Market Highlights For December 2021

Brace for an interesting year in the housing market

As the Metro Vancouver housing market comes off a record sales year, we are entering what could be the most interesting 12 months this region has ever seen. The term ‘interesting’ can be seen in relation to the age-old curse of “may you live in interesting times,” but we believe it will also be a blessing because the blinders that have obscured some real estate realities will be ripped away in 2022.

The first expose will be that Canada does not have the supply or the political gumption to provide the housing needed for the biggest surge in immigration this country has ever seen.

The second expose will be that the federal government continues to look at ways to tax homes in Canada as evidenced by a recent CMHC study to add an annual tax on homes valued above $1M, will they slap a capital gains tax on the sale of principal residences next, despite its strenuous denials?

The final reality that every home buyer, seller and renter in Metro Vancouver will face is that the cost of housing here is never going to come down, despite the barriers to demand that every level of government has thrown up over the past 10 years.

It is up to the private market – that is you, me and everyone else who aspires to homeownership – to prepare and prosper in a future characterized by a low supply of housing, greater property taxation and accelerating land and property values.

It won’t be easy, but Metro Vancouver has never been an affordable market. Yet it has remained Canada’s leading residential environment for decades.  There is nowhere better to live in Canada and it certainly has no match when it comes to achieving real estate success.

Let’s look at immigration. According to Statistics Canada, this country absorbed 123,000 immigrants in the third quarter of 2021 alone: the highest level for any quarter since 1946, at the end of World War II. For all of 2021, Canada welcomed 403,000 new residents. To put this in perspective, the United States brought in only 300,000 immigrants for all of last year. Due to immigration, Canada now has the fastest-growing population of all G7 Nations.

If former immigration surges are any indication, up to 30% of newcomers to Canada will immediately or eventually – usually within two years – locate to B.C. and 95% of these will come to Metro Vancouver.
But the supply of housing in Metro Vancouver has fallen to record low levels and, due primarily to local governments, construction of new homes is not keeping pace with the current population, let alone meeting the needs of a hundred thousand newcomers every year.

Considering the lowest we have seen the number of Greater Vancouver active listings go in the last 30 years was 6,200, to hit below 5,000 is truly astonishing. Criticize the supply side discussions all you want but a fundamental flaw in the Metro Vancouver and many other real estate markets that we are experiencing right now is a significant lack of homes. Demand side measures clearly are not the long-term answer. At some point there needs to be real effort to increase supply and allow it to be increased in a meaningful way. And yes, the right kind of supply. We can’t keep wishing for it, there needs to be real work behind any kind of resolution to this issue.

As of December 1, 2021, only 6,000 more homes had started construction in Metro Vancouver than in the same period a year ago in 2020. Townhouse construction increased by just 98 units; and starts of detached houses fell by 300 homes. The only big increase was in apartments, but 30% of the 17,745 units started in 2021 were rentals, not strata homes.

This is despite a federal housing ministry pronouncement back in January 2021 that “We have a rock-steady focus on increasing the supply of housing in Canada.”

Of course, it is local municipalities that really decide how many homes will be built. And that is where the problem lies. Not to belabour the point, here is a snapshot for Metro Vancouver of some recent  development non-decisions.

Vancouver: In 2016 the Grandview-Woodland Community Plan was approved, and the late and iconic Vancouver architect Bing Thom presented plans for the anchor development, his last big proposal, The plan now has been scaled back to 438 secured rental units, including 93 units at below-market rates, and 215 strata residential units, all across from the Broadway-Commercial SkyTrain hub. After three presentations and revisions over four years, the proposal has now been sent for future public hearings. “We have not received rezoning approval,” a developer spokesperson said in December 2021. “We have no idea when it will come.”

As of December 1, 2021, the City of Vancouver had seen total starts of less than 5,000 homes for the year, just 1,500 more than a year earlier, and 90% of 2021 starts were apartments. Only 135 new strata townhomes have started in Vancouver in the past two years.

North Vancouver District. The development of the Maplewood Town Centre was included in the 2006 official community plan. Five years ago, a plan was submitted by two major developers for 535 homes, including 80 below-market rentals. In December 2021, the entire proposal was voted down by District council.
A proposal to develop 420 housing units, half of them rentals at below market rates, in Lynn Canyon has been submitted three times to District council starting nearly two years ago. As of December 2021, it was referred to another round of public hearings.

As of December 1, 2021, North Vancouver District has posted just 423 housing starts, down from 611 in the same period in 2020. Only 17 townhouses were started in 2021.

West Vancouver: Council recently voted down an eight-story condo building with seven strata units. It would have been the first-ever zero emission, mass-timber housing development in the district.

Burnaby:  First presented under the official community plan in 1988, the Bainbridge Urban Village Community Plan and the Lochdale Urban Village Community Plan, meant to increase density around the Sperling SkyTrain station and Hastings Street, began consultations in 2020.The Latest update indicates that final plan to council sometime this year, subject to more public hearings.

Highlights of the December 2021 housing market report:
  • West Side detached housing prices may have peaked for now at $3.4 million
  • Immigration has hit the highest level since the end of World War II
  • Richmond is considering “rental only” zoning

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