see a flipping tax imposed by the province to prevent owners from reselling their properties prior to the complex害羞草研究所檚 completion, instead of the speculation tax.

害羞草研究所淚 don害羞草研究所檛 believe someone is going to purchase those and leave them vacant (so)there害羞草研究所檚 still a benefit to people living in the community.害羞草研究所�

He said micro suites are affordable compared to the average price of a home in Kelowna, which is now around $700,000.

But Basran said it is concerning that there are Kelowna residents who want to own their first home but aren害羞草研究所檛 able to because someone has seen it as a way to earn easy money.

The market dictates the price

Coun. Luke Stack had concerns with micro suites when they were first proposed.

害羞草研究所淚 do have an issue with them not paying (development cost charges), particularly if you have a tiny space,害羞草研究所� he said 害羞草研究所淒CCs help pay for community parks. So they don害羞草研究所檛 help to pay for parks or roads or any public service. I would think in a small suite you would want to use stuff like that.

害羞草研究所淚t also means those taxes are loaded onto your neighbours,害羞草研究所� he said. 害羞草研究所淲hen I saw them a couple years ago I had some issues. I would personally like to see them become affordable but they weren害羞草研究所檛 pitched as being affordable, they were pitched as being less expensive to build but there was no promise they would be affordable.害羞草研究所�

Stack isn害羞草研究所檛 sure if micro suites will catch on in Kelowna.

It may just be a one-time wave,害羞草研究所� he said.

He害羞草研究所檚 also not a fan of investors taking advantage of the market situation but doesn害羞草研究所檛 see a problem with investors renting out units in the building.

害羞草研究所淚害羞草研究所檇 love to see the people that need the housing get the housing, unfortunately, the market is the market. We can害羞草研究所檛 control it,害羞草研究所� he said.

The province has introduced legislation that owners who buy and sell properties without living in them or paying capita gains tax. The speculation tax, which will tax foreign owners and satellite families two per cent unless properties are rented, will come into effect in January 2019.

carli.berry@kelownacapnews.com
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