Housing affordability, which started as an “issue” before becoming a “problem” and finally a “crisis,” shows every sign of simply getting worse. And it doesn’t really matter whether you want to own or rent.
In a real estate market that is both globally desirable and significantly constrained in terms of available product — as Vancouver is — house prices have been recently increasing by double digits.
The breathtaking rise is driven, as research tells us, by off-shore dough. Buying at the high end of the market creates a domino effect leaving those who were once able to squeeze in at the bottom, seeking home ownership well beyond the city’s limits.
But there is more. Condo ownership for previous generations was the bottom rung of the ladder leading to the ultimate goal of single-family home ownership, white picket fence etc. etc. You know, build up your equity then move along just before the kiddies start arriving or at least before they are big enough to need their own bedroom.
Now condo ownership isn’t the first step; quite often it is the last. But not so fast.
I direct you to last Friday’s Globe and Mail’s business pages and a report from Canada Mortgage and Housing Corporation; the headline reads “More foreign buyers own Canadian condos.”
CMHC found that in Vancouver 3.5 per cent of condos are owned by people whose primary residence is outside of Canada. (That’s the highest of all three cities where the numbers are notably rising including Toronto and Winnipeg.) Here, it is up from 2.3 per cent in 2014. While the percentage may seem relatively small, the net effect is to drive up condo prices right across the market.
And how about those rentals? I mean, after all, more than 50 per cent of the folks in Vancouver are renters. Well, there too is little to cheer about. According to the city’s housing policy staff, a “healthy” vacancy rate is between three per cent and five per cent. The vacancy rate in Vancouver is .5 per cent.
This week council is considering what it calls “new protections for Vancouver’s tenants and rental housing stock.” There would be more money from landlords to support tenants who have to move including, for some, months of free rent and funds for moving expenses.
The city is, however, powerless to control rents or what are referred to as “renovictions” where tenants are tossed out so landlords can add a lick of paint and a new bathroom sink then jack up the rent.
There is one not insignificant lever the city has: Rate of Change Regulations. These are regulations that have been around since the late 1980s and cover 47,000 of Vancouver’s 67,000 rental units in buildings with six or more suites.
Since 2007, none of those 47,000 suites can be demolished unless they are replaced on a one-to-one basis. The problem is that while the number of units being protected remains the same, the population has increased; the vacancy rate dropped by half.
The B.C. Non Profit Housing Association released a report last month covering 521 Canadian municipalities and measuring “rental housing health.” It’s based on a 2011 National Housing Survey and measures affordability, percentage of tenants spending more than 50 per cent of their income on housing, overcrowding and the amount of money tenants would need to meet the national standard of spending less than 30 per cent of their income on housing.
Of those 521 municipalities, Vancouver came in at 516. But we can be thankful we are not Burnaby. In spite of the fact that rents are somewhat lower there, they came dead last.
While Vancouver protects rentals with Rate of Change Regulations, no such regulations exist out in Mayor Derek Corrigan’s one-party state. In fact modestly priced rental units are coming down at a record rate to be replaced by high-priced condos.
One other point: While foreign funds continue to roll in and Victoria and Ottawa dither about what to do, a growing number of people from Maple Ridge to Saanich to Prince George find themselves living in tent cities. These are not only drug addicts or the mentally ill. Increasingly, they are workers living paycheque to paycheque unable to find affordable housing in the midst of this worsening crisis.