Vancouver residents have spent the last two years desperately grasping for a solid explanation of the forces driving property prices so high, so fast.
There was hope answers would come with the publication of a major report on empty homes the city released this morning (March 8).
They did not. The report is now out and there are just as many questions about real-estate prices as there were yesterday.
In January 2016, the benchmark price of a single-family detached home on Vancouver’s east side was $1.23 million, according to the Real Estate Board of Metro Vancouver. Homes on the city’s west side rose to a benchmark price of $2.93 million. A popular theory on why property values have increased so dramatically suggests foreign nationals are parking cash in Vancouver homes and then leaving them empty, thus distorting the real-estate market by separating it from local wealth and wages.
The study the city released today does not prove foreign money is having no effect on Vancouver property prices. However, by failing to find evidence of that where some assumed it would, the data does suggest the possible role of foreign money in Vancouver real-estate could likely be smaller than many have come to assume.
In 2014, the vacancy rate for the City of Vancouver was 4.8, almost exactly what it was 12 years earlier, when the rate was 4.9 percent in 2002. That’s below the national average of seven percent.
The vast majority of Vancouver’s empty dwellings are apartments, the study found.
Single-family and duplex homes have a vacancy rate of just one percent, a number that has remained stable for the 12-year period covered by the study.
While the data fails to offer answers related to the affordability of single-family detached homes, it suggests there might be more government can do with condos and apartments to provide some relief to the housing market.
The vacancy rate for Vancouver apartments is 7.2 percent, the study found. That number, while still in line with the national average, represents an estimated 9,750 empty units.
The study utilized 12 years’ of anonymized BC Hydro data to determine volatilities in power consumption that can serve as evidence of empty homes. It focused on long-term vacancies, using a definition that aimed to exclude dwellings that might be left empty for a few months but that still had a valid reason to be considered occupied. For example, it would count a house owned by snowbirds who escape to Arizona for December and January as inhabited.
Results of the study were presented to council by Matthew Bourke of the city’s housing policy and projects department and Bruce Townson, a consultant and CEO of Ecotagious Inc.
Townson called attention to the issue of empty condos.
“The non-occupancy rate in apartments dropped from 7.7 percent in 2002 to 7.2 percent in 2014,” he said. “It’s these apartments that actually drive the city’s aggregate, non-occupancy rate.”
He noted the study’s definition of apartments consists of two subsets: purpose-built rental apartments and privately-owned condos.
“In 2014, the CMHC [Canada Mortgage and Housing Corporation] vacancy rate for purpose-built rental units was just over zero percent; it was about half a percent,” Townson said. “This would mean that the non-occupancy rate for condos, which make up the rest of the segment, would actually be closer to 12.5 percent.”
That said, he continued, empty homes in neighbourhoods the study calls Northwest Vancouver and Southwest Vancouver do exist. Those areas together comprise the city’s west side, where property values have climbed the fastest in recent years. They have vacancy rates of 7.4 percent and 3.4 percent, respectively, according to the study.
Meanwhile, Vancouver’s downtown core has a vacancy rate of six percent.
Bourke attempted to explain what the city should take from the report.
“What do these findings mean for Vancouver in terms of the big picture?” he asked. “We know that the rate of empty homes in the region and the city is in line with other larger cities in Canada. But affordability is a bigger challenge in Vancouver. And although the rate is flat, as you just saw, the numbers are growing. Many of these units could potentially be rented out, helping to reduce pressure on the existing rental market and housing affordability overall.”
While Vancouver condo prices have not increased anywhere near as fast as the value of single-family detached homes, they have still outpaced inflation and growth in wages.
According to data collected by the Real Estate Board of Metro Vancouver, from 2006 to 2015, the price of a one-bedroom condo in Vancouver grew by 41 percent.
Following the presentation of the report, Vancouver mayor Gregor Robertson brought forward a motion that asks for the provincial government to provide “legal tools to track property ownership and ensure timely occupancy of vacant units”.
Robertson first made an official request for provincial help collecting data on empty homes and property ownership back in May 2015.
A letter he wrote to B.C. Premier Christy Clark suggests the province increase property-transfer taxes on the region’s most expensive homes, introduce taxation measures that would discourage home flipping and reduce speculation, and that the province amend the Vancouver Charter to “strengthen the ability of municipalities to track property ownership and ensure timely occupancy of vacant units”.
Robertson’s letter emphasizes the problem is not just one of higher housing costs, but a matter of prices rising “much faster than inflation or incomes”.
“Call me anytime to discuss!” reads a handwritten note penned alongside the mayor’s signature.
A June 4 response from Clark downplays any role foreign money might play in the region’s real-estate market.
“Industry experts estimate that most of the real estate speculation taking place in the region is being done by local investors,” it reads.
Clark’s letter also argues against the implementation of any new tax.
“Using any method of new taxation with the goal of driving down the price of housing could have the unintended effect of hurting current homeowners across the region,” he warns.
On February 16, B.C. Finance Minister Mike De Jong announced the province finally will begin collecting data related to the foreign ownership of B.C. real estate. He said the government would also raise taxes on sales of properties valued at more than $2 million.