Nov 25 Market Update: The Housing Crisis in One Number
We hear a lot about the housing crisis around here. But what does that actually mean? Unaffordable houses? How unaffordable and what houses and to whom? What makes a crisis versus just a bad situation?
Well we have a clue from the first data release of Statistics Canada’s new Canadian Housing Survey which looked at reasons why people move. It turns out that a shocking 10% of the most recent moves in BC were forced ones. That is a landlord or the bank kicked them out. We know that the rate of foreclosures is very low in BC so realistically this means landlords kicking out tenants. At one in ten moves that is nearly twice the Canadian average, and nearly three times the low in Manitoba.
To me that is the housing crisis in one number. Moving is already a top stressor in people’s lives, but a forced move, into a market with near zero rental vacancy where rents have appreciated substantially is excruciating. I’m somewhat encouraged by the massive increase in rental construction and focus on dedicated rental supply at all levels of government, but this problem is decades in the making and it will a long time in fixing as well.
All the charts below are from the fantastic Jens von Bergmann who writes at the Mountain Math blog and maintains the incredible Census Mapper site.
The data also shows that an astonishing 60% of BC households moved in the last 5 years, also the highest rate in the country. Looking at the reasons for people moving (charted below), a few things jumped out at me where BC is an outlier.
- Higher moves for health reasons. Possibly a symptom of our relatively elderly population?
- Higher moves to reduce costs. We know that many of people escaped Vancouver in 2016/17 to arguably reduce costs (and many others simply cashed in, reducing costs along the way).
- Lower new household formation and relatively low new homeowner rate. Our rental and housing prices likely push these two down.
Here are the weekly numbers courtesy of the VREB. Sales slowed substantially, so we won’t be posting as large of year over year sales gains as it looked from the first couple weeks that were very active. Makes me think the sales projections should be removed really because there is hardly a month that those sales projections don’t end up changing quite a bit every week. Almost certainly we won’t hit 600 sales this month, likely 570-597.
| November 2019 |
Nov
2018
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 49 | 202 | 322 | 447 | 498 |
| New Listings | 68 | 304 | 449 | 624 | 804 |
| Active Listings | 2547 | 2557 | 2513 | 2464 | 2343 |
| Sales to New Listings | 72% | 66% | 72% | 72% | 62% |
| Sales Projection | — | 642 | 632 | 597 | |
| Months of Inventory | 4.7 | ||||
New post: https://househuntvictoria.ca/2019/11/29/how-relatively-unaffordable-is-victoria/
That’s precisely why I developed the spreadsheet to calculate actual annual return from solar. Payback is stupid. When I buy a GIC I don’t think about that the payback is X years, I think that the return is Y%.
Solar is the same thing and depending on cost to install the return can be quite competitive
If investment (7% per annum in the last 25yr) isn’t calculated then break even at 23yr still isn’t great with out factor in maintenance. But, to me going solar isn’t a good choice due to lost of money that could be use for investment.
Thanks Leo.
So you’re a dealer, huh.
I recently bought a pair of shoes from a dealer. Total mistake. I don’t know what he laced them with, but I was tripping all over the place.
Of course it is. But I’m the one dealing in facts.
… and to be clear, this discussion started with me pointing out that changing some Victoria zoning (from single to duplex) might result in those homeowners paying more property tax, in response to a poster saying it wouldn’t affect him “one iota”. Somehow it’s morphed into whether that would be “fair” or not, but I think my point remains that some property taxes might rise because of this.
You mean, foreigner or Canadian or British Columbian, because they’re all different now no?
You are right there, but what you pay in (total) property taxes only starts out with the land value. Then other variables come in, such as what you’re doing with the property (commercial vs residential), what you potentially could do (e.g. build a commercial tower) and (worst of all) if you’re a foreigner or Canadian. So I consider it an oversimplification to imply that property tax is just based on land value.
The Assessment Act, which I posted a link to, says no such thing. It does say the following.
There are however situations where a property may be taxed at less than market value.
At what point have they not “brought it upon themselves”? For example, you seem fine with the idea that someone needs to pay vacancy spec tax because their fully occupied premises could be torn down and rebuilt with higher density residential.
But, let’s say the owner of all this is from Seattle. Now the spec tax that they have “brought upon themselves” is 4X higher than a BC resident owning the same thing. Has that Seattle owner of a commercial property in Canada really brought all that “nonsense” on himself, or does the spec tax need a rework so it makes sense.
Sounds like these commercial property owners kind of brought this upon themselves. They complained that commercial property that got rezoned to joint commercial/residential use should not all be taxed at the (higher) commercial rate. Sounds like BC assessment listened and is starting to give split assessments even for properties that don’t have any residences built yet. However, since the residence “portion” is unoccupied it (could) fall under the spec tax.
True, but its more complicated than that, because commercial rates are 4X higher than residential rates, and the govt gets to assume diffferent uses for different property taxes. For example, they can charge commercial rates on the basic property tax which assumes commerical use, and also charge spec tax which assumes the unbuilt air is residential.
Spec tax is a type of Property Tax. https://www2.gov.bc.ca/gov/content/taxes/property-taxes
There’s also spec property taxes that will be payable on unbuilt air above land that is occupied.
https://vancouversun.com/news/local-news/dan-fumano-b-c-government-to-review-new-taxes-impact-on-small-businesses
“May 15, 2019
Finance Minister Carole James says her government will review the fact that new B.C. anti-speculation taxes appear to apply to the air space over the heads of some small businesses during a broader study this summer of the property assessment system.
James spoke Wednesday after a report earlier this week showing how two new provincial taxes could hit the air space above some commercial properties, including many local mom-and-pop businesses.”
But this is part of the market value of the land. For example my brother-in-law just bought an old house in North Van. The house is assessed at less than $50,000, but the land is assessed at $1.5M. This 1.5M is not based on the current house that is on the property, but the potential of what can be built on it.
This whole argument about the city taxing the “air” is misleading. They are taxing the land. And land value can skyrocket if the land gets rezoned to allow high rises. The problem in a lot of these cases is that commercial rental agreements often have the tenant paying property taxes, so when land value shoots up their costs go up, but they don’t reap any reward for the increase in land value. The tenants can no longer afford to stay. Than the owner can sell to a developer and make a big profit. Progress!
No, for some types of zoning, property taxes are not just based on current market value.
They are based on the assessement, and the factors in the assessment can vary depending on the zoning. In some commercial zoning, development potential is part of the assessment , and taxes the air space above the buildings as if there were commercial properties located there. Here’s one of many articles on the topic.
https://vancouversun.com/news/local-news/tentative-dan-fumano-column-on-new-property-taxes
“Like other commercial tenants, he has long paid some amount of tax on the airspace above his business. That’s because B.C. properties are assessed — and taxed — based on their “highest and best use.” Effectively, that means older businesses in single-storey buildings, like Tuesdays’, are assessed on their development potential, which could be a multi-storey building with commercial space on the ground floor and residential units above.”
The BC govt are extending this to taxing airspace for school tax and spec tax (if the commercial zoned property is also zoned residential) , starting next year. The govt exempted spec tax on airspace for one year, but that’s running out.
“Now, Wener worries the airspace above his West 4th Avenue business will eventually be hit with two new taxes from the B.C. government: the so-called speculation tax and the additional school tax”
Patrick, the solar quote was from Shift Energy Group
“In the case of false “personal use” the laws should have enough bite to make it worthwhile to pursue and enough of a deterrent so this doesn’t happen as often as it does. As it stands the laws are toothless.”
The law you are talking about was amended in 2018 and compensation is now 12 months rent.
Not really because the buyer is the one that needs to do the due diligence. What can an unrepresented seller really come after you for? That they sold the home for too low? Their problem.
With an unrepresented buyer you are just opened up to a lot more potential problems.
True. But when a buyer with agent buys from unrepresented seller (sale-by-owner), the agent normally asks only buyers agent commission from the seller. That is more work/risk involved as well, right?
Property taxation in BC is based on current market value, not what the property might sell for if fully developed. If your property is rezoned to duplex and the lot value increases because of that, your assessment will go up by that amount, but the improvement part will not be affected. That’s assuming the lot value went up in the first place. In Vancouver it’s gone down since the duplex rezoning.
Also in BC there is a legacy assessment for those owning a property for 10 years or more. If the property is upzoned, the lot assessment stays based on the previous zoning.
http://www.bclaws.ca/civix/document/id/complete/statreg/96020_01
Just to want clarify. In Vancouver, the new zoning rule allowing duplexes in SFH areas has a very clear statement from the city: “the new duplex option would not allow an increase in floor area over what is currently allowed in these areas. This approach is expected to limit any potential land value escalation.”
So in there, building a duplex in a lot doesn’t increase the max house size allowed (unless it is an addition of an existing SFH), that is real density increase and wise one. But in Saanich now (not sure in Victoria), say in a lot which allows max 2500 sqft SFH, if it is rezoned, you can build a duplex that doubles the size to 5000+ sqft. That is land usage density increase, but NOT real density increase. So if we open up duplex rezoning to all areas like Vancouver did, the city also has to change building bylaw to limit size of duplexes as Vancouver did.
Perhaps, but govt automatic rezoning is an example of “Hi, I’m from the govt and we are here to help you!”, which might affect you more than “one iota”.
Rezoning has been used as an excuse to raise Property taxes, based on the “highest and best use” of a property. For example, if the vacancy rate stays low, and we have run out of low hanging fruit to tax (not enough foreigners with spec homes ), the next likely target would be people “under-utilizing” their properties. If you’re zoned for a duplex, but hogging it all to yourself with a single home, aren’t you taking up space for two households? Shouldn’t you be taxed as such (and pay the tax that both sides of a duplex would pay)? Vancouver has been doing this “highest and best use” tax method, including taxing the air above (Commercial) buildings. And they’re scheduled to be charging vacancy/spec tax for the “air” above residential zoned “not tall enough” apartment buildings next year, unless they reconsider that.
I don’t see why residential areas would be immune from this “highest and best use” treatment.
Sure, but that doesn’t mean it’s worthwhile. Just because you are doing something for the right reason, doesn’t mean you should be doing it. I’d argue that if you want to fight crappy landlords doing renovictions you’d be better off fighting for tougher legislation than “winning” against an individual where the punishment does or nothing to dissuade him from ever doing it again.
I’ve discussed pursuing small cases with my lawyer. Often it’s not worth your own time, energy and frustration.
In the case of false “personal use” the laws should have enough bite to make it worthwhile to pursue and enough of a deterrent so this doesn’t happen as often as it does. As it stands the laws are toothless.
Leo S – “..switching zoning from single-family to duplex..”…” Then along the arterials it can basically be four-story low rises in many areas with no negative effects.”
You probably know, a vast rezoning to allow duplexes is what Vancouver city council did a year ago: “Duplexes are now permitted on 99 per cent of Vancouver’s single-family zoned properties.” (https://www.cbc.ca/news/canada/british-columbia/vancouver-s-new-duplex-rules-explained-1.4831741)
They’ve also has made big zoning changes to arterials like Cambie St, Oak St, Granville St, etc, allowing low rises and row townhouses where they weren’t permitted before. Those arterials have already been crazy busy for years, despite more robust public transit options near there.
Introvert – “significant changes in human history have come about because someone (or some group) began questioning something.”
Its one thing if you just question quietly to yourself , and just quietly leave at at that — in case that’s what Leo S means. But yes, if you question, research, understand, discuss, and enough others gradually do the same, every now and then when public sentiment is strong enough and somebody proposes what seems could be effective policy — yeah, it can affect end up affecting our way of life.
My mere posting clients always call me when they have a buyer without a realtor interested in their property and I tell them get the buyer to have their lawyer draft it up. If they are willing to spend a couple of hundred bucks with their lawyer you know they are somewhat serious and not kicking tires.
The best reason to fight anything
No. Better off finding a lawyer. But then people don’t want to spend money on offers that might not be accepted. Can’t have it both ways
Cadborosaurus:
Why would anyone fight it other than out of principle? My assumption is the amount awarded wasn’t worth the time fighting it, let alone covering her troubles and costs beyond that. Safe bet it wasn’t punitive enough to prevent the landlord from considering doing it again. I mean, he’ll probably factor the potential cost in, but I really doubt it’s a case of, “Oh wow, that was a mistake, I’m never doing that again.”
From on the ground experience the listing agent would be much more likely to provide a discount to the seller in the scenario of the ” $1K fee offer-writing only buyer agent” than an unrepresented party. Unrepresented party is a lot more work/risk so I doubt on average listing agents would give as much of the discount.
That being said as a buyer good luck finding a $1k offer-writing agent only. My brokerage is has the lowest fees in Victoria and it is $300/transaction + $50 VREB so that is already $350. Not to mention monthly brokerage fees and VREB, etc.
Reality is you won’t find a $1k only offer writing agent.
The only realistic way to do this is to get a cash back agent that will physically show you the properties.
Only makes sense if the listing agent is passing on the savings of the $1,000 cooperating commission to the seller; otherwise it doesn’t.
However, as you point out it is extremely transperent now so I would guess most agents would have to pass on the savings otherwise seller is going to be like “what da?”
It perhaps wouldn’t affect your quality of life, but I’m saying it would affect mine. People feel differently in different circumstances. I’m also not sure just how “gentle” and “gradual” the increase in density would be, once zoning changes begin in earnest.
Increased density means more cars driving on residential streets, more cars parked on the road, more noise from cars, more noise from people, more noise from dogs barking, more pollution, more litter, more couches and mattresses dumped on corners, and just a more busy atmosphere. These are things that don’t appeal to me personally.
You questioning the long-term consequences of pumping CO2 into the atmosphere has no impact on real world emissions so it’s immaterial.
What a silly thing to say, Leo. Many (most?) significant changes in human history have come about because someone (or some group) began questioning something.
Very good. So in the cases when there is no buyer agent or $1K fee offer-writing only buyer agent, the seller could see and save some of commission payout that would normally goes to the buyers agent?
Personally, we support all the corner lots with good sizes to become duplexes, including our own street (actually the corner lot in our street has always been a seven students house for 15+ years with little issue)
In the past they weren’t necessarily However after the new regulations came in the listing agent has to present a form showing exactly what compensation he or she will receive based on a specific offer, in dollar terms. So there should be no more confusion there
It seems the majority of evictions by landlords are based on non-payment of rent in BC, not for landlord use of property or renovation (this is less than 5% of disputed evictions based on RTB data). This may be due to generally high rents causing tenants to have difficulty paying rent, and landlords needing rental income to be able to afford their mortgages due to high real estate prices so they are more likely to move to eviction more quickly. https://globalnews.ca/news/4051813/vancouver-landlord-eviction-disputes-sfu-study/
If so, would the listing agent passes some of the reduced fee to the seller when the buyer has no agent or a $1K commission “offer-writing only” agent? Or is the seller even aware the true break-up of the commission in those cases?
I’ve heard good things about ‘Power to the People’.
I think this is where we diverge. I don’t believe that switching zoning from single-family to duplex would affect me one iota since right now there is no negative affect from neighbours and adding perhaps 30% more people in the same area very gradually over decades would make no noticeable difference to my quality of life. Then along the arterials it can basically be four-story low rises in many areas with no negative effects.
You questioning it has no impact on the real world population though so it’s immaterial
Please don’t generate a portion of your own electricity. We’re building a $9 billion dam, you see.
Everyone has their contradictions.
I personally can’t support cramming more and more people into everywhere and pretend that the results are, in every way, good.
I’m all for density downtown. Build as many high-rise condos as you want; that’s fantastic. I’m even willing to pay substantially higher taxes to fund clean transit options, so that people outside downtown can get to work efficiently and sustainably. But I’m simply not in favour of jacking up the density of every suburban neighbourhood in the core. Density is already plenty high in places like GH, where basement suites and houses rented by seven students are common. I can live with the density we’ve already got in GH, but I can’t support increasing it. It’s UVic’s problem that, for decades, it didn’t adequately build on-campus residences as it simultaneously tried to increase enrollment every single year. More people around me doesn’t increase my quality of life or the livability of the neighbourhood; in fact, it has the opposite effect.
And perhaps my views on density and the environment aren’t as contradictory as they seem at first blush: I also question limitless population growth (locally and in general) and limitless economic growth.
I’d suspect for most people, climate “concerns” are either virtue signaling, or, they are willing to do things until they’re inconvenienced by it in some way. It’s exactly the same phenomenon where people can support tax increases, as long as it’s not them that have to pay it, or much of it. Or people who wear a ribbon to “prevent” child abuse. Whatever, it doesn’t matter what the cause is, it’s whatever the flavor of the day is that people feel they can use to claim they’re morally virtuous.
Ah, I love being so cynical…
This info is quite out of date based on what I have seen. BC Hydro really does not want you to put up solar so they seem to actively discourage it
Thanks for the info. Yes, please post company info if available. Glad to hear about Hydro as a battery, I didn’t realize BC Hydro did the net metering. I found their page about it, and here (below) is some info from it. They quote similar numbers to yours above. I’m definitely interested, just hoping to find a single company to handle the full installation, at a price comparable to your numbers above ($2.40/W) or BC Hydro numbers (below = $14500/4400kWh = $3.30/W). Hydro claims a 23yr payback which as about 4% annual, which is great. Of course there must be some maintenance over that period, but The main motivation here isn’t to make money.
https://www.bchydro.com/work-with-us/selling-clean-energy/net-metering.html?WT.mc_id=rd_netmetering
“A typical home generally consumes 11,000 kWh/year. A typical solar installation on a residential roof is 4 kilowatt (kW) in size with 16 solar panels, which in B.C., generates 4,400 kWh of electricity over a year.
On average, solar systems of this size can cost about $14,500. Based on BC Hydro’s step 2 of its Residential Conservation Rate, payback on your investment is about 23 years (including savings from the Rate Rider and GST).”
“ Buyers agent must personally show property to buyer or coop fee reduced to $1000”
So common on listings now. Makes sense, why would a listing agent want to do all the work of showing an unrepresented buyer and then have that buyer turn around and use an agent after all.
Court system does usually have a bit of common sense.
I think you views on climate change and zoning are irreconcilable. From a new UN report:
I don’t have time to answer all of your comments from last thread but I’ll just give you a real life example to the one above.
This afternoon I am showing a condo and this is what the listing agent has in her realtor notes/listing contract.
“Buyers agent must personally show property to buyer or coop fee reduced to $1000.”
Agents tried the whole “just write offers” approach and within a year (back in 2013 or 2014) the listing agents starting using the clause above.
Basically, this seems to defeat the whole purpose of a community plan which is to provide long term stability to an area. It simply means endless spot zoning.
When the local TV news did a story on some development in Fairfield recently, it was mentioned that Fairfield’s population has grown by only 85 people in the last 45 years.
Now that’s the kind of “gentle density” I can get behind!
Sanity prevails. Although this line hurts my head “Wells raised more than $10,000 through the crowdsourcing site gofundme.com”
Absolutely could happen. I think it depends on how much longer the economy stay strong. If it keeps going for another year or two I think we will see prices rise somewhat again. If we wouldn’t have had the stress test, we definitely would have higher prices now. The run up and prices was quite violent but it was quite short as well, previous bull markets went on for much longer.
Brother in law just installed 9kW for $1.3/W by doing the install himself. Very good price but of course not an option for many.
Just heard someone got a quote for $2.40/W fully installed with warranty. Will try to see if I can find out more about what company that was with.
Getting a battery is pointless because Hydro is the best battery.
Punch your quote into this spreadsheet calculator to see return https://househuntvictoria.ca/2017/10/28/solar-power-does-it-make-sense-in-victoria/
At $1.3/W the return is 5.5% annually which is excellent. At $2.4 it’s 3.2% which still isn’t bad for risk free after tax return. It’s getting there. I suspect we will be seeing tax incentives in the next federal budget
1.5GJ for just the hot water here. New high efficiency Rheem tank. 4.5-5.5GJ in the winter with rare fireplace use. Heck the pilot lights alone seem to blow through 1.5GJ on their own if I leave them on
This news will warm the cockles of Leo’s heart:
https://www.timescolonist.com/real-estate/legal-challenge-against-gonzales-townhouse-project-fails-1.24019031
And perhaps this will too:
https://www.timescolonist.com/business/all-electric-taxi-fleet-approved-to-roll-on-greater-victoria-streets-dec-1-1.24018910
I think we would need a lot more detail before drawing too many conclusions from the forced to move column.Our neighbour inherited five houses that her father had used as rentals. After dealing with a couple of bed tenants along with increased costs all five where sold and converted to principle residences. It would be interesting to find out the stats on conversion of rental units to principle residence in BC.
Well if that question interests you, you must also wonder why BC’s rate of people fortunate enough to move to a better neighbourhood is higher than any other province. Of course to me that is good housing news, and doesn’t fit the “BC housing crisis” narrative, so perhaps you’ll have an explanation that fits the “crisis” narrative.
Alternatively, perhaps some B.C. people just interpreted the questionnaire a little differently this year, or it’s a small sample within the range or error, and those stats mean nothing, and differences will disappear next year. Who knows how many people pay attention to the StatsCan definition of “were you forced to move”? At a minimum, we would need actual govt BC eviction stats, with reasons for evictions, to draw any direct conclusions about relevance to measuring the housing crisis.
Evicting a tenant for personal use of a family member could also be correlated to rent being so high. If your adult child cannot afford to rent (or buy) on their own due to high prices, I have seen a lot of examples where the parents will go in on a house together so the adult child has their own space.
Patrick of course that includes evictions of shitty tenants too… I was speaking in terms of why is BC’s rate of forced moves higher than any province? There’s shitty tenants across the country I don’t think we have a higher rate of eviction for cause here vs. anywhere else. What we DO have is a higher rate of renters vs owners and a rampant jump in prices of both selling price and rental price for homes. This explains both forced moves because of property sale / personal use, and also renovictions to cash in on higher rent from a future tenant.
It’s nasty for sure, but keep in mind the shoe will eventually be on the other foot. I remember when we went to rent our place several years ago, landlords were doing first and last free and still had trouble finding anyone. Able to really negotiate some nice deals – we could have picked from so many with virtually no competition.
People always think that right now is the way it will always be and always has been, hence new rules are needed, government should step in etc. It’s complete illusion. Having said that, rules should be in place and enforced as appropriate. A landlord claiming a unit for personal and just re-renting it out immediately is poor form no matter the market.
This number of forced evictions would include tenants evicted for non payment of rent or other cause (damaging property, noise etc.). Unless you also have a “fairly accurate” estimate of that, don’t blame all evictions on “a*hole landlords” and the housing crisis.
Re: forced moves at 10%…
I think this is fairly accurate. Patrick you say that landlords can’t evict due to a housing crisis but they sure do. I’m pretty savvy with RTB and rules and have had almost a dozen friends contact me for help with interpretation of those rules over the past couple of years while their landlords attempt to rennovict them.
Landlords will claim personal use of property, dire renovations needed or will just sell the house out from under the renter’s and the new owner claims their kid is moving into the basement suite. It’s all to get higher rent from the next tenant and very stressful and hard to fight as a tenant. Even when rules were being broken, most of my buds chose to just move to get away from asshole landlords in these scenarios where they felt they were being pushed out. One friend successfully proved her landlord didn’t use the space for personal use and re-rented it for substantially more, and she was awarded a small amount for her trouble of uprooting 3 kids and moving to a much more costly home. Most people won’t even fight this.
Patrick – “My argument isn’t that the population isn’t aging. It is that Canada’s population is rising”
Okay, so yes more people means more homes. I was answering your references to younger immigrants, and comparisons of 70+ age range to 0-25.
Circling back to the Zillow article this started with below, the U.S. too is projected to have immigration growth. And yet their research talks about the possibility of an unusually large inventory supply coming online. I guess you are saying, who cares because there will be enough people to buy it up.
“You shouldn’t be surprised at people’s support of taxes that are payable by people other than themselves”
It is indeed surprising when many Vancouver homeowners support policies which obviously will have the result of downward pressure against Vancouver prices, and an end to the real estate party. It is still a loss in value for a great many owners.
In 2016, “roughly two-thirds of residents in the metropolitan (Vancouver) area wanted home prices to fall, including half of homeowners. More startling was that one in five homeowners in the survey expressed a desire to see home prices fall by 30 percent or more.”.
https://www.nytimes.com/2018/06/02/business/economy/vancouver-housing.html
You shouldn’t be surprised at people’s support of taxes that are payable by people other than themselves. If you want to be surprised, ask the 1% of people that have to pay the spec tax if they are in favor of it. Since 99% (like me) don’t have to pay the tax, the signifcance is that the support of it is well below 99%.
BC seems like to stand out .. seems like high house price makes forming house hold hard ..
I believe it might be Generated based on their email address but I’m actually not sure
My argument isn’t that the population isn’t aging. It is that Canada’s population is rising relentlessly in spite of that- projected out at least 40 years! Not like Japan or Germany that is falling. Hence the need for housing ever increases. More people = need for more homes, regardless of their age.
So the population rises from average age 40 to average 45 in the next 40 years…. so what?
These are living people, that will occupying dwellings like everyone else – they don’t disappear. If anything, seniors take up more dwellings, with lower average household size. Senior’s homes take up residential space and resources just like other residential homes. Except there will be 25% higher population. I doubt that a shift in age of 5 years is going to somehow overcome the relentless population increase.
With current trends, Victoria’s population would be just under 500k people in 25 years – how would there be a tsunami of houses for sale as that happens, and not a larger tsunami of buyers? For example, don’t you think there would be lots of buyers for the Oak Bay or Saanich SFH for sale? In case you haven’t noticed, there is almost no net construction of SFH in Core Victoria, and we have rapidly falling SFH numbers as a % of dwellings (SFH now down to 38%). Yet 78% of people still want SFH. All that needs to happen to prevent the “tsunami” selling from affecting prices is a slowing of new home construction. That will happen naturally (as it always does), because any core homes (and especially SFH) for sale would be in greater demand than new Langford shoe boxes in the sky.
In our little street, there are more than 75% of residents belong to “Silver Tsunami” group or older. During past 10 years, about half of these families lost the husbands (past away) with the wives in their late 60s to early 90s left. But no one wants to move and everyone want to stay in their homes until the very end, so only one house was sold after the wife (age 92) was also gone.
Also I would suspect that high percentage of the new comers to Victoria are of the “Sliver Tsunami” group, comparing to other cities. We often run into these age 50+ couples from Calgary or Edmonton during open house of fancy/new SFHs …
Patrick – “Stats Can population projections has us rising constantly…Remember that immigrants are largely young adults (average age 28) ”
The very Statcans study which you cite/link to knocks down your own argument, on the same linked page.
“According to all selected scenarios, the proportion of seniors aged 65 years or over would continue to increase in the future. This group would represent between 23% and 25% of the population by 2036 and between 24% and 28% by 2061, compared to 14% in 2009”
And yes, the StatsCan study acknowledges they have taken immigration into account: “Migratory increase would be the main driver of population growth in all scenarios.” But even so, the proportion of seniors aged over 65 keeps going up in the future.
“According to the medium-growth scenario, the population aged 80 years or over would be 2.6 times higher in 2036 compared to 2009, and 3.9 times by 2061. It could reach 3.3 million persons by 2036 and 5.1 million by 2061.”
“According to the scenarios, median age would vary between 42 and 45 years by 2036 and between 42 and 47 years by 2061, compared to 40 years in 2009.”
It’s going to happen, by all StatsCan scenarios.
Stats Can population projections has us rising constantly.
“ According to the medium-growth scenario, the Canadian population would reach 43.8 million by 2036 and 52.6 million by 2061.” https://www150.statcan.gc.ca/n1/pub/91-520-x/2010001/aftertoc-aprestdm1-eng.htm
Those are rises of population of 18% in next 17 years, and 43% over 42 years. So roughly 1% per year, and that puts us 25% higher population in 25 years. Remember that immigrants are largely young adults (average age 28) and there’s 9 million of those coming in the next 25 years (+9m people, requiring 4.5m additional dwellings). Just when is this silver tsunami supposed to peak, and why won’t the relentless 1%/yr population increase have overwhelmed it?
“That “silver tsunami” has been conventional wisdom for a long time, but it hasn’t happened (boom, bust and echo was published 23 years ago in 1996!)”
Haha, yes I’ve seen that book too. Contemporary data/analysis is more interesting than 23 year old predictions… though if I had time it’d be interesting to go back and see what the book got right (well, so far — the Boomers are still very much here for quite a while yet).
“If you look at a population pyramid, to see things in 25 years, trade the 70+ group for the 0-25 group. Looks like an overall gain in house buyers to me, not a loss.”
Baby boomers were born 1946-1964, so they’re actually 55-73 years old right now. In line with the “Silver Tsunami” being about boomers, compare the 50-75 group with the 0 to 25 group.
The 50-75 group exceeds the 0 to 25 group by about 10% (numbers in link below).
The current 55-59 age group in Canada is at 2.75 million, far exceeding every other age grade, and which (if recall correctly) is a dynamic that has historically never been seen in Canada ever before. You can see that cohort of boomers moving along from the “50 to 54” category to the “55 to 59” category within the last five years.
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1710000501
That “silver tsunami” has been conventional wisdom for a long time, but it hasn’t happened (boom, bust and echo was published 23 years ago in 1996!). If you look at a population pyramid, to see things in 25 years, trade the 70+ group for the 0-25 group. Looks like an overall gain in house buyers to me, not a loss. https://www.populationpyramid.net/canada/2019/
Maybe will result in slowed new construction, but I don’t see a switch to negative total dwellings needed. Especially when immigration (1% of population per year, average age 28) is added to that pyramid.
Zillow reports on the “Silver Tsunami” that is coming to the U.S.:
“Currently, 33.9 percent of owner-occupied U.S. homes are owned by residents aged 60 or older, and 55.2 percent by residents aged 50 or older… Over the next 20 years, more than a quarter (27.4 percent) of the nation’s currently owner-occupied homes are likely to hit the market as their current owners pass away or otherwise vacate their homes…Places likely to be most impacted by this upcoming Silver Tsunami include both retirement hubs and regions where young residents have left…Housing released by the Silver Tsunami will provide a substantial and sustained boost to housing supply, comparable in magnitude to the fluctuations that new home construction experienced in the 2000s boom-bust cycle.
https://www.zillow.com/research/silver-tsunami-inventory-boomers-24933/
No, this isn’t the U.S., but I can’t help wondering to what extent Victoria will be in for the same.
That said, Its not necessarily clear what a Silver Tsunami of inventory 8-10 years will mean, especially if new construction between now and then is slow enough to offset the effect.
Agreed. They are thoughtful predictions based on previous years’ activity, not just a simple extrapolation. Please keep ‘em!
There are also rental condos, which comprise much of the rental stock in metro Vancouver, and whole rental houses or the primary part of houses with suites or duplexes.
No way do I buy that 2/3 of BC rentals are secondary suites.
Landlords can’t evict people (forced move) because there’s a housing crisis,. They can evict to renovate (or less likely from tenant not paying rent or the owner wants to move in). That “forced move” metric could just as easily be a measure of renovation activity. B.C. has a much higher spend on construction than ROC, and this applies to renovations too. With more renovations, we’d expect more renovictions, and so for me this metric this doesn’t show “the housing crisis in one number”
A better metric of unaffordability is on that chart. It is people who move to “reduce cost”, since that indicates unaffordable housing. There we see BC only marginally higher than ROC. Moreover we see that BC also leads the ROC in people moving to a “better neighborhood” which is the opposite of what we would expect in a BC unaffordable housing crisis. If the crisis is so bad, how come 8% of BCers moved to a ”better” neighborhood, and only 6% moved to a “reduced cost” neighborhood?
CBC article a few days ago (https://www.cbc.ca/news/canada/british-columbia/bc-building-code-secondary-suites-duplexes-townhouses-1.5369390): “David Hutniak, chief executive officer of LandlordBC, says he supports the move because those secondary suites represent about two-thirds of all rental housing.”
It is hard to believe 2/3 of all BC rentals housing are secondary suites, not purpose-built rental. But that probably is one of the main reasons of high forced moving rate in BC. Hopefully the new rule implemented last year (that landlords can’t force tenants leave after end of a fixed term) would help to reduce forced rate.
To be honest, I like the sales projections even though they’re not right.
Sorta gives you an indication of what the month will be like based on what we already know.
First