It's working.

Kelowna's concerted effort to have more rental apartment buildings constructed in the city is paying off with way more units on the market and dropping rents.

"It's positive progress," said Ryan Smith, the City of Kelowna's director of planning and development.

"Very few cities in Canada are making inroads like this."

In the next year alone, numerous apartment complexes with 2,000 more rental apartments are expected to be finished and come on the market.

That's almost a 10% addition to the estimated 24,000 rental units already in the city.

In Kelowna, there's a total of 75,000 homes of all kinds (single-family houses, townhouses, condominiums and apartments), so the 24,000 rentals account for one-third of homes in the city.

"The influx of inventory we've had already over the past couple of years has filled the pent-up demand and I would say the extra supply coming on stream in the next year will result in more affordability," said Smith.

"Rents are coming down. Right now that decline may be hidden in free-rent incentives, but soon, incentives won't be enough and rents will drop."

Photo credit: LinkedinRyan Smith is the City of Kelowna's director of planning and development.

Let's put this in perspective.

Median monthly rent for a typical one-bedroom apartment in Kelowna climbed steadily to a record-high of $2,010 in August 2024, according to data from Zumper, the online platform that lists apartments for rent and compiles the monthly Canadian Rent Report.

In January, the monthly median had slipped to $1,910.

Over the same period, free-rent incentives have become rampant.

Photo credit: ZumperKelowna's softer rental market means renters can take advantage of one and two months free rent incentives.

A quick look at Zumper's listings in Kelowna shows at least 14 established and new apartment complexes are offering one or two months free rent if a potential tenant signs a 12 or 14 month lease.

As an example, one of the best deals is two months free rent if you sign a 14 month lease.

Apply that to the one-bedroom apartment that's listed at $1,950 and that works out to $3,900 in free rent.

Take that $3,900 off the $27,300 you would have regularly paid in rent (14 months x $1,950) and you have $23,400 paid over 14 months.

Work that out to a monthly rent and it's down to $1,672 rather than $1,950.

That looks, feels and sounds like a much more palatable monthly rent to a tenant.

Even with lower rents, Kelowna is still considered unaffordable to many.

It is still the 8th most expensive city in the country to rent an apartment behind Vancouver, Burnaby, Toronto, Victoria, Halifax Ottawa and Barrie.

In early 2022, Kelowna was the 3rd most expensive in Canada, behind only Vancouver and Toronto.

On the other side of the coin, landlords save face keeping rent at a listed $1,950, but attract tenants with the incentives to fill units.

As Smith previously mentioned, rent discounts are now hidden in incentives, but it won't be long before actual regular monthly rents are less because there's so much extra inventory, renters can shop around and landlords have to sharpen their pencils to get leases signed.

Photo credit: ZumperThousands of new rental units have come on stream in Kelowna since a rental building boom started a few years ago.

It wasn't all that long ago that Kelowna had a shortage of rental apartments, demand was high amid a booming economy and potential renters had no choice but to pay high rents.

Since then, the City of Kelowna and Canada Mortgage & Housing Corporation have been working in tandem to see more rental apartment buildings constructed in Kelowna to help solve the housing shortage and with more affordable options.

That's been done with a layered approach of tax incentives, allowing additional density, reducing red tape, speeding up approvals and easing strict parking provisions that's prompted numerous developers to build rental apartment buildings.

"It's what we wanted to achieve," said Smith.

"It's all good news for affordability."

Smith points out that many of the new apartment buildings have units that might not be considered affordable in the $2,000 a month range for a one-bedroom.

"But, the ripple effect may see an existing renter take advantage of an incentive and move out of their basement suite or older building and get into a new apartment," he explained.

"That frees up a cheaper basement suite or unit in an older building for a new renter to get into."

This brings us to what Kelowna's rental vacancy rate is for apartments.

In 2023, according to Canada Mortgage & Housing Corporation, it was 1.3%, which was tight, and equated to 1.3 apartments in every 100 being available for rent at any given time.

Last year, it was pegged at 3.8%, a considerable increase, the effects of which are being seen as new apartment buildings are complete, more units come on the market, incentives abound and rents come down.

In fact, Kelowna's 3.8% vacancy rate is the third highest in the country, tied with St. Catharines, and behind only St. John at 4% and Calgary with 4.8%.

A balanced market is considered to be 3%, so 3.8% tips in favour of renters.

"The real vacancy rate right now in Kelowna is likely between 5% and 6%," said Smith.

"It could be even more later this year. We'll see. That's why incentives won't be enough and rents will go lower, more affordable."

It also means current renters might be able to move on up to a bigger or better place, someone with roommates can strike out on their own if they want and those stuck staying with their parents, friends or relatives might now be able to get a place of their own.

Even if you aren't a renter, this trend is important because it's an indication Kelowna and its economy may be changing.

Our famously unaffordable city is becoming a little more affordable, the housing crush has eased somewhat and Kelowna has become a more cosmopolitan and diverse city with a wider array of housing options and prices.