Kelownasa国际传媒檚 supply of micro suites has become a speculatorsa国际传媒檚 haven.

Kevin Bird of K West, the developer of Cambridge House on Leon Avenue, said many of the buildingsa国际传媒檚 313-square-foot units have had multiple owners before it was even complete. Prior to registration, the complexsa国际传媒檚 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 Kelownasa国际传媒檚 residents, has also built significant interest from investors, with the property now 75 per cent sold.

While Smith said itsa国际传媒檚 not possible to see if speculators are eyeing up micro suites at Sole KLO until it is registeredsa国际传媒� registration being the point when the building is complete and livablesa国际传媒� his suspicion is that building will follow the same trend.

sa国际传媒淢y guess is it would be over 50 per cent speculators,sa国际传媒� he said. sa国际传媒淧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 itsa国际传媒檚 speculators, people who think the market is going to go up by the time itsa国际传媒檚 finished or at least people who are going to put renters in there.sa国际传媒�

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 cansa国际传媒檛 purchase and reassign their contract to make money, so flipping before registration isnsa国际传媒檛 possible, Kelly said.

sa国际传媒淚t has mostly been investors and there have been a few purchases from single males who are just looking to get into the market,sa国际传媒� 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 sonsa国际传媒檚 needs.

sa国际传媒淚t seemed like we were lured in, or he was lured in with the price,sa国际传媒� said Jack Vogt. sa国际传媒淏ut then you know you have to start considering (specialized) furniture, because you cansa国际传媒檛 put regular furniture in there, and there were all kinds of other costs that came up that ended up being significantly more.sa国际传媒�

sa国际传媒淭hey actually werensa国际传媒檛 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.sa国际传媒�

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 communitysa国际传媒檚 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 hasnsa国际传媒檛 been a negative impact on the city with the suites, he said.

Foreign buyers make up less than two per cent of Kelownasa国际传媒檚 market, so Smith doesnsa国际传媒檛 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

Theresa国际传媒檚 room for micro suites to be student rentals and investments, said Smith. But with the provincesa国际传媒檚 new speculation tax coming into effect, he expects people will buy fewer for that purpose.

sa国际传媒淪lowing that trend down is good but certainly the micro suites are an important component that is filling a need in the market,sa国际传媒� Smith said.

While he feels itsa国际传媒檚 unlikely a micro suite would be more expensive to furnishsa国际传媒攁s theresa国际传媒檚 less furniture needed than for other larger homessa国际传媒攖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 sa国际传媒渁 lot of these places have been bought on speculation and a lot of them are for sale. Theysa国际传媒檝e upped the price considerably.sa国际传媒�

sa国际传媒淚tsa国际传媒檚 small but itsa国际传媒檚 fine. Itsa国际传媒檚 like a nice hotel room.sa国际传媒�

Spence said the units in his building are practical for young single individuals as they are close to downtown. But he said he wouldnsa国际传媒檛 buy a micro suite with todaysa国际传媒檚 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 complexsa国际传媒檚 completion, instead of the speculation tax.

sa国际传媒淚 donsa国际传媒檛 believe someone is going to purchase those and leave them vacant (so)theresa国际传媒檚 still a benefit to people living in the community.sa国际传媒�

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 arensa国际传媒檛 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.

sa国际传媒淚 do have an issue with them not paying (development cost charges), particularly if you have a tiny space,sa国际传媒� he said sa国际传媒淒CCs help pay for community parks. So they donsa国际传媒檛 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.

sa国际传媒淚t also means those taxes are loaded onto your neighbours,sa国际传媒� he said. sa国际传媒淲hen I saw them a couple years ago I had some issues. I would personally like to see them become affordable but they werensa国际传媒檛 pitched as being affordable, they were pitched as being less expensive to build but there was no promise they would be affordable.sa国际传媒�

Stack isnsa国际传媒檛 sure if micro suites will catch on in Kelowna.

It may just be a one-time wave,sa国际传媒� he said.

Hesa国际传媒檚 also not a fan of investors taking advantage of the market situation but doesnsa国际传媒檛 see a problem with investors renting out units in the building.

sa国际传媒淚sa国际传媒檇 love to see the people that need the housing get the housing, unfortunately, the market is the market. We cansa国际传媒檛 control it,sa国际传媒� 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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