Top-Tier Real Estate Sales Surge in Toronto, Vancouver and Montreal Reflects Solid Market Foundation as Canada Confronts Coronavirus - GlobeNewswire | Canada News Media
Toronto, Ontario, March 25, 2020 (GLOBE NEWSWIRE) — Despite conditions of extreme uncertainty in public health and the economy due to the unprecedented global coronavirus (COVID-19) health crisis, new top-tier real estate market data reveals that the Greater Toronto Area, Vancouver and Montreal real estate markets are confronting a period of turmoil from a strong foundation.
The latest data compiled by Sotheby’s International Realty Canada reveal that Greater Toronto Area (GTA) residential real estate sales over $1 million more than doubled in the first two months of the year, soaring 107% year-over-year in January and February, while luxury sales over $4 million surged 75% during this time. Bold gains were experienced across every housing type despite limited inventory, as $1 million-plus condominium, attached home and single family home sales climbed 117%, 52% and 115% respectively. Luxury condominium and single family home sales also rose significantly: six condominiums sold over $4 million in the first two months of the year compared to one during this period in 2019; while single family home sales over $4 million climbed 71%. Preliminary sales data for the first fifteen days of March also underscored the GTA’s strong foundation, as overall $1 million-plus and $4 million-plus sales increased 94% and 56% respectively.
Vancouver’s top-tier real estate market rebounded in the first two months of the year, reflective of solidifying market fundamentals. Pent-up demand ignited $1 million-plus sales activity across the condominium, attached home and single family home markets, which surged 65%, 109% and 79% year-over-year. This resulted in an overall 80% increase in residential sales over $1 million in January and February, while luxury sales over $4 million surged 78%. $1 million-plus sales pulled back 19% year-over-year in the first 15 days of March.
Top-tier real estate sales over $1 million in Montreal rose 68% year-over-year in the first two months of 2020, while sales over $4 million rose 50%. The upswing in activity was experienced across all housing types, as condominium, attached home and single family sales over $1 million increased 92%, 63% and 60% respectively. In the first 15 days of March, sales over $1 million increased a more modest 15% from the same period in 2019.
Despite the heavy toll of steeply falling oil prices, real estate consumer anxiety, and a deeply entrenched buyers’ market, $1 million-plus sales in Calgary contracted a mild 8% year-over-year in the first two months of 2020. In the first two weeks of March, Calgary experienced a 5% year-over-year uptick in sales over $1 million, however, the city remains vulnerable to broader forces shadowing the market.
“Canadians are confronting unprecedented and historic times, and concerns for our collective health, economic prosperity and personal finances are running high. In spite of these monumental global forces, the most recent conventional and luxury real estate market data reveals that many of our country’s key markets are facing this turbulence from a solid foundation,” says Don Kottick, President and CEO of Sotheby’s International Realty Canada. “The Toronto, Vancouver and Montreal real estate markets experienced bold gains in the first months of 2020. A shortage of listings inventory, pent-up consumer demand, and regional economic fundamentals position these markets for resilience in the months ahead. Furthermore, historically favourable mortgage lending conditions and extreme stock market volatility make Canadian real estate a desirable and secure investment. While uncertainty lies ahead, housing will remain essential, activity will continue and the long-term prospects for Canadian real estate are solid.”
According to Kottick, while Calgary’s real estate market remains vulnerable, real estate sellers across all Canadian markets require new strategies when marketing their home this spring, with digital advertising, videography, virtual reality tours and global marketing more important than in years past.
Key Influences
Domestic Resilience Meets Global Headwinds COVID-19 represents a grave and substantial threat to Canadian public health, trade, economic performance and business and consumer confidence in the coming months, the impact and duration of which are unknown. With a longstanding global reputation for overall stability and security the country is poised to confront unprecedented headwinds from a position of relative resilience.
Prior to the unforeseen emergence of COVID-19, modest but steady gains were anticipated for the Canadian economy at the start of the year, with institutions such as the Conference Board of Canada forecasting growth rates in the range of 1.8%. Quebec’s economic growth, which has seen annual gains averaging 2.6% since 2017, was anticipated to continue on a growth trajectory in 2020, while Ontario’s real GDP was forecast to increase 1.8%. British Columbia was projected to post a strong 3.1% gain. In spite of challenging conditions, it was anticipated that Alberta would emerge from the previous year’s recession over the course of 2020.
At the start of the year, key indicators suggested that the Canadian economy had been operating close to capacity; labour markets in most regions showed little slack and wages continued to firm. By February, Canada’s unemployment rate hovered at 5.6% as employment increased by 30,000 jobs, a nominal 0.2% gain. During this time, Montreal and Toronto’s unemployment rate fell below the national average at 5.5% and 5.4% respectively, while Vancouver’s unemployment rate fell to 3.4%, the lowest of the country’s largest metropolitan areas. At 7.4%, Calgary’s unemployment rate was virtually unchanged year-over-year in February.
Canada’s overall economic resilience was reflected in a significant surge in conventional and luxury real estate sales activity in Montreal, Toronto and Vancouver in the first two months of 2020; these fundamentals are now key to stabilizing top-tier real estate market performance in times of turbulence. In contrast, the steepest global oil price decline in decades has rendered Calgary’s economy and top-tier real estate market more vulnerable.
Top-Tier Real Estate Shortage, Pent-Up Demand to Support Market Absorption Rate A shortage of conventional and luxury property listings, compounded by surging consumer demand incited multiple offers and price escalation across three of Canada’s key metropolitan top-tier markets in the initial months of the year.
In Montreal, an unprecedented 28% year-over-year drop in overall residential real estate supply in January marked the most significant annual decline for the month in two decades, as well as the region’s 52nd consecutive month of falling supply. At the same time the total inventory of homes for sale fell short of keeping pace with strong sales gains in both Toronto and Vancouver. The overall scarcity of listings across the condominium, attached and single family home sectors was most acute in the market for housing under $2 million, but also permeated the luxury market, where a shortfall of supply in the cities’ premier neighbourhoods was met with robust demand that saw sales of $4 million-plus residential real estate rise 50%, 75% and 78% year-over-year in the first two months of 2020 in the City of Montreal, the Greater Toronto Area and the City of Vancouver respectively.
While it is anticipated that there may be a contingent of real estate sellers and buyers that may hesitate to transact in the current market, these underlying fundamentals support absorption of new listings supply through the spring, as well as a rebound once market disruption is fully resolved.
Mortgage Lending Environment to Stimulate Top-Tier Market Activity Dramatic shifts in the mortgage lending environment in the preliminary months of 2020 are expected to stimulate conventional and luxury real estate activity this spring in Toronto, Montreal and Vancouver. These factors will also provide a measure of support to Calgary, as the city braces for the local economic impact of falling global oil markets and growing concerns of a provincial recession.
Prompted by concerns that the COVID-19 outbreak will have negative economic consequences, the U.S. Federal Open Market Committee lowered its target range for the federal funds rate to 1.00–1.25% on March 3, and then again to 0.00– 0.25% on March 15. Meanwhile, the Bank of Canada which dropped its target overnight rate to 1.25% on March 4, reduced it to 0.75% on March 13. The ensuing drop in mortgage rates not only has a positive impact on the purchasing power of home buyers and real estate investors, but also positions conventional and luxury real estate as more favourable assets by lowering carrying costs and improving potential returns.
At the same time, the loosening of Canadian federal mortgage financing rules previously implemented to deter rapid housing price gains and debt growth come into effect on April 6, 2020. The pending changes to the mortgage stress test will update the benchmark rate utilized to determine the minimum qualifying rate for insured mortgages to the weekly median five-year fixed insured mortgage rate from mortgage insurance applications, plus 2%. The announcement of these changes in February 2020 quickly bolstered real estate consumer confidence and is anticipated to encourage the entry of some home buyers sidelined by the previous stress test.
Financial Market Turmoil Reinforces Real Estate Demand In 2019, the endurance of a 10-year market bull room as well as significant volatility in major global stock indices towards the end of the year, prompted consumer and investor confidence to shift in favour of Canadian top-tier real estate. According to Sotheby’s International Realty Canada experts, there was a notable increase in affluent real estate consumers utilizing top-tier real estate to diversify asset portfolios, buffer against inflation, and protect against stock market volatility.
In light of COVID-19, sharp declines across all major indices has amplified consumer anxiety towards the financial market and increased interest in Canadian real estate. Strategies utilized by stock market-wary real estate consumers include allocating more funds towards a primary home purchase, investing in rental and vacation properties, and in the case of baby boomers and older adults, reinvesting in real estate following the sale of their primary home, rather than cashing out and investing the proceeds into tumultuous financial markets.
Vancouver Gains in top-tier real estate sales in the first two months of 2020 underscored solidifying market fundamentals in the City of Vancouver as it faces new challenges in light of COVID-19.
In the preliminary months of the year, building consumer demand for top-tier real estate surged into the market as home buyers and sellers who had remained on the sidelines due to previous years’ uncertainty enacted their return. With inventory limited, the lift in qualified sales activity led to active open houses, an upswing in property enquiries, as well as the return of bidding wars for condominiums, attached and single family homes, particularly for properties under $2 million. As a result, the composite benchmark price for all residential properties increased 1.4% year-over-year in Vancouver East and 3.5% in Vancouver West in February 2020.
Overall, $1 million-plus residential real estate sales (condominiums, attached and single-family homes) saw a significant 80% increase in the first two months of 2020 to 501 properties sold. Sales between $1–2 million rose 83% to 346 units sold, while $2–4 million sales increased 71% to 123 properties sold. Pent-up demand from local buyers also spilled into the luxury segment as sales of $4 million-plus properties increased 78% to 32 units sold in the first two months of the year following muted activity in 2019. Initial data from the first 15 days of March revealed that sales over $1 million dipped 19% from 116 properties sold during this period in 2019, to 94 properties sold in 2020. Four properties sold over $4 million in the first 15 days of March, compared to six sold during this time in 2019.
Vancouver’s resilient condo market saw increased traffic and elevated top-tier sales activity. Sales over $1 million surged 65% year-over-year in the first two months of 2020 to 142 units sold. January and February sales of condominiums between $1–2 million saw a 75% increase to 121 units sold while the $2–4 million segment of the market experienced a 6% gain. Four luxury condominiums sold over $4 million compared to one during the first two months of 2019. Preliminary data for the first fifteen days of March saw sales over $1 million decrease 46% to 20 units sold; as in the case of 2019, there were no transactions over $4 million during this time.
The city’s $1 million-plus attached home market remained strong in the first two months of the year, more than doubling with an overall 109% year-over-year increase to 98 homes sold. The $1–2 million segment of the market experienced a 137% surge to 90 homes sold. Attached home sales between $2–4 million were consistent with 2019 levels with eight units sold in the first two months of 2020, due primarily to the lack of inventory available in face of demand. In the same time period, there were no sales of attached homes over $4 million, compared to one home sold during this period in 2019. In the first fifteen days of March, 16 attached homes sold over $1 million compared to 17 units during the same period in 2019.
In the first two months of the year, sales of single family homes over $1 million rebounded 79% from 2019 levels to 261 homes sold. Single family home sales in the $1–2 million and $2–4 million segments of the market saw strong year-over-year gains of 65% and 104% respectively to 135 and 98 homes sold. Luxury $4 million-plus sales experienced a promising 75% year-over-year rise in sales in the first two months of 2020 to 28 homes sold. 58 homes sold over $1 million between March 1–15 compared to 62 homes sold during this period in 2019, a nominal 6% dip. Meanwhile, four homes sold over $4 million in the first 15 days of the month, compared to five in the first 15 days of March 2019.
Vancouver’s recent surge in top-tier real estate sales reflects the fact that demand in the city’s market had not dissipated during previous years’ pullback, but had simply remained dormant. As one of the world’s most coveted regions in terms of livability, the city is positioned to see continued activity through the spring and to regain significant momentum once the disruption passes.
Calgary Definitive buyers’ market conditions are expected for the City of Calgary’s top-tier real estate market in spring 2020 as the provincial economy confronts the monumental challenges of falling oil prices and the COVID-19 crisis. While overall residential sales were up 23% year-over-year in February, activity in the top-tier market was subdued in the preliminary months of 2020, reflecting rising consumer anxiety in face of ongoing economic challenges. The overall benchmark price contracted 1% year-over-year to $416,900 in February.
Sales of $1 million-plus residential real estate (condominiums, attached homes, and single family homes) contracted 8% in the first two months of 2020 to 57 properties sold compared to 62 units sold during the same period in 2019. Of these, 50 properties sold between $1–2 million, down 2% from 51 units sold in January and February of 2019, while seven units sold between $2–4 million, a 30% decline from ten units sold in the previous year. There were no transactions over $4 million compared to one unit sold in the first two months of 2019. In the first fifteen days of March, sales over $1 million were up a marginal 5% to 22 units sold year-over-year.
It is expected that Calgary’s top-tier condominium market will continue to see challenges into the spring as oversupply remains the narrative. One condominium sold over $1 million in the first two months of 2020 compared to three units that sold in the same period in 2019. $1 million-plus sales remained quiet between March 1–15, as was the case during the same period of 2019.
Attached home sales over $1 million experienced a 43% decrease in the first two months of 2020 to four homes sold, while sales over $1 million were quiet in the first fifteen days of March compared to the single attached home sold during the same period last year.
The majority of top-tier activity was seen in the single family home market, with sales in this segment comprising over 90% of Calgary’s overall top-tier market activity in the first two months of the year. Single family home sales over $1 million remained stable from 2019 levels, with 52 homes sold in the first two months of 2020 and the same period the year prior. There were no transactions over $4 million in the first two months of the year, or the first half of March.
Prior to the drop in oil prices and the onset of COVID-19, the conventional and top-tier real estate market was expected to stabilize in 2020 given favourable mortgage lending conditions and retreating levels of inventory. This spring, Calgary is vulnerable to challenging and unforeseen macro-economic forces that will further delay the city’s recovery. For prospective home sellers, strategic pricing and comprehensive marketing will be a requirement for maximizing the potential of a property sale.
Greater Toronto Area (GTA) As Canada’s largest real estate market braves economic and public health challenges in light of COVID-19, it does so from solid footing. Uniquely positioned as the country’s economic epicentre as well as its leading destination for immigration, migration, and global investment interest, the region and its top-tier real estate market are expected to remain resilient in the long-term, with any pullbacks in spring activity to be temporary.
The Greater Toronto Area’s (Durham, Halton, Peel, Toronto and York) top-tier real estate market was poised for significant gains this spring prior to the emergence of COVID-19. Consumer confidence was fully restored and sales activity was anticipated to surpass spring 2019 levels. Preliminary data from the first two months of 2020 reflected a market that had recovered from uncertainty in years prior, with industry experts reporting pent-up demand in certain segments of the top-tier market and a sharp shortfall in available inventory in relation.
Across the conventional real estate market, rising consumer demand was met by insufficient supply, igniting a fresh wave of bidding wars. The composite benchmark price for all residential properties rose 10.2% year-over-year.
The GTA’s $1 million-plus residential real estate market (condominiums, attached and single family homes) saw sales in the first two months of 2020 more than double from 2019 levels, rising 107% year-over-year to 3,106 units sold. Sales between $1–2 million and $2–4 million experienced 106% and 120% increases year-over-year respectively to 2,673 and 398 properties sold. Luxury $4 million-plus sales activity increased by 75% to 35 properties sold, reflecting boldly rebounding demand across the GTA, both in and outside of the city core. Within the first fifteen days of March, sales over $1 million and $4 million experienced a year-over-year 94% and 56% increase to 1,256 and 14 units sold respectively.
The City of Toronto’s top-tier real estate market also reflected renewed demand within the first two months of 2020. Sales over $1 million (condominiums, attached and single family homes) continued on a positive trajectory with a 79% increase year-over-year to 1,232 properties sold in the first two months of 2020. Sales between $1–2 million rose 66% to 939 units sold, while sales between $2–4 million saw 148% growth to 268 units sold. Sales in the luxury $4 million-plus segment increased by 47% to 25 units sold within the first two months of the year. Over the first fifteen days in March, sales over $1 million and $4 million experienced 76% and 57% annual gains to 501 and 11 properties sold respectively.
Strong, underlying demand is projected to persist in the $1 million-plus condominium market in the GTA, following a strong start to 2020 that saw top-tier condominium sales increase steeply from 2019 levels. In the first two months of the year, condo sales over $1 million rose 117% year-over-year to 314 units sold in the GTA, and 112% to 284 units sold in the City of Toronto. During this time, sales surged in the GTA’s luxury $4 million-plus market to six condominiums sold compared to one sold in 2019.
This upswing in condo activity continued into the first fifteen days of March, as GTA sales over $1 million rose 46% to 82 units sold; one condominium sold over $4 million during this time while none had sold in the same period in 2019. During this time, $1 million-plus condo sales in the City of Toronto increased 70% to 75 units sold, while one unit sold over $4 million, up from zero sold in the first 15 days of March 2019. Demand for top-tier condominiums is expected to endure through the spring, as inventory diminishes and local and global home buyers and investors seek to diversify from financial assets.
Preliminary data from the early months of 2020 also reflect a solid top-tier attached home market, as $1 million-plus sales volume experienced gains in the first two months of the year. Sales over $1 million increased 52% year-over-year in the GTA and rose 27% in the City of Toronto to 277 and 199 homes sold. GTA $1 million-plus attached home sales nearly doubled to 155 units sold in March 1–15, up 99% year-over-year; consistent with the same period in 2019; no sales over $4 million had yet transacted. In the City of Toronto, attached home sales over $1 million were up 48% compared to the year prior to 102 homes sold. As in the case of the condominium market, supply issues persisted, limiting potential sales in spite of demand.
The $1 million-plus single family home market experienced a blitz of activity in the first two months of 2020. Sales over $1 million in January and February rose 115% from the same period in 2019 in the GTA and 88% in the City of Toronto to 2,515 and 749 homes sold respectively reflecting a solid foundation of consumer demand and rising confidence. Luxury home sales over $4 million increased 71% year-over-year in the first two months of the year to 29 homes sold in the GTA, while sales were up 36% to 19 homes sold in the City of Toronto.
In the first fifteen days of March, 1,019 single family homes sold over $1 million in the GTA, up 98% from the same period in 2019. Meanwhile, 13 homes sold over $4 million in the GTA, a 44% increase when compared to the year prior. During this time, $1 million-plus and $4 million-plus single family home sales in the City of Toronto rose 88% and 43% respectively.
Despite macro-economic turbulence, the GTA’s recent sales surge reveals that the underlying, long-term fundamentals of its top-tier real estate market are strong, positioning the region for renewed strength once disruption passes.
Montreal The City of Montreal’s robust conventional and luxury real estate market fundamentals position the city to confront challenges from a strong base. Despite uncertainty, preliminary data reflects a city poised to maintain ground in top-tier real estate performance this spring.
Overall real estate sales rose for the 60th consecutive month in Montreal this February, as sales increased 23% year-over-year. Declining supply coupled with strong demand drove a rise in prices as the median prices of single family homes, plexes and condominiums rose 13%,13% and 10% respectively.
Strength in the conventional market was mirrored in the City of Montreal’s top-tier segment, as the city’s prime luxury neighborhoods saw price gains, limited days on market and sales above asking price as a result of bidding wars amongst interested buyers. Overall $1 million-plus residential real estate sales (condominiums, attached and single family homes) experienced a 68% year-over-year increase in the first two months of 2020 to 187 properties sold. The greatest sales activity was in the $1–2 million segment of the market, which experienced a 78% year-over-year increase to 155 properties sold while $2–4 million sales rose 32% to 29 properties sold. Luxury sales of over $4 million increased 50% year-over-year to three properties sold in the first two months of the year. Steady gains continued into the first fifteen days of March, during which $1 million-plus sales increased 15% year-over-year to 46 properties sold; there were no transactions over $4 million, compared to two properties sold over $4 million during this period in 2019.
Montreal’s heated condo market continued to experience steady market absorption rates in the preliminary months of the year, reflecting a sector well-positioned to withstand short term challenges. Sales over $1 million climbed 92% year-over-year to 50 units sold in the first two months of 2020. The $1–2 million and $2–4 million segments of the market saw 83% and 133% annual sales gains to 42 units and seven units sold. One luxury $4 million-plus condominium sold on the resale market in the first two months of the year compared to none during the same period in 2019. Top-tier condo sales remained strong in the first fifteen days of March: sales over $1 million were up 144% to 15 units sold, while there were no transactions as of yet over $4 million, consistent with the same period in 2019. While local end-user and investor demand has driven Montreal’s luxury condominium market to date, the fact that the city remains unencumbered by foreign buyers’ and other taxes, positions the city as an attractive, accessible destination for domestic and international investment, particularly during a time of global uncertainty.
The city’s $1 million-plus attached home sales rose 63% year-over-year to 57 units sold in the first two months of 2020, while $1–2 million and $2–4 million attached home sales rose 63% and 67% to 52 and five homes sold respectively. Given the lack of luxury inventory, there were no $4 million-plus attached homes sold in the first two months of the year, as was the case during the same period in 2019. 12 attached homes sold over $1 million in the first fifteen days of March, compared to 13 sold in the first fifteen days of March 2019.
A severe shortage of supply capped market activity in the top-tier single family home market in spite of healthy demand. In spite of this, single family homes sales over $1 million in the first two months of 2020 rose 60% year-over-year to 80 homes sold. During this time, 61 homes sold between $1–2 million, a 91% annual gain; 17 homes sold between $2–4 million, a 6% increase. Luxury sales over $4 million saw no change as two homes sold in the first two months of both 2020 and 2019. In the first fifteen days of March, sales remained stable in the face of uncertainty: 19 homes sold over $1 million compared to 20 over the same period in 2019.
Based on this performance, the City of Montreal confronts unprecedented challenges from a foundation of unprecedented real estate market strength.
About Sotheby’s International Realty Canada Combining the world’s most prestigious real estate brand with local market knowledge and specialized marketing expertise, Sotheby’s International Realty Canada is the leading real estate sales and marketing company for the country’s most exceptional properties. With offices in over 32 residential and resort markets nationwide, our professional associates provide the highest caliber of real estate service, unrivalled local and international marketing solutions and a global affiliate sales network of approximately 1,000 offices in 71 countries and territories to manage the real estate portfolios of discerning clients from around the world. For further information, visit www.sothebysrealty.ca.
Disclaimer The information contained in this report references market data from MLS boards across Canada. Sotheby’s International Realty Canada cautions that MLS market data can be useful in establishing trends over time but does not indicate actual prices in widely divergent neighborhoods or account for price differentials within local markets. This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information and analysis presented in this report, no responsibility or liability whatsoever can be accepted by Sotheby’s International Realty Canada, or Sotheby’s International Realty for any loss or damage resultant from any use of, reliance on or reference to the contents of this document.
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Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
VANCOUVER – Voters along the south coast of British Columbia who have not cast their ballots yet will have to contend with heavy rain and high winds from an incoming atmospheric river weather system on election day.
Environment Canada says the weather system will bring prolonged heavy rain to Metro Vancouver, the Sunshine Coast, Fraser Valley, Howe Sound, Whistler and Vancouver Island starting Friday.
The agency says strong winds with gusts up to 80 kilometres an hour will also develop on Saturday — the day thousands are expected to go to the polls across B.C. — in parts of Vancouver Island and Metro Vancouver.
Wednesday was the last day for advance voting, which started on Oct. 10.
More than 180,000 voters cast their votes Wednesday — the most ever on an advance voting day in B.C., beating the record set just days earlier on Oct. 10 of more than 170,000 votes.
Environment Canada says voters in the area of the atmospheric river can expect around 70 millimetres of precipitation generally and up to 100 millimetres along the coastal mountains, while parts of Vancouver Island could see as much as 200 millimetres of rainfall for the weekend.
An atmospheric river system in November 2021 created severe flooding and landslides that at one point severed most rail links between Vancouver’s port and the rest of Canada while inundating communities in the Fraser Valley and B.C. Interior.
This report by The Canadian Press was first published Oct. 17, 2024.
British Columbia voters face no shortage of policies when it comes to tackling the province’s housing woes in the run-up to Saturday’s election, with a clear choice for the next government’s approach.
David Eby’s New Democrats say the housing market on its own will not deliver the homes people need, while B.C. Conservative Leader John Rustad saysgovernment is part of the problem and B.C. needs to “unleash” the potential of the private sector.
But Andy Yan, director of the City Program at Simon Fraser University, said the “punchline” was that neither would have a hand in regulating interest rates, the “giant X-factor” in housing affordability.
“The one policy that controls it all just happens to be a policy that the province, whoever wins, has absolutely no control over,” said Yan, who made a name for himself scrutinizing B.C.’s chronic affordability problems.
Some metrics have shown those problems easing, with Eby pointing to what he said was a seven per cent drop in rent prices in Vancouver.
But Statistics Canada says 2021 census data shows that 25.5 per cent of B.C. households were paying at least 30 per cent of their income on shelter costs, the worst for any province or territory.
Yan said government had “access to a few levers” aimed at boosting housing affordability, and Eby has been pulling several.
Yet a host of other factors are at play, rates in particular, Yan said.
“This is what makes housing so frustrating, right? It takes time. It takes decades through which solutions and policies play out,” Yan said.
Rustad, meanwhile, is running on a “deregulation” platform.
He has pledged to scrap key NDP housing initiatives, including the speculation and vacancy tax, restrictions on short-term rentals,and legislation aimed at boosting small-scale density in single-family neighbourhoods.
Green Leader Sonia Furstenau, meanwhile, says “commodification” of housing by large investors is a major factor driving up costs, and her party would prioritize people most vulnerable in the housing market.
Yan said it was too soon to fully assess the impact of the NDP government’s housing measures, but there was a risk housing challenges could get worse if certain safeguards were removed, such as policies that preserve existing rental homes.
If interest rates were to drop, spurring a surge of redevelopment, Yan said the new homes with higher rents could wipe the older, cheaper units off the map.
“There is this element of change and redevelopment that needs to occur as a city grows, yet the loss of that stock is part of really, the ongoing challenges,” Yan said.
Given the external forces buffeting the housing market, Yan said the question before voters this month was more about “narrative” than numbers.
“Who do you believe will deliver a better tomorrow?”
Yan said the market has limits, and governments play an important role in providing safeguards for those most vulnerable.
The market “won’t by itself deal with their housing needs,” Yan said, especially given what he described as B.C.’s “30-year deficit of non-market housing.”
IS HOUSING THE ‘GOVERNMENT’S JOB’?
Craig Jones, associate director of the Housing Research Collaborative at the University of British Columbia, echoed Yan, saying people are in “housing distress” and in urgent need of help in the form of social or non-market housing.
“The amount of housing that it’s going to take through straight-up supply to arrive at affordability, it’s more than the system can actually produce,” he said.
Among the three leaders, Yan said it was Furstenau who had focused on the role of the “financialization” of housing, or large investors using housing for profit.
“It really squeezes renters,” he said of the trend. “It captures those units that would ordinarily become affordable and moves (them) into an investment product.”
The Greens’ platform includes a pledge to advocate for federal legislation banning the sale of residential units toreal estate investment trusts, known as REITs.
The party has also proposed a two per cent tax on homes valued at $3 million or higher, while committing $1.5 billion to build 26,000 non-market units each year.
Eby’s NDP government has enacted a suite of policies aimed at speeding up the development and availability of middle-income housing and affordable rentals.
They include the Rental Protection Fund, which Jones described as a “cutting-edge” policy. The $500-million fund enables non-profit organizations to purchase and manage existing rental buildings with the goal of preserving their affordability.
Another flagship NDP housing initiative, dubbed BC Builds, uses $2 billion in government financingto offer low-interest loans for the development of rental buildings on low-cost, underutilized land. Under the program, operators must offer at least 20 per cent of their units at 20 per cent below the market value.
Ravi Kahlon, the NDP candidate for Delta North who serves as Eby’s housing minister,said BC Builds was designed to navigate “huge headwinds” in housing development, including high interest rates, global inflation and the cost of land.
Boosting supply is one piece of the larger housing puzzle, Kahlon said in an interview before the start of the election campaign.
“We also need governments to invest and … come up with innovative programs to be able to get more affordability than the market can deliver,” he said.
The NDP is also pledging to help more middle-class, first-time buyers into the housing market with a plan to finance 40 per cent of the price on certain projects, with the money repayable as a loan and carrying an interest rate of 1.5 per cent. The government’s contribution would have to be repaid upon resale, plus 40 per cent of any increase in value.
The Canadian Press reached out several times requesting a housing-focused interview with Rustad or another Conservative representative, but received no followup.
At a press conference officially launching the Conservatives’ campaign, Rustad said Eby “seems to think that (housing) is government’s job.”
A key element of the Conservatives’ housing plans is a provincial tax exemption dubbed the “Rustad Rebate.” It would start in 2026 with residents able to deduct up to $1,500 per month for rent and mortgage costs, increasing to $3,000 in 2029.
Rustad also wants Ottawa to reintroduce a 1970s federal program that offered tax incentives to spur multi-unit residential building construction.
“It’s critical to bring that back and get the rental stock that we need built,” Rustad said of the so-called MURB program during the recent televised leaders’ debate.
Rustad also wants to axe B.C.’s speculation and vacancy tax, which Eby says has added 20,000 units to the long-term rental market, and repeal rules restricting short-term rentals on platforms such as Airbnb and Vrbo to an operator’s principal residence or one secondary suite.
“(First) of all it was foreigners, and then it was speculators, and then it was vacant properties, and then it was Airbnbs, instead of pointing at the real problem, which is government, and government is getting in the way,” Rustad said during the televised leaders’ debate.
Rustad has also promised to speed up approvals for rezoning and development applications, and to step in if a city fails to meet the six-month target.
Eby’s approach to clearing zoning and regulatory hurdles includes legislation passed last fall that requires municipalities with more than 5,000 residents to allow small-scale, multi-unit housing on lots previously zoned for single family homes.
The New Democrats have also recently announced a series of free, standardized building designs and a plan to fast-track prefabricated homes in the province.
A statement from B.C.’s Housing Ministry said more than 90 per cent of 188 local governments had adopted the New Democrats’ small-scale, multi-unit housing legislation as of last month, while 21 had received extensions allowing more time.
Rustad has pledged to repeal that law too, describing Eby’s approach as “authoritarian.”
The Greens are meanwhile pledging to spend $650 million in annual infrastructure funding for communities, increase subsidies for elderly renters, and bring in vacancy control measures to prevent landlords from drastically raising rents for new tenants.
Yan likened the Oct. 19 election to a “referendum about the course that David Eby has set” for housing, with Rustad “offering a completely different direction.”
Regardless of which party and leader emerges victorious, Yan said B.C.’s next government will be working against the clock, as well as cost pressures.
Yan said failing to deliver affordable homes for everyone, particularly people living on B.C. streets and young, working families, came at a cost to the whole province.
“It diminishes us as a society, but then also as an economy.”
This report by The Canadian Press was first published Oct. 17, 2024.
