Shocker: New homes occupied by real people

There’s often push back on new construction when it comes to the community input part of the process.  Some people simply don’t like change, but others that are in favour of more supply protest that the new supply being proposed is too expensive and thus not addressing the issue of affordable housing.  By virtue of it being new and construction costs being what they are, new construction does tend to be on the expensive side, so it is on the surface a reasonable objection.   However this weekend I saw a tweet that went as far as to say (emphasis mine) “There is no point to housing construction in Metro Vancouver. It’s almost all unaffordable & it’s being sold overseas where the market price gets set.”

Of course it’s a ridiculous statement, but luckily Nathanael Lauster from the Home Free Sociology blog crunched the numbers to prove that it is.   Looking at the occupants of new housing, approximately 85% of new owners moved from within the city, metro area, or BC.   In other words, the people buying these new homes are mostly local families.   This is data from 2011 so somewhat out of date (and not available for Victoria specifically), but if anything direct foreign buyers would have dropped further after the introduction of the foreign buyers tax.

Yes the buyers of those properties in general have higher incomes, so it’s true that the new construction is unlikely to be affordable for the majority of residents.   However if people are moving from within the area, they are vacating other housing (likely cheaper), and opening it up to those with less means, who in turn open up their housing.   In the end the new supply filters down.   Certainly we can be sure that if the supply didn’t exist at all, those buyers that have the means to buy a new home would remain in competition for all the remaining housing, crowding out those with lesser means and forcing prices up faster.  It’s certainly important to ensure that new supply goes to where we want it to go (housing people), but I think it’s clear the new construction does help with affordable housing.  The simple observation that prices are up despite new construction does not disprove that point.   Read the details on Nathanael’s blog.

Also here are the weekly numbers courtesy of the VREB.  Last December 10th we had 129 sales, so the month is starting slow with sales per business day down 19%.  However that means almost nothing in the first week, so we’ll have to see how it plays out for the rest of the month.    I have noticed some particularly wild swings in sales month to month recently.   Condo sales went gangbusters in September before dropping right back down, while single family was on a tear last month.  Will it drop back in December?  It’s clear that substantial demand has returned after the introduction of the stress test, but somehow it doesn’t feel all that stable yet.