The Missing Middle
Category: Home Ownership | Author(s): Jackson Gardner
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Location Address: 238 4 Ave, Kamloops, BC V2C 2A9, Canada
Subject
Everyone needs a starting point when entering the real estate market. For first time home buyers, townhouses, multiplexes and smaller family units or ‘The Middle’ are what seem to check the boxes. They’re more affordable than detached homes, are spacious and include many amenities such as balconies, garages, patios, small yards, etc.
Having an adequate number of these houses in the middle allows for these first time home buyers that don’t have outlandish needs and are looking for an affordable option to enter the real estate market at a time that aligns with their financial and life goals. Alternatively, by lacking these houses in the middle, would be home buyers are forced to pay rent at a rate that’s similar to the mortgage they would be paying if they owned. The only reason they’re not in the position to own is due to the lack of supply of these houses in the middle, and anything more luxurious than that is too expensive and out of reach for people in these positions.
Crisis
The problem is that there are not enough townhouses, multiplexes and smaller family units in Kamloops. This causes a lack of opportunity for would be home buyers to purchase real estate which slows down their life plans as first time home buyers are forced to delay their entry into the real estate market. This also causes a ripple effect, meaning that by pushing back entry into the real estate market by a period of time, all of their real estate and financial milestones will also be pushed back but with exponential ramifications. This prevents victims from this crisis to build their own equity and contributes to the housing continuum crisis that we’re currently facing.
The reason for this can be boiled down to multiple things. Kamloops is becoming an increasingly hot destination for people to settle down in. On top of people from overseas coming in and entering the real estate market, which happens to most Canadian cities, we also now have a growing number of people coming from the likes of Kelowna, Vancouver, etc. choosing Kamloops as their next home. In the 2021 census, Kamloops was the third most growing city in Canada with a 10% population increase.
This increase of demand is accompanied by a lack of supply, and leads to an increase of real estate, including the houses that we do have in the middle. 2021 property assessments show that the average cost of a single-family home increased by 27%. When paired with the increasingly out of reach middle homes, it’s currently a demoralizing time for house hunters in Kamloops.
Of the 3,868 dwelling units between 2016 and 2020, only 851 building permits were issued for houses in the middle. The rest went to apartments (2,357) and single-family dwellings (660).
On the other hand, it’s important to see the possibilities and what Kamloops can strive for when it comes to having a middle. Two examples of Canadian cities in similar size to Kamloops with a middle are Saguenay, Quebec and Trois Rivieres, Quebec.
Saguenay, Quebec
Population: 146,184
Number of houses in middle: 32,920 (49.7% of total)
Average real estate price: $206,242
Trois-Rivieres, Quebec
Population: 141,352
Number of houses in middle: 35,085 (55.6% of total)
Average real estate price: $255,694
Kamloops, British Columbia
Population: 104,810
Number of houses in middle: 15,490 (42.1% of total)
Average real estate price (multi-family unit): $401,000
A key observation of these two cities with a middle in comparison to Kamloops which lacks a middle. Firstly, despite having a population of only roughly 35-40% more, Saguenay and Trois-Rivieres have over 100% more houses in the middle. Both Saguenay and Trois-Rivieres have seen the benefits of having a middle. The numbers have shown that their present middle has caused a positive ripple effect in the housing market. This has caused the average price of real estate in those cities to be over $150 000 less than what it currently is in Kamloops.
With that being said, it is no coincidence that Quebec, a more European influenced area of Canada, has a better attached home system in place than a more modern area such as Kamloops. Kamloopsians that go on vacations to popular travel destinations such as Barcelona and Edinburgh will be amazed with the advanced European typography, which due to their modern regulations and competitive architecture market are far more advanced and go above and beyond north american homes. So much so, that upon returning back home, the houses in the middle don’t exactly catch their eye. This energy and view has possibly transpired to the median citizen of Kamloops and has left a level of uncertainty for developers, and caused less predicted demand than it would take for developers to rush to build these duplex, townhouses, etc.
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Community Implications
As referenced earlier, the implications of this can be seen in the ripple effect and the housing continuum crisis. If the first time home buyers that are seeking the middle are unable to find what they’re looking for, they’re forced to go one level lower and settle for a lesser property. This trend continues so on and so forth, and as you get lower down the chain you’ll have people forced to experience homelessness or live in an inadequate housing situation solely due to the ripple effect caused from the missing middle. In addition, by delaying these financial milestones, we are delaying the opportunity for young adults to start building their own equity which may cause a later retirement age down the road and will most definitely delay other milestones such as buying their first detached home, vacation home, etc. or prevent it from evening happening at all.
While not having a middle has financial and well being implications for residents, there is also an opportunity cost involved. Kamloops is missing out on the opportunity to build a vibrant, united and exciting community with these attached homes that cities like Saguenay and Trois-Rivieres have.
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A Way Forward
We recognize that no one suggestion will solve the housing crisis in Kamloops, but based on our research, here are some ideas that may help move us even slightly forward.
Kamloops has already taken a step in the right direction, as in December 2021 council approved the construction of City Gardens, a 525 unit building with one, two, three and four bedroom units designed for families of different sizes. With that being said, the entire culture needs to change. The way forward is to paint a picture for Kamloopsians that puts the European style, vibrant attached home communities in a desirable light and subsequently creates a level of demand that makes the development of these middle projects a no brainer for developers. Once the demand is clear and the investment seems low risk for developers, we will evidently see a further increase in these houses in the middle and a more united community and attainable real estate market in Kamloops.