Region's housing deficit continues to grow
Metro Vancouver's housing shortage continues to grow, with the region now facing a deficit of over 45,000 homes, according to the Fall 2024 edition of the rennie landscape report.
Despite an increased pace of homebuilding in recent years, it has not been enough to keep up with rapid population growth. This growing gap is straining the housing market and is expected to worsen over the next decade.
“Though the pace of construction has increased in recent years, it pales in comparison to the additional demand brought from a growing population,” said Ryan Berlin, head economist and vice president of intelligence at rennie.
“Even as population growth is expected to slow in the coming years, the household formation deficit is still forecasted to grow over the next decade, to nearly 49,000 homes – which is equal to the entire dwelling stock of the Township of Langley,” said Berlin.
According to the report, more homes need to be built each year to close the gap between demand and supply. Metro Vancouver’s current rate of household formation has been reduced by over 2,000 homes annually for the past two decades due to the deficit.
With a demolition rate of 16%, making up the 2,070-home annual gap would require an additional 2,400 new homes to be built per year, on top of what’s already being constructed.
The rennie landscape report also noted growing pressures in the labour market. The unemployment rate has been rising for more than two years, while labour force participation is near its lowest point in 25 years. At the same time, job vacancies have returned to pre-pandemic levels, signalling stress in the workforce.
Canada's longstanding productivity challenges have worsened over the past seven years, adding another layer of complexity to the housing crisis. While inflation has eased and the Bank of Canada has begun to scale back its restrictive monetary policies, it still has a long way to go to return to neutral rates.
Homebuyers have not yet felt the full effect of lower interest rates due to housing prices remaining relatively stable. Borrowing, particularly consumer credit, has been on the rise even before the central bank started lowering rates, outpacing the growth of mortgage credit.
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Furthermore, BC’s new short-term rental restrictions have not significantly alleviated the housing crunch, as most of those units are not suited for long-term rental use. The report also called for updates to the Real Estate Development Marketing Act (REDMA), which has been in place since 2004, to better reflect the changing housing development landscape.
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