Rental market
Preliminary consultations are set to begin for a parcel of property at Main and East 7th where, in August, Vancouver Mayor Gregor Robertson and the Vancouver Affordable Housing Agency (VAHA) announced plans for 400 new affordable housing units on four city-owned sites.
Marcon Developments Ltd., on behalf of VAHA, and Catalyst Community Developments Society – the non-profit that will manage the units – propose 145 units in a nine-storey building at the site. An open house December 12 will gather feedback prior to a formal rezoning application for the property.
Appropriately, information about the event arrived the same day as Canada Mortgage and Housing Corp. released its annual rental market survey.
Purpose-built rental apartment vacancies in the Vancouver metropolitan area dropped to 0.7% from 0.8% in 2016. Vacancies in investor-owned apartments plunged to 0.3% from 0.9%. Meanwhile, average monthly rents for purpose-built apartments rose 6.9% to $1,223 while those for investor-owned apartments increased 3.1% to $1,625. Small wonder tenants feel squeezed. They’re getting it on both sides, while wages have risen a paltry 1% versus a year ago despite strong job growth in B.C.
Adding insult to the injury is the fact that new rental starts haven’t alleviated the problem. Vancouver logged 1,796 new purpose-built rental starts in the first 10 months of 2016, the biggest tally in recent years, contributing to a net gain of 922 purpose-built units.
Yet the activity wasn’t enough to offset the addition of just 1,516 investor-owned apartments to the rental pool, a sharp drop from the few thousand added in past years.
The mayor hopes a 1% tax on vacant homes will draw more units into the rental pool, and Marcon’s project on Main Street will contribute its mite, but CMHC’s report indicates that tenants will face ongoing pressure.
“[There’s] lots of people moving here,” said Robyn Adamache, principal market analyst for Vancouver. “The other thing that’s been going on, too, is … with the condo prices rising, it would take people longer to save up that down payment if they did want to get into homeownership, so that’s probably adding to demand as well.”
Declines ahead
By the time this appears, the Real Estate Board of Greater Vancouver will have issued another month’s worth of sales statistics. Another month of year-under-year declines? Undoubtedly.
But wait! New Westminster-based Landcor Data Corp. last week issued its third-quarter report touting stronger momentum in the housing market. Its survey of both new and resale product indicates that seasonally adjusted sales numbers are at their highest quarterly tally since the final quarter of 2007.
Sitting in Etobicoke, report author Will Dunning is hot with enthusiasm for the province’s “excellent” fundamentals and 3% annualized job growth.
“The strong employment situation is encouraging B.C. residents to get into the housing market. Moreover, it is encouraging people to move to B.C. from other provinces,” he writes.
Affordability? Dunning doesn’t share the bearish sentiments of many observers. Given historically low interest rates, which he considers the one true cost of housing, he boldly declares: “Housing affordability is very positive ... much better than is generally appreciated.”
Anyone required to make principal payments on their mortgage (and that’s most of us), will counter that the regular payments are quite hefty given local house prices.
In fact, Central 1 Credit Union senior economist Bryan Yu describes wage growth, which has been in the 1% range for the past nine months, as “disappointing” and “puzzling.” Driven in part by job gains in low-paying sectors such as health care, the arts and recreation, slack wage growth does nothing to help people save for home ownership.
Small wonder Cameron Muir, chief economist with BC Real Estate Association (BCREA) last week forecast that B.C. home sales would fall in 2017 even as demand remains above average.
“Declining affordability related to rising prices and government policy interventions limit the number of eligible buyers,” he said.
BCREA estimates peg housing sales at 113,800 units this year provincewide and 96,300 in 2017.
