CPABC Industry Update Summer 2015 - BC Real Estate Industry | Page 21
investors, adding much-needed rental
accommodation supply. In addition,
adjusting for inflation and wage
growth, apartment condominiums
have become more affordable over the
past five years. Further, relatively stable
prices have provided little incentive for
short-term speculative activity in the
apartment market segment.
The single-detached home stock has
declined in both absolute and relative
terms in the Vancouver CMA. This
increasing scarcity has led to significant
price appreciation as consumers
compete for the available stock.
Regional residential densification
efforts have led to relative price
stability in multi-family housing over
the past five years, as home builders
have kept pace with demand. Multifamily housing now comprises twothirds of the Metro Vancouver housing
stock and approximately 80 per cent of
new home construction activity.
The average home price in the region
is an inadequate yardstick for housing
affordability. Nearly 70 per cent of all
MLS® residential transactions in Metro
Vancouver during 2014 were below
the average price of $738,000, with 32
per cent of homes sold below $400,000
and 82 per cent below $1 million.
The Changing Housing
Stock
Metro Vancouver is Canada’s thirdlargest census metropolitan area and
is home to over 2.4 million people
distributed across approximately
950,000 households. Its geography
is constrained on all sides by natural
a n d l e g a l i m p e d i m e n t s to t h e
supply of developable land. The vast
suburban sprawl associated with
many North American cities wasn’t
able to fully take root in Vancouver
as the relative scarcity of land forced
housing stakeholders to look up rather
than farther afield. Densification in
Metro Vancouver has largely been
a success, with the supply of multifamily housing more or less matching
demand. Increasing residential density
has also enabled the production of
more compact communities with
better transit and smaller ecological
footprints.
The flip-side to Vancouver’s density
story is that single-detached homes
are becoming scarce, both in absolute
and in relative terms. Between the 1991
and 2011 census periods, the total
stock of single-detached homes in the
Vancouver CMA actually declined by
over 1,000 units.
More significant is the fact that the
share of single -detached homes
declined from 50 per cent of the
housing stock in 1991 to barely a
third in 2011. Single-detached homes
are now a lot less common in Metro
Vancouver and are fast becoming a
luxury segment of the housing market.
Indeed, fully 80 per cent of new
construction activity in the Vancouver
CMA is typically devoted to multifamily housing. Media reports have
tended to focus on single-detached
homes in the City of Vancouver.
However, that market segment only
comprises 15 per cent of singledetached homes in Metro Vancouver
and just 5 per cent of the total housing
stock.
Affordability and Housing
Stock Dynamics
The dwindling supply of single detached homes relative to multifamily types has led to significant
upward pressure on pricing. Over the
past five years, the MLS® Benchmark
price for a single detached home
climbed 32 per cent to $1.1 million
in the Real Estate Board of Greater
Vancouver (REBGV ) area. However,
apartment condominiums nudged
ahead less than 7 per cent over the
same period, largely the result of
adequate new supply. Since wages
have grown at a faster rate and
mortgage interest rates are lower
today than five years ago, apartment
condominiums are more affordable
today than in 2010.
A common practice to measure
affordability is in relation to the
average home price in the region.
This has proven to be an inadequate
measure in Metro Vancouver as the
housing stock is increasingly diverse.