Evaluating the CMHC 2020 Victoria Outlook
CMHC published their 2020 Housing Outlook a little while back, which lays out their predictions for both the housing and rental market in Victoria, so let’s take a look at whether their forecasts seem plausible.
The first thing you’ll notice is that all of the forecasts are a pretty wide range. On housing starts, they say that “starts will continue to fall” but their chart shows a range indicating anywhere from a significant increase to a significant decrease in housing starts in 2020.
If you look at the forecast for single family detached starts it becomes even broader. Apparently in 2020 we will see anywhere from an unprecedented collapse in detached starts to a complete rebound. While I appreciate the acknowledgement that forecasting housing is inherently uncertain, that’s not much of a forecast!
The CMHC predicts an increase in rental vacancy rates, which is essentially guaranteed given our sky high rental construction rate that is resulting in a big wave of completions throughout 2020 and beyond. What I’m surprised by is how gradual they think the vacancy increase will be. They predict a a small increase from 1.2% to 1.5% this year, then only a tiny bump to 1.6% in 2020 and 1.8% in 2021. That just doesn’t make sense to me given our rental construction. Let’s take a look at how vacancy rates have trended in the past and how it compares to rental construction rates.
Personally I think we will see much more pronounced increase in vacancy rates, towards 3% by 2021. The only way to explain CMHC’s forecast is to assume that we will see a large influx of out of town residents that will occupy all those new rentals. That’s certainly possible but CMHC also predicts that “Lower migration to Victoria from other parts of British Columbia as well as the rest of Canada will result in slower growth for the young adult population. In addition, as young adults age they become more likely to exit the rental market and become homeowners”. We’ll see what happens but demand dropping while supply spikes is not a recipe for a stagnating rental vacancy rate. Either way we agree that rents will continue to rise for a few more years.
The prominent prediction on the first page is that “housing demand will slow from 2019 to 2021. That aligns with my view that we are in the first third of a longer term cooling cycle in Victoria real estate. However that doesn’t mean we can’t see price gains in 2020 if the economy holds and we continue to see the recovery from the shock of the stress test. Remember that the overall market still leans towards sellers, even if the higher end is sluggish.
On resale prices, the CMHC predicts that properties over $1M will drop while lower priced properties appreciate and condos outperform detached housing. While it is certainly true that the high end is weaker, the reality is that outside of true luxury over $2M, it is not really possible for these two market segments to go in opposite directions in any significant way. The low end is certainly hotter now, but that will equalize relatively quickly if prices in the low end rise. I’m also not convinced that condos will outperform. In slowing markets condos tend to do worse, and there are are a number of headwinds for condos including the ongoing speculation & vacancy tax, AirBnB restrictions, and spiralling strata insurance rates. The one thing that condos have going for them is better affordability, but if I had to make a bet I would still bet on low end detached.
On interest rates, the CMHC doesn’t predict much movement, with rates nudging upwards by half a percent in the next two years. I doubt we will get to any increases in rates. Best case scenario if the economy holds at its current sluggish pace of growth we can expect a hold on rates, but any tilt towards recession will quickly send rates downward.
Forecasts are certainly difficult in real estate, as is evident from the mixed results of our own annual predictions. That’s likely the reason that no one else seemingly has any interest in reviewing the accuracy of their previous forecasts and would much rather move on to making new ones. However without a critical look we don’t get better, plus it’s fun to pick these apart (no offense to my friends in the CMHC!).
New post: https://househuntvictoria.ca/2019/12/09/shocker-new-homes-occupied-by-real-people/
“For example, Leo posted a story about an “amateur” landlord couple in Calgary with one rental unit, that will be selling it to fund retirement. That’s one more forced eviction, and no “evil” story or greedy profit motive behind it. There are members here in this board, who own a house and rent out a suite and plan to take the suite over themselves when their family expands.”
Of course – that’s perfectly reasonable. I don’t think anyone has a problem with landlords taking back possession of a rental unit, so they can use it for something like that.
The problem was with landlord’s taking back possession under the guise of moving in or renovating, and then tossing the rental unit back on Craigslist 2 weeks later for twice the rent. Those are the types of forced evictions that are considered to be a problem.
You are correct that purpose built rental housing is more secure, and so it’s good to see construction booming.
Dad, I agree with your post.
Yes, that amateur investor landlord problem is worse in BC though, because we have so few purpose-built rentals, compared to other parts of Canada. We have many more “amateur landlords” as you call them. But those aren’t evil people, they are just mum n pop landlords that own 1 or two places. You shouldn’t be surprised to see them evict tenants when their circumstances change.
For example, Leo posted a story about an “amateur” landlord couple in Calgary with one rental unit, that will be selling it to fund retirement. That’s one more forced eviction, and no “evil” story or greedy profit motive behind it. There are members here in this board, who own a house and rent out a suite and plan to take the suite over themselves when their family expands. That’s entirely reasonable, yet it will be a “forced eviction” stat, and a renter turned out into low vacancy market to find a place for rent. That wouldn’t happen if we have more purpose built rentals.
The solution is more “professional landlords”… ie purpose built rentals that you can rent forever. Housing policies friendly to purpose built rentals will get the numbers up to where they should be, and then people in Victoria can rent one of these and not get kicked out by some near-retirement boomer “amateur landlord” who wants to fund his retirement.
It is weird though isn’t it because talking about others moving to Victoria and others procreating is not really doing anything personally and it kind of shifts the focus from personal action and responsibility to theories that don’t require this? Not to say the debate is not useful and that maybe we can all vote based on our views on this, but there is a Charter right to live and seek employment anywhere in Canada.
“If your point is that previous NDP rent controls in the 70s killed new rental construction, and that led to zero vacancy in 1981, even years after the rent controls were removed, I agree with that!”
That is only part of the story. BC started introduced strata title in 1966 when the Strata Titles Act was brought into force. I’d have to look at the data again, but as I recall there wasn’t a boom in purpose built rental construction after 1983. It was still more profitable to build condos even in the absence of rent control.
“The current NDP may be repeating the same mistake by limiting rent increases and other tenant friendly measures. The big mistake in the 70s was tying the rent to the unit, and that same bad idea is being floated today by some groups. The irony is that “tenant friendly” meddling by the government can backfire, and lead to inadequate supply of new housing, and “tenant un-friendly” low vacancy rates.”
Implementing vacancy control would be insane, and I don’t think there is any interest in doing that. The current government seems pretty centrist. Maybe it’s the red tory influence of the Greens. They aren’t my grandfather’s or my father’s NDP, that’s for sure.
I have mixed feelings about rent control. The benefits tend to accrue to older folks who are lifelong renters at the expense of younger ones who may only be in the rental market temporarily – that is not necessarily a bad trade-off. On the other hand, it may encourage some older folks to become lifelong renters who otherwise wouldn’t be, and people are still vulnerable to demovictions, as we’ve seen in BC. Not an ideal social policy.
As for recent tenant-friendly changes, I don’t think they really move the needle much for landlords, especially in the primary market (where vacate clauses were rarely used). Lots of landlords in the secondary market used vacate clauses, because they wanted to easily get rid of tenants they didn’t like…and also to circumvent rent control.
Discouraging landlords from nudge nudge wink wink “moving into the rental unit” or evicting tenants so they can “renovate” makes sense, and doesn’t effect 99% of landlord’s anyway. It might even discourage some speculation by amateur investors, who were able to evict tenants paying below market rent with impunity.
I’m not promoting sprawl. I’m promoting limiting densification and limiting sprawl, which would effectively slow population growth in the region. And because more people in Victoria won’t make anything better in Victoria, slowing growth is a good thing.
I am being selfish, because I don’t want Victoria to turn into Vancouver, which has the worst of both worlds: high density in many parts, and endless sprawl.
Concern about population growth—locally and globally—is valid, because the natural world is never improved with increasing human numbers. And the natural world is in trouble.
Have you noted what my handle is, good sir?
I think we get along pretty well.
Sorry, I don’t follow that reasoning.
If the non-rent controlled places (>$400 monthly rent) were too expensive for many people, then some of them would be vacant and the overall vacancy rate wouldn’t be “defacto zero”. Because “too-high” rents won’t lead to zero vacancy, they’ll go unrented and cause high vacancy.
Anyway, thanks for the discussion.
First of all the units that were still rent controlled were priced under market. That gives you no vacancies in that sector, as the critics of rent control loudly pointed out at the time. The article points out that the uncontrolled units were too expensive for many people. Thus for them, there were de facto no vacancies, since you can’t rent something if you don’t have the money.
By the way there is no date on the article and I’m not the one claiming it was written in 1981.
Patriotz,
If your point is that previous NDP rent controls in the 70s killed new rental construction, and that led to zero vacancy in 1981, even years after the rent controls were removed, I agree with that!
The BC NDP rent controls of the 70s did hurt the supply of new rental construction, which wasn’t instantly fixed when the rent controls were removed (removed Partially in 1977 and Fully in 1980). The current NDP may be repeating the same mistake by limiting rent increases and other tenant friendly measures. The big mistake in the 70s was tying the rent to the unit, and that same bad idea is being floated today by some groups. The irony is that “tenant friendly” meddling by the government can backfire, and lead to inadequate supply of new housing, and “tenant un-friendly” low vacancy rates.
Well yes, as I stated, and is explained in the article quotes as I posted, some rent controls were still in place in 1981, but only for lower priced units under $400 per month, which wasn’t much help as many rents were in the $500-$700 range (as pointed out in the Victoria newspaper article Leo posted)
Your point was “Of course you will get a de facto zero vacancy rate from that.” Which to me doesn’t even follow logically (because vacancy is affected by “supply and demand”), but even under your theory, it could only be true for the lower rents that were under $400 in 1981. If you want to continue to believe that having rent controls only for lower priced units under $400 “of course” produced a “defacto zero vacancy rate” in Victoria/Vancouver in 1981, you’d need to explain why, and not just state that it’s “of course” true.
The article Leo S posted states “Rental units not governed by controls are commonly $500 to $700 per month”, which indicates that at the time it was written unit based rent control was still in effect, except for properties exempted for being new builds or having “luxury” rents. Indeed a writer with a different ideological perspective (Shields was a long time NDP supporter) would have drawn a connection between rent controls and the rental shortage, and many others did just that.
I’m well aware that the controls were phased out in stages post-1975. However it’s quite clear that the near-zero vacancy rates which persisted up until the recession of 1982 were the result of rent control policies which were not completely eliminated until 1983, at which time they were nearly moot.
lets hope depopulation starts with you soon
I’m still learning about climate change. As far as I can see there is a locus of control issue. You might not be able to control population growth overall, but you can do many things and some things have a much bigger impact than others, including:
Too late for me, but turns out having one less child (or none) is the single biggest thing you can do to reduce your carbon footprint.
Next on the list, eat less meat and dairy, or an entirely plant-based diet.
Third, live car free or drastically reduce car travel.
Fourth, reduce or eliminate air travel. I’ve reduced, but I still take planes, only now I feel guilty. European airlines all offer a carbon tax credit for purchase when you buy a ticket. Not sure if it really works.
Densification is going to happen in some of the core areas, but I would appreciate it if there was a good master plan for creating green, walkable, communities and I understand why people who bought into a neighbourhood that was one way and had certain zoning don’t want to see changes after they’ve made a big investment both financially and emotionally. That kind of change is hard for a lot of people.
Buy buy Vancouver
Play about the 1981 bubble.
https://youtu.be/P7XlM2T9svo
Those whacky boomies
Sorry to hear, but it really isn’t about a green competition or something. Housing people sustainably is important and that can’t be done with sprawl. Might as well make the best of people coming here and provide diverse central housing options where they can do things like bike to work.
Anyway my older invite to grab a coffee stands I’m sure we’d get along better in person. 🙂
Introvert,
I am with you wrt reduce carbon footprint and control world population growth, but a person who truly cares about the environment would never promote urban sprawl.
The truth hurts.
Herself. But yeah, absolutely nailed it.
Hi, Leo.
I’ve been mulling this comment over for a few hours now, and I want to let you know that I resent it.
You seem to be implying that I’m an inauthentic environmentalist and, by contrast, you’re not.
We both live in the same size house, in the same neighbourhood. We have the same number of children (pretty sure). I think we vote for the same or similar parties in provincial and federal elections. You have one vehicle, I believe, and it’s electric. We plan to replace our one gas-powered vehicle with an EV. I don’t heat my house with fossil fuels at all; you’re aiming to do the same. Both our families seem to make many trips by bike. You were in Germany recently; I assume you took a plane to get there. I haven’t flown outside of North America, ever. And we don’t travel much, in general.
All this to say that you and I probably aren’t that different in terms of our carbon footprint, and in terms of our level of caring about the chemistry of the atmosphere and the future of the planet.
Almost all of the world population growth is projected to come from Africa.
?w=640
NIMBY attitude and ultra socialist mentality at taxing business to death making it impossible for industrial/manufacture to survive in BC.
Nope.
The 1972-74 Dave Barret NDP rent controls introduced by NDP got dismantled by the SoCreds election in 1975. As you can see below, they were dismantled in stages in 1977-83. But in 1977 they were removed for rentals over $400 and new builds, and 1980 removed entirely (except for “excessive” increases)
https://www.linkedin.com/pulse/ending-rent-control-part-i-history-controls-british-dale-schuss
“In 1977 the Social Credit government introduced a new Residential Tenancy Act that exempted units renting for over $400 a month from rent control and all newly built rental units.
In 1980, a year after re-election the Social Credit government took away rent control (and rents tied to the premises) in favour of a rent review system where the Office of the Rentalsman could adjust rent increases deemed too excessive.
In 1983, after another election where the Social Credit Party defeated the NDP, the government abolished the Office of the Rentalsman and with it brought in a new Residential Tenancy Act that eliminated all rent controls including rent review. Landlords were now free again to raise rents as the market would allow. These changes were also enacted to encourage landlords to build a lot more rental housing again; yet they didn’t.“
A lesson for Victoria…. Toronto had a building boom of high density towers in 2001, rising the vacancy rate from 1% in 2001 to 4.3% in 2005. During those 4 yrs, house prices rose 25%, and continued to rise after that. Rents rose during the 4 years (by a small 2%) and then conued to rise above inflation. And vacancies fell slowly to where they are today <2%.
http://www.torontocondobubble.com/2013/07/toronto-residential-vacancy-rate-1971.html
Rents https://www.torontorentals.com/blog/average-rent-in-toronto-since-2000
The Dave Barrett era rent controls were still in effect then. Rent increases were controlled even when tenants changed, thus preventing rents from adjusting to the market. Of course you will get a de facto zero vacancy rate from that.
Neither am I. That’s why I’m sure humanity will soon realize that 7.5 billion is more than enough of us, and that Victoria won’t be improved by adding 150,000 people over any time period.
The decoupling of the economy from resource usage is already happening?
No, it’s really not.
Cool article. And look they called sub 1% rental vacancy a crisis too. rental vacancy rates have slipped to one per cent. Says Bob Noseworthy of the Newfoundland and Labrador Housing Corporation, “I think it’s fair to say we’re in a crisis situation.”
Heck they even said sub 3% is a “danger level”
Also like this sentence “For the “boomies,” the drug generation of the ’60s, real estate has become the new addiction.”
When did the boomies become the boomers?
I’m not interested in defeatism. The human race is adaptable and our best chance is working to mitigate the issue
It does appear that Victoria’s vacancy rate was an ultra-low 0.1% in 1981, not only in the newspaper article that LeoS posted, but also in this Maclean’s March 1981 article.
(This was just before the interest rates exploded higher and the boom ended)
For some perspective, there were likely about 90k Victoria dwellings back then, and 40% were rentals that would be 90k* 0.1% * 40%= 36 total places for rent! Now, in the midst of our “crisis”, with our 1.0% rate, we have at least 10x that amount per capita for rent. So whatever you call it, Victoria vacancy rate was 10X worse in 1981.
https://archive.macleans.ca/article/1981/3/30/hunger-for-housing
“In addition to a 0.1-per-cent vacancy rate in Vancouver, Victoria and St. John’s, the rate in 19 of the 25 major Canadian cities has slipped to the danger level of below three per cent.”
Metro Vancouver had that population back in the 1950’s, and the quality of life back then looks like an impossible dream compared to today. But there were a lot fewer cars per capita in those days – maybe that’s a good place to start if you want to handle population growth in a smart way.
That’s not the only thing we can do. We can also try to reduce the number of persons through economic incentives/disincentives.
Why do you advocate for lowering one’s carbon footprint? It doesn’t matter. Climate change is already locked in.
It doesn’t matter. Those people are coming regardless of what you want. So you can choose to house them more sustainably or less sustainably. That’s it. There’s no option to pull up the drawbridge
I was a landlord in the 1980’s in Vancouver and I can tell you that the rental market was weak. Tenants were very choosy. Can’t speak for Victoria but I do know that was the time of Bill Bennett’s restraint program.
It’s already happening. It is also the only possible solution since you’re not going to change human nature. The only thing you can do is lower impact per person
So you’re banking on a magical thing happening—something that has never happened before—to get humanity out of this environmental mess?
But I’m being unreasonable critiquing endless population growth?
Leo: “The human population is growing. I have no control over it. Therefore it will continue and it’s fine.”
Also Leo: “The world’s environment is in trouble. I have no control over it. But I will choose to advocate for lowering one’s carbon footprint anyway.”
I’d prefer no forests cut down in Langford, no new townhouses in my neighbourhood, and Victoria’s population stabilize. Maybe house prices won’t rise anymore because of it, but isn’t that a good thing?
Someone tell how having 600,000 people in Victoria (as opposed to 450,000) improves quality of life in Victoria. Would our landfill fill up more slowly with an extra 150,000 people in the region? Would there be less pollution? Would it be quieter and less hectic? Would traffic improve? Would having more concrete and more buildings surrounding us make us cheerier?
Having one vehicle, even though I can afford two, is a slight inconvenience, I think you’ll agree.
I’ll ask you, does having more people around help or hurt the environment, on balance?
I think it can be feasible if the economy decouples from resource usage. I don’t recall having an opinion on exponential growth other than observing it is happening also I have no control over it so this is hardly analogous. However NIMBY attitudes are directly responsible for restrictive zoning causing sprawl. And again everyone is entitled to their opinion but we all have to reconcile our beliefs and our actions, or come to the realization that our beliefs aren’t that important after all.
“How about sticking to discussing the issues, and avoiding personal attacks against anonymous people on the internet.”
I would call it an observation, not an attack.
Leo. You also talk about the environment yet you discuss continued exponential growth of the economy as if it were both feasible and desirable.
Not questioning your commitment to the environment Leo. Just saying that we all have our contradictions.
How about sticking to discussing the issues, and avoiding personal attacks against anonymous people on the internet.
“And I’m against global population growth. Earth’s life-support systems are already failing at the present population, so adding more people won’t improve things.”
Don’t you have children? Or are you just against other people having children?
Your complete opposition to density in your own neighbourhood is an interesting position to take for someone who appears to be very concerned with the well-being of the planet. Not only are you promoting inefficient land use and the retention of inefficient housing stock past its useful life, you are promoting sprawl, because people like you refuse to accommodate growth in existing areas of the City. Thus, people like Stew Young have to come along and mow down entire forests to accommodate it. At least Langford does a decent job accommodating growth via density in existing neighbourhoods. Your proposed solution of zero growth is not just an inane fantasy, but it is also irreconcilable with your love high house prices. You want zero growth? Off to Port Alberni you go.
I don’t think you are sincere. It seems that you are here to troll bears, correct grammatical errors for no good reason, gloat about how smart you are for buying when you did, and to post half-baked platitudes about zero-growth and feign concern for the environment to deflect from your own selfishness.
I think you are a pest. You take pleasure in pissing people off. I can’t imagine that someone who takes pleasure in doing that, day after day and year after year has much concern for the well-being of the planet or anyone but himself.
If only it were so simple.
Should I point out again that you talk about the environment quite a bit and then tell people they should cut down a forest in Langford and commute long distances just to avoid having a townhouse in your neighborhood? I’m not telling you what you should or should not like, but at some point you must accept you don’t really care for the environment if you aren’t prepared to accept the slightest inconvenience for it. Not meaning to be preachy, but that’s what it boils down to.
It’s a decent argument, except that they’ll come after Central Saanich and North Saanich next.
Densification won’t stop, because it doesn’t—it can’t—solve the root of the problem. The root of the problem isn’t too few places for people in Victoria to live; it’s too many people wanting to live in Victoria.
Well, I’m against that.
And I’m against global population growth. Earth’s life-support systems are already failing at the present population, so adding more people certainly won’t improve things.
Yeah, and how is Earth doing?
Not really. You’ve assumed that it’s “speaking” that there is an affordable housing crisis (calling it “the housing crisis in one number”).
But If our vacancy rate and housing prices were the same as they are now, but we instead had a higher % of our rental stock being purpose-built rentals (like Montreal), then far less moves would be forced, and this number would be lower. Evictions because the property is being sold don’t commonly happen in purpose-built rental units).
So that “1-in-10 moves” number “speaks” to me differently, by telling me the issue is the rental mix needs to be more purpose built rentals, where renters can typically stay as long as they want, and not be forcibly evicted. People who need long term rentals can seek out these rentals and not worry about being kicked out.
On your article, look at Quebec , with lowest % of forced moves. That is because of the high % of long term purpose rentals in places like Montreal (600k rental units compared to 100k in Vancouver).
In your November article (“housing crisis in one number”) followed up by the a second article, unless I missed it, you discussed the high forced moves as a consequence of the housing crisis, but didn’t mention this point that it could actually not be from the housing crisis at all, and might be a consequence of so few purpose built rentals in Victoria.
So that high forced rentals number is indeed describing some problem in one-number, but it isn’t the “housing crisis in one number”, it’s the “need for higher mix of long-term purpose rentals “ in one number.
And now we have a big developer that want to spend even more on that piece of property to build a large tower full of housing units to improve the quality of life for a bunch of people.
Or those who don’t want to share could move away themselves …
I’m sorry sharing is an unfortunate outcome of living in a society for some. However, everyone must learn to share, otherwise we will have wars.
They didn’t called it anything except that many blamed the immigrants specifically the Vietnamese (they came here and they stole our jobs). Unemployment was high on the island during the 80s.
People still have to live somewhere after the RE market crash, thus that put more on pressure rentals.
As long as Canada’s population grows, yes.
All of human history shows us that’s what happens with cities. And the ones that decline in population don’t do so for reasons that make the populace happy
So any process, once begun, must continue forever?
Densification in Gordon Head is the only reason you’re not sitting in a field right now
No. It’s because you aren’t forced through the Colwood crawl when you live in Caddy Bay.
But you’re happy that they densified Gordon Head in the 70s right?
I wasn’t advocating for greater density in Gordon Head before I bought in Gordon Head. Quite the opposite.
Interpreting this as me wanting to roll up the ladder now that I’m on board is false. I never thought anybody was rolling up the ladder on me when I was renting and looking to buy. I simply acknowledged that there were ladders of different heights attached to different ships.
Instead of promoting urban sprawl, maybe those who can’t stand population density could move to less populated areas, like central and north Saanich where you could have (already established) big yard?
By the way Patrick if you think the boomers were not also complaining about house prices rental vacancy rates, you are mistaken.
From 1981 Times Colonist:
Rental vacancy at 0.01% if that can be believed.
I suspect the increase in the secondary rental market prevents ultra-low vacancy rates from recurring now.
Roughly flat. Condos up a bit
I notice that people are happy with the 150 years of densification in Victoria before they bought a house but any densification after they buy is the devil.
Also a rental crisis. Call it a rental VeryBigProblem if you prefer. Not sure why you think this is some kind of competition. One in 10 moves being forced speaks for itself.
What is your point anyway? Vacancy rates that start with a zero are fine? Vacancy rates are meaningless? I’m not really sure.
“ Vancouver gingerbread house sells for $20,000 over asking price”
https://www.thebeaverton.com/2019/12/vancouver-gingerbread-house-sells-for-20000-over-asking-price/
Maybe we should be trying to build more Caddy Bays in the Westshore instead of trying to turn Caddy Bay into Westhills, however “slowly” and “gently.”
Yes, and densification only begets more densification. It’s a short-term solution, at best, that simultaneously lowers the quality of life for many who originally made the choice to pay more for that quality of life.
I have to agree that the word crisis seems to be one of the favourites for the spin doctors. A some point it is fair to question whether increased densification actually makes life worse for the people who already live here.
One reason that RE is a lot pricier in Cadboro Bay than in Westhills is that the former has decent-sized lots and therefore isn’t as population-dense. And that relatively low density is one aspect that makes quality of life in Caddy Bay higher. And there are enough people who will pay more to achieve that quality of life, which is why Caddy Bay is more expensive than Westhills.
For everyone, does low-density equal better quality of life? No. But for many, in the context of comparing neighbourhoods and areas within cities, it does.
So that’s why I’m against most changes that would make Cadboro Bay more like Westhills, no matter how slow, gentle, or incremental the changers claim the changes will be. For the most part, leave Caddy Bay alone. For the most part, leave Saanich alone.
If Greater Victoria doesn’t have what you want, at the price you want, then deal with that reality. But don’t try to densify neighbourhoods you can’t afford. Live somewhere you can afford. Or earn more money and/or make more sacrifices so that you can afford what you want.
I wonder if they called it a “crisis” back then, and, if not, why not?
I am.
Zoning isn’t the problem; it’s that, lately, too many people want to live here. Can’t afford RE in your favourite area? Look farther out, or find a new city, or earn more money so that you can live where you want.
That’s what people did in the olden days: they accepted reality.
Alberta stories
” They should sell their rental property which generates no return after mortgage and other costs. They bought it for $910,000 in 2008. It has an estimated present value of $625,000, 31 per cent less than they paid.”
https://business.financialpost.com/personal-finance/alberta-couple-laid-off-in-their-late-50s-faces-31-collapse-in-property-value
On a housing blog, with constant references and articles about the “housing crisis”, I consider it acceptable to challenge the ascertion that there really is a crisis, by supplying data to counter the narrative. Pointing out that supposed Victoria “rental crisis” conditions (vacancy<1.5%) have been around 21 out of the last 31 years is an example of that. And is hardly an example of “freaking out”.
No.
@Patrick, why do the terms housing crisis and rental crisis freak you out so much? Are you worried it is going to cause unbridled rezoning and development in your neighborhood?
I don’t really care what we call it, but low vacancy rates indicate that there are not as many options out there and usually means a lot of people won’t be able to find something suitable to them. Most people however will still be happily renting in a market like that, so it is not a “crisis” to them. However for the people that are not able to find something that is suitable to them, it does not make their life any easier.
Cool. I’ll be waiting for the upcoming CMHC release on Victoria vacancies, champagne chilled for a +1.5% reading signaling the end of the “rental crisis.”
Though for me, your vacancy chart and your rental crisis definition (>1.5% vacancy rates) merely adds to the legend of the boomers in the 80s. now we can add a five-year “rental crisis” from 1987-92 as shown on your chart. Poor boomers!
Well I didn’t know, and I was renting boomer throughout all of the 80s. (albeit out In Toronto). I didn’t realize it until I just now checked, but it turns out I’m a “survivor” of a 5 year rental crisis that was much worse than Victoria’s ever was. I hope thats earned me some “street cred” with the bears here.
Look at this Toronto rental data from the ”boomer” 80s…
http://www.torontocondobubble.com/2013/07/toronto-residential-vacancy-rate-1971.html
Vacancy Rate in Toronto
1985 – vacancy rate 0.4%
1986 – vacancy rate 0.1%
1987 – vacancy rate 0.1%
1988 – vacancy rate 0.2%
1989 – vacancy rate 0.3%
LeoS, if 1.5% is a rental crisis, what is <0.1% called?
I think anyone looking for a rental in that time probably knew.
Yes at least in broad strokes. That said that’s an overall measure and does not represent the availability of adequate supply in all price ranges.
The biggest challenge going forward is going to be the retirement of the 60s low rise rentals that are forming the bulk of the affordable rentals out there. If those start being removed from the market at a much accelerated pace we will continue to have a large problem.
Wow, by that definition, and your vacancy chart above, we’ve been in a Victoria “rental crisis” (<1.5%) for 21 of the last 31 years! Who knew?
And now, your “vacancy rate history” chart above has us at 1.7% in the “orange lines” as of NOW. Does that mean that in your (orange line) estimation that we are above 1.5% now and therefore out of the “rental crisis” as you’ve just defined it above?
Oh, so given your predictions that “I think we will see much more pronounced increase in vacancy rates, towards 3% by 2021.“…. does that mean when we rise above 1.5%, we are no longer in a “rental crisis”? (Your chart has us at 1.2% now, so we are almost there!)
[Removed. Sorry not keen on that image on the blog - admin]IMO, we have drugs abuse issue not a homeless issue.
I don’t know why suddenly trades journeymen/farm workers/migratory workers/seasonal workers lived in their vehicles, parks (tents and trailers) became a housing crisis when that practice have been with society for hundreds if not thousands of years.
I think any place with a sub 1 or 1.5% vacancy rate is in a rental crisis
The govt should spend lots of time and money helping out people in need, such as the homeless and those with lowest incomes. But they shouldn’t divert any of that money towards helping people with decent incomes and acceptable housing, who are nonetheless expecting the govt to help lower their rent or buy-in price for their commute-free core area home, by calling their situation a “crisis”.
From Leo’s chart below, annual rent growth from 2016 to 2018 is 0.2% fro Calgary, 0.5% for Edmonton (Probably very similar for 2019).
That is, the decade starting shortly after the financial crisis, oil price crash, and recession circa 2009.
How have rents done in the last 5 years? That is, since the most recent oil price peak?
Owner builder builds keep decreasing. Too bad the NDP never re-examined that particular bullshit.
Fine, if you insist, feel free to credit the BC Libs and the munis for all the great work they did making the boom in purpose built rentals happen. That point isn’t material to the discussion.
fwiw, The boom in purpose-built rental construction was nationwide (Not just BC), and details of that are documented in that previous cbre.ca link.
So magically the private market started to build apartments after 25 years.
Tell me good sir, what changed?
That’s fantastic for the people who can actually rent a place. We’ve had people from out of town reject an already accepted job offer because they couldn’t find a place to rent. We’ve had tent cities appear all over the place in this town for a long time now, and some people in them have jobs. When you have people working in the city who live in their vehicle, or in a park, you have a problem.
Cheap compared to buying at the current prices, also I wasn’t bragging, I was saying don’t do it.
.. i guess those homeless people should pair up .. that ways they can combine 30k salary
lets do the math for a single income minimum wage elderly (or young 20) working at walmart
30k salary – after tax 25k – averaged 1 bd apart annual by your definition 15k – ouch 60% into rentals – good thing we have a lot of those low income people to support the the service industry .. we should be taking those “now hiring “signs off from service industry anytime now
That boom graph in rental-starts construction from LeoS only goes up to 2017, so the 10X rentals-starts boom seen would have occurred under BC Libs (election was May 2017). And if you’re asking me if I credit the BC Lib govt for any of that… no I don’t. Private enterprise builds most of these, despite govt meddling.
There’s no Victoria rental housing crisis, outside of the lowest income groups. Vic rents are only $100 per month higher than the national average (Winnipeg is at the national average). Low cost rental housing for lowest-income people has and should be an important issue for governments forever, but don’t call that a crisis in Victoria for people with incomes higher than that group.
A two person Victoria household with entry level $15/hr jobs would make $60k per year and spend 25% of their income on an average 1bdr apartment. Nothing unaffordable or “crisis” level about that. .People making less than that can rent a below average apartment.
In fact, posters have bragged here how cheap Victoria rents are. Example post you might be familiar with: https://househuntvictoria.ca/2019/10/01/september-trend-reverses-but-for-how-long/#comment-63476 “You can rent nicer than a $400k condo for $1500 a month. I know people that rent a 3 bedroom upper for $1350 in GH. I current rent a 3 bedroom whole house in GH for $1900. If you’re renting a $400k condo for 1500 you’re getting hosed.”
You understand that housing crisis is that people aren’t able to be housed, not that people can’t buy right?
That’s the market doing it? Pretty sure it’s government. Market has had ages to get in on rentals, and haven’t built them.
November 2017 – Nov 2018 – 49200 more jobs
November 2018 – Nov 2019 – 18100 more jobs
Again. I don’t know what their definition of employment means. Whatever that 18.1% means, it’s nothing to hang your hat on at this point.
Looks like the actual employment rate 61.8% is not really any higher than the Canadian avg 61.7%
Another point from the CBRE report is the general ”shortage” of purpose-built rentals, in BC and Canada in general.
page 7-9 https://www.cbre.ca/en/research-and-reports/Canada-Multifamily-Overview-2019
“ rental inventories in major Canadian markets are limited compared to their global peers. The largest rental market in Canada is Montreal with just under 600,000 units, a formidable total. Toronto follows with 313,000 units, slightly over half of Montreal’s total, and then comes Vancouver with only 109,000 units.”
//==//==
So Vancouver has 1/6 the purpose-rental units that Montréal has. And Victoria’s numbers are worse.
Purpose-built rentals are more tenant friendly than condo rentals by landlords (who may be small players, in it short-term and planning to sell). They have lower rents, and longer average tenancies. Pay your rent and you can stay there forever.. LeoS construction data has pointed to almost no significant purpose-built rentals in Victoria for a long time (until recently). So we have a shortage of them here.
Given this, why are we surprised to see a high and rising rate of “forced evictions” here. It has been suggested on this site that the the high rate of evictions shows the “housing crisis in one number”. https://househuntvictoria.ca/2019/11/25/nov-25-market-update-the-housing-crisis-in-one-number/
An alternate explanation is that the high forced evictions number instead shows the “shortage of purpose-built rentals in one number”, and isn’t so relevant to the housing crisis after all.
And we can solve the “high forced evictions “by building more purpose-rentals (which we are doing). Then tenants can live for longer periods in their suites without being evicted because the landlord wants to sell. That may be the market being smart enough to solve that problem, without us needing to lower the value of everyone’s homes in an attempt to solve a perceived housing crisis.
Looks like BC has added:
2,550.3 – 2,532.2 = 18100 jobs since November 2018
But has lost
2,578.4 – 2,550.3 = 28100 jobs since May 2019.
Another month like last month would mean that BC would have lost jobs over the course of 2019.
They didn’t say that. I assume they’re referring to net BC jobs created, YOY.
Don’t know what their definition of employment is here, but there’s no way the number of people employed in BC has increased by 18.1%.
Couple things at play here:
And yet, BC still has lowest unemployment in the country with YOY improvement.
https://www.vancourier.com/news/b-c-economy-sheds-18-200-jobs-in-november-1.24029696
“B.C.’s unemployment rate also rose in November, up to five per cent from 4.7 per cent the month before. It still remains the lowest rate in the country.
Year-over-year, employment in B.C. is up 18.1 per cent and the Canadian economy gained 293,000 jobs — an increase of 1.6 per cent over November 2018 that is largely accounted for by gains in full-time employment. “
Calgary and Edmonton have had high vacancy rates for a decade (vacancy currently about 4-5%, but as high as 7% during the last 10yrs). Yet their average rents still increased by 2.5% per year over the decade.
This, and a lot of other well presented information about rentals in Canada, is found starting at page 7 https://www.cbre.ca/en/research-and-reports/Canada-Multifamily-Overview-2019
Bank of Canada Governor Stephen S. Poloz to step down in June 2020
“My time as Governor has been the most fulfilling of my long career.”
Yeah, if I made $500K a year for 7 years, I’d be pretty fuckin’ fulfilled, too.
Great job if you can get it—have a chat with the Bank’s Board of Directors every 45 days, make an interest rate announcement, take a few questions, then go home and watch Netflix in your jammies for a few weeks until the next one.
https://www.bankofcanada.ca/2019/12/bank-canada-governor-stephen-s-poloz-step-down-june-2020/
Thanks for the insight. I am hearing conflicting things on this. The GCs are saying what you are saying, but then I heard from structural engineers that they have a ton of rental towers in the pipeline and didn’t see a slowdown on that side yet. And if you listen to the latest 29er radio show they talk about the money flowing into the housing corporations for affordable housing that they are pushing to turn into projects.
They are, but BC has had job loses in 5 of the last 6 months now. Forest sector (which was our biggest export – tied with coal) is being decimated right now.
The past tense of “lead” is “led.”
That aside, another nice analysis, Leo.
Like a student just going through the motions to get a passing grade, CMHC isn’t putting a lot of effort into these outlooks, it seems to me.
Yeah bad job report for sure although they are highly volatile. But chance of no recession out to 2021 has got to be pretty small after a decade bull market
Great news everybody.
Canada loses 71,200 jobs last month. BC with 25% of that total at 18200 jobs lost. It’s been a shitty 6 months now in the jobs dept for BC.
Harris Green development that includes 1200-1500 units proposed. Development permit and a rezoning permit to go in to the city in January.
Large scale development has definitely stalled past 2022 and a lot of work will be winding up in 2020-2021. Beyond that there has only been casual conversations, no preliminary drawings or movement on any commercial or residential development in the core.
Yes but not over years. If the place completes they’re still going to want to fill it over the course of say 6 months, don’t you think?
Sure market rents increase a bit the longer they wait but not enough to compensate for the zero income in the meantime.
We are past the point of ultra low vacancy rates though where you really can’t find a place. And rents aren’t likely to drop so I don’t see it becoming more attractive. Don’t see that people are moving out of their parents house any more than in the last two cycles.
I’d say they already are. Takes a while to ramp of course but there really is a lot of money flowing into rentals, including sub-market ones
My observation has been that owners of new large rental buildings do not release all the units onto the rental market at once. They slowly fill vacant suites a few at a time. This ensures higher rental income amounts and higher NOI once stabilized. They have an incentive to do this because on a 100 unit building for every extra $100/month/unit rent increase, the building value will increase by approximately $3M. The vacancy rate will not increase that dramatically.
Count my daughter in that mix come Fall 2020. Whether she’ll be renting or we help her into a condo is the $400K question.
Not the only way. There’s also elasticity of rental demand, i.e. an increase in the number of households out of the existing population. Particularly young people moving out of their parents’ houses as the rental market becomes more attractive to them.
Also I think any significant drop off in starts will result in the BC Government moving on affordable housing in a big way. Conveniently timed with respect to the next election.