Demography & Demand - Mainland/Southwest

demography & demand THE CHANGING CONTEXT FOR REAL ESTATE OCCUPATIONS IN MAINLANDSOUTHWEST

RENNIE ADVISORY SERVICES PREPARED FOR: THE REAL ESTATE INSTITUTE OF BRITISH COLUMBIA

table of contents

INTRODUCTION + APPROACH

GROWTH AND CHANGE IN THE REAL ESTATE INDUSTRY

DEMOGRAPHIC CONTEXT FOR CHANGE WITHIN THE REAL ESTATE SECTOR

POPULATION GROWTH AND HOUSING DEMAND

PROJECTED RECRUITMENT AND RETIREMENT IN THE REAL ESTATE INDUSTRY

SUMMARY OF CHANGES

APPENDIX

introduction + approach

In 2007, the Urban Futures Institute produced a report titled Demographic & Demand: Managing Growth & Change in the Real Estate Industry (The Context for BC and its Regions). In that report, also written by the authors of this paper, future employment in the real estate sector was examined in the context of both demographic changes (aging and retirements) and externally-driven growth in the industry, vis-a-vis expanding demand for housing and real estate services stemming from a growing and changing population. This report adopts the same approach as the previous one to evaluate future changes within real estate occupations (grouped into “conveyance” and “development” aggregates) in British Columbia and its eight economic regions. More specifically, this report quantifies both the magnitude of potential attrition within each of the real estate conveyance and development sectors over the next two decades due to aging and retirement (answering the question of how much recruitment is needed within each sector to make up for expected retirements), and the extent to which employment growth within each sector will be required to meet future housing demand. The data in this report have been obtained from a variety of sources. Data describing employment by occupation and housing occupancy (including household maintainer rates) are from the 2011 and 2021 Canadian Censuses. Recent historical and future annual population changes by age group are from BC Stats and their P.E.O.P.L.E. demographic series. At this point it is important to make a note of the most recent projections from BC Stats. In early 2024 BC Stats released a new projection series to reflect updates to national immigration policy that moved immigration targets up to 500,000 in both 2025 and 2026. As part of this new projection series BC Stats also revised their assumptions about levels of immigration beyond 2026. These new projections expect future levels of immigration to BC to be maintained at 75,000 immigrants annually to 2046. With BC’s average share of national immigration in the range of 15 percent, the implicit assumption is that national immigration is maintained at or above 500,000 annually between 2027 and 2046. Provincially, this new projection series takes the province to 7.45 million residents by 2041, 11% more than the 6.73 million previously expected for that date.

1. Growth and change in the real estate industry

● The most typical person working in real estate conveyance type occupations in the Mainland/Southwest region in 2011 was between the ages of 45 and 54. With 6,565 people in this age group in 2011, it represented approximately 28 percent of all people working in the sector. A decade later (by 2021) the most typical worker was still between the ages of 45 and 54, with this age group comprising 25 percent of the workforce related to real estate conveyance by 2021 (5,415 individuals). [Figure MS-1] ● Between 2011 and 2021 net recruitment to this sector resulted in the addition of 6,605 people to the under 55 age groups, with 2011’s 25 to 34, 35 to 44, and 45 to 54 cohorts growing by 456 percent, 24 percent, and 18 percent, respectively. However, the 55-64 and 65 plus cohorts experienced a net loss between 2011 and 2021 as people retired from the sector. The 65 plus cohort saw 105 percent of people retire, with a total loss of 5,885 people from the sector and the 55-64 age group lost 2,180 workers to retirement, a 33 percent decline from 2011. These changes saw the total number of workers in real estate conveyance occupations decline by 1,460 workers, from 23,520 in 2011 to 22,060 in 2021 (a six percent loss). ● The most typical person working in occupations related to real estate development in 2011 was between the ages of 45 and 54 (with this age group comprising 17,795 people) and 25 to 34 (having 17,750 people), each representing 25 percent of all workers in these occupations. Ten years later (2021) the most typical worker was still in the 25 to 34 group, with 26,045 people in this cohort (25 percent of all workers in these occupations) while the share of those aged 45 to 54 decreased to 19 percent (20,250 people). [Figure MS-2] ● While there was a net loss of workers in the 55 to 64 and 65 plus age groups between 2011 and 2021 – with 70 percent of 2011’s 65 plus cohort (6,765 people) retiring over this period and 1,820 retirements and attrition from the 55-64 age group (10%) – the younger age groups all saw net gains over the period. Specifically, 2011’s 25 to 34 cohort grew by 229 percent by 2021 (adding 18,130 people), the 35 to 44 cohort grew by 44 percent (7,840 additional workers), and the 45 to 54 group increased by 22 percent (adding 3,655 people). Overall this pattern of change resulted in a 32,575-person net increase in the number of people working in occupations related to real estate development between 2011 and 2021.

FIGURE MS-1 occupations related to real estate conveyance MAINLAND/SOUTHWEST REGION, 2011 & 2021 CENSUS

FIGURE MS-2 occupations related to real estate development MAINLAND/SOUTHWEST REGION, 2011 & 2021 CENSUS

2. Demographic context for change within the real estate sector

● Between 2011 and 2021 the Mainland/Southwest region added 458,616 people, a 17 percent increase which saw its resident population grow from 2,727,081 to 3,185,697 people. The region saw growth each year, at a relatively slow pace, with the annual growth rate peaking in 2014 and 2019 at 1.9 percent. From 2019, rates saw a decline through to 2021 reaching as low as 0.8 percent, however, 2022’s rate saw an increase ending at 2.7 percent. [Figure MS-3] ● In the coming years Mainland/Southwest’s population is projected to continue to grow, but it will do so at a declining rate compared to what has been seen historically, as low birth rates and the declining contribution of natural increase (the number of births each year net of the number of deaths) will see net migration to the region serve as the primary driver to future growth. While annual population change will reach 3.3 percent in the near-term, it is expected to decline thereafter, falling to 1.5 percent by 2041. This long-range pattern of change would see Mainland/Southwest’s population grow from its 2021 population of 3,185,697 to 4,615,914 in 20 years, an increase of 1,430,217 residents (a 45 percent increase). ● The 1,430,217-person increase expected for Mainland/Southwest by 2041 would be driven by growth across a variety of age cohorts (Figure MS-4). The greatest absolute increase is projected to be in the 65 plus group, which would grow by 361,450 people. The 35 to 44 age group would also see an increase (of 329,964 people) followed by the 25 to 34 group (265,073 additional residents). The other age groups are all expected to grow between but more minimally compared to the other groups with the 45 to 54, under 15, and 15 to 24 cohorts growing by 163,167, 151,056, and 133,175 workers respectively. The 55 to 64 age group is expected to realize the lowest level of growth adding 26,332 workers. It is clear that migration will be the dominant theme that will characterize community change in the Mainland/Southwest region. [Figure MS-4] ● In relative terms the greatest changes would be seen in the 35 to 44, 65 plus, and the 25 to 34 age groups, which would grow by 71 percent, 66 percent, and 53 percent respectively. The 45 to 54 cohort is projected to have a relative change of 39 percent while the 15 to 24 and under 15 age groups are each expected to grow by 34%. The remaining 55 to 64 age group saw a minimal increase in population of six percent.

FIGURE MS-3 total population & annual change 2011-2022 HISTORICAL & 2022-2041 PROJECTED, MAINLAND/SOUTHWEST REGION

FIGURE MS-4 projected population change by age 2021-2041, MAINLAND/SOUTHWEST REGION

3. Population Growth and Housing Demand

● There is a distinct age-related pattern of maintaining a household in the Mainland/Southwest region. Tenant-occupancy is relatively prominent in the younger age groups, with the most likely renters being between the ages of 30 and 34 where a quarter of people in this age group maintain rental accommodation. The propensity to maintain rental accommodation steadily declines from the 30 to 34 age group for each cohort all the way through to a low of 12 percent in the 85 plus population maintaining rental accommodation. [Figure MS-5] ● Not surprisingly, the propensity to maintain an owner-occupied household increases quickly through the period of the lifecycle characterized by labour force entry and the early family formation. Between the 15 to 19 and the 45 to 49 age groups, ownership rates increase from below one percent to 36 percent. From the significant increase over each five year age group during this stage of the lifecycle, rates level out between the ages of 50 and 69 where approximately 42 percent of people in the Mainland/Southwest maintain owner occupied accommodation. It is important to note here that these rates are almost 10 percent lower compared to other regions within British Columbia, a pattern in part driven by higher mobility and in part by higher prices. Owner occupied maintainer rates continue to increase, albeit much more slowly than in the younger age groups, peaking at 46 percent for the 75 to 79 age group before declining for the 80 to 84 and 85 plus age groups, as older residents move towards rental accommodation or towards other forms of housing such as nursing homes and care facilities. ● In order to develop a projection of future housing demand in the region, the age specific maintainer rates were combined with the age specific population projections for the Mainland/Southwest region to determine the impact that demography alone would have on future housing demand. This projection provides a benchmark indication of the level of future demand the real estate industry might anticipate in the coming decades. With respect to historical changes in the age-specific patterns of maintaining a home, while availability and affordability have historically pushed maintainer rates down for the younger cohorts entering the housing market, this projection assumes that by 2041 a greater balance in the housing market will emerge and allow rates for the younger generations to increase back to levels seen a decade ago (2011). ● Total housing demand in the Mainland/Southwest region is projected to increase from 1,249,774 units in 2021 to 1,612,593 by 2031 and further to 1,934,615 by 2041. Over the next 20 years this represents an increase of 684,841 units, or a 55 percent increase from 2021. Annual changes in occupancy demand would decline over the long-term, from 3.1 percent in 2022 then falling to 1.6 percent annual growth by 2041. Net additional owner-occupancy demand would therefore average approximately 34,242 units per year, a 39 percent increase above the 20,863 units averaged over the 2011 to 2021 period. ● Growth in housing demand for owned tenure is expected to increase from 789,003 units in 2021 to 1,031,831 by 2031 and further to 1,246,373 by 2041. This increase of 457,370 units over the next 20 years represents an increase of 58 percent from 2021. For rental, the 460,771 units in 2021 is expected to increase to 580,762 by 2031 reaching 688,242 by 2041 (an increase of 49 percent from 2021). [Figure MS-6]

FIGURE MS-5 primary household maintainer rates, by tenure MAINLAND/SOUTHWEST REGION, 2021 CENSUS

FIGURE MS-6 housing occupancy demand & annual change 2021-2041 PROJECTED, MAINLAND/SOUTHWEST REGION

4. Projected Recruitment and Retirement in the Real Estate Industry

● Given the pattern of recruitment that was seen between 2011 and 2021 for the real estate conveyance and the real estate development sectors (as seen in figures MS-1 and MS-2), Figures MS-7 and MS-8 show the aging and retirement of the current stock of people working in each sector along with the number of people that would need to be recruited to fulfill retirements and potential growth in demand for real estate services over the next two decades. ● Of 2021’s 22,060 workers in occupations related to real estate conveyance in the Mainland/Southwest region, patterns of aging and retirement would see this number decline to only 10,283 by 2041 (a 53 percent decline). In order to just maintain the size of this sector’s workforce at its current level, an average of 6,436 recruits would be needed each year to match the retirement of workers. Further, given a growing and changing population and their housing needs, in order to meet the projected growth in the real estate market over the next 20 years, a further 6,772 recruits would be required each year. Overall, a total of 13,207 additional workers would be required each year to fill both potential retirements and additional demand. This would see the sector grow from 22,060 workers in 2021 to 34,848 by 2041, a 12,788-worker, 58 percent increase. [Figure MS-7] ● In a similar vein, aging and retirement in the real estate development sector would result in the workforce declining from 2021’s 103,900 individuals to 75,144 by 2041, a 28 percent decrease. Given this pattern of change, an average of 14,572 workers would need to be recruited each year over the next 20 years in order to fill the spaces left by worker retirement. With the demand for real estate services expected to continue to grow, a further 30,238 workers would need to be recruited each year to keep up with demand, for a total of 44,810 additional workers needed each year to 2041. Growth of this magnitude would see the sector go from 103,900 workers in 2021 to 160,834 in 2041, a 56,934-person, 55 percent increase. [Figure MS-8]

FIGURE MS-7 occupations related to real estate conveyance 2021 CENSUS & 2022-2041 PROJECTED, MAINLAND/SOUTHWEST REGION

FIGURE MS-8 occupations related to real estate development 2021 CENSUS & 2022-2041 PROJECTED, MAINLAND/SOUTHWEST REGION

5. Summary of changes

● Between 2021 and 2041, population is projected to grow by 1,430,217 people (an increase of 45 percent) and, accompanying this population growth, is an expansion of the housing stock by 684,481 homes (a rise of 55 percent during this same two decade period). The resulting effect on employment is growth of 32 percent (or 40,533 workers) to account for retirements and 55 percent (or 69,772) to account for the increase in housing stock. [Figure MS-9]

FIGURE MS-9 summary of changes 2021 CENSUS & 2022-2041 PROJECTED, MAINLAND/SOUTHWEST REGION

6. Appendix

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