B.C. Housing supply levels over the next decade.
Moving past the undoubtedly wavey short to medium term the Vancouver real estate market with have another headwind to contend. Earlier this summer BIV put out an article (https://biv.com/article/2022/06/bc-requires-570000-homes-2030-restore-affordability-cmhc) - that was conducted by analysists at RBC in an attempt to model how many new home/ dwellings would have to be built in British Columbia to ”restore any semblance of affordability – which CMHC defines as housing requiring 44% of disposable income. Currently, residents of BC require 58.3% of their income to purchase a home.” To further this article the purpose of the essay is to shed more light on how we are currently performing in British Columbia and how many dwellings we are currently starting each year.
According to the BIV article we are in need of 570,000 new dwellings in British Columbia by 2030. This equates to just over 80,000 new dwellings needed each year until 2030. So how are we doing?
In 2021 it was recorded that 46,574 residential building permits were issued in BC (note* Permits issued for new dwellings and alterations and improvements to existing dwellings.) therefore we are building roughly half as many homes and dwellings as we require to meet affordability projections in BC. Last year alone we had over 100,000 new migrants move to BC and with the federal government’s policy on immigration over the next three years it is unlikely that this trend won't stop, of the total number of the new population coming to BC roughly half will reside in the lower mainland.
At current rates we will fall short of the projections to meet CMHC expected supply requirements by 2030. There must be a greater change in the philosophy around housing BC and particularly the lower mainland. Community plans that include more mid-level and low-level multi-family complexes along more active routes would go a long way in providing additional density without transforming the character of a community. In fact, the commercial spaces that typically accompany these projects, can provide increased attractions and community within local neighbourhoods.
Canada population increases over the next three years
The federal government has announced its plans to welcome over 1.3 million immigrant workers in the next three years more precisely:
431,645 in 2022
447,055 in 2023
451,000 in 2024.
NOTE* (In the 1st quarter of 2022 - 127,978 people have immigrated to Canada. This was the highest rate of growth in a first quarter since 1990)
The most immigrant workers Canada has ever welcomed in a year to date is 405,000 workers. With this increase in population across the country the need for more housing supply will not just be felt in British Columbia. The CMHC further released a June 2022 report (https://www.cmhc-schl.gc.ca/en/blog/2022/canadas-housing-supply-shortage-restoring-affordability-2030) that outlines the need for a further 3.5 million dwellings nationwide to meet demand requirements by 2030.
In conclusion it is good to see more data pointing to the root cause of inflating housing values and what can be done in an attempt to meet demand.