CHANGING RENTAL HOUSING DYNAMICS & THE PANDEMIC
01. INTRODUCTION
Whether a topic of conversation or the subject of government policy, the rental housing market is a frequent, if not a permanent, fixture. For good reason, too: along the spectrum of housing options, rental housing in its various forms represents the most accessible path into the housing market for most people, particularly new entrants. For example, rental housing occupancy is most prevalent among people aged 25 to 44; it is also the tenure of choice (or necessity) for international migrants to the region, with the majority renting during their first five years living here (compared to one-third of existing households in Metro Vancouver being renters). The importance of rental housing in the context of new entrants cannot, therefore, be understated, particularly with Metro Vancouver attracting an average of 70,000 in-migrants annually over the past decade. Additionally, Metro Vancouver’s rental housing market (also referred to as the “long-term” rental housing market) arguably plays a more important role in housing this region’s residents than anywhere else in Canada given its comparatively expensive ownership market. Without digressing too much—acknowledging that there are more sophisticated methods of parsing home price data— it is worth noting that the average sold home price in the Vancouver Region in March 2021 (the most recent date for which data were available at the time of this report’s writing) was $1.14 million— the highest amongst Canada’s eight largest Census Metropolitan Areas, being 4% above Toronto’s average sold home price of $1.10 million. With a rental vacancy rate that has hovered around 1% for the past decade—the lowest in Canada among comparably-large metro areas—there has been continuous and growing concern over whether Metro Vancouver has an adequate supply of rental housing. Case in point: between 1991 and 2016, the region’s population grew by 57%, while the purpose-built rental stock actually declined (by 5%). During this period, the number of purpose-built rental homes per 1,000 residents fell from 69 to 42, a 40% decline. That said, there has been some positive movement on the supply front in recent years. Over the past decade (2010 to 2020), Metro Vancouver’s purpose-built rental stock has added 8,700 homes; however, the majority (80%) of the overall growth in total rental housing has occurred in the secondary market (via the addition of 35,360 rented condos). While the secondary rental market is an important source of new rental supply,
security of tenure remains an ongoing concern as well as, in many cases, a lack of professional management. For many people participating in the current housing discourse, the prevalence of short-term rentals (i.e. Airbnb) underscores this problem. As rental supply and demand has shifted over the past year due to the pandemic—largely due to a variety of economic and demographic factors—the dynamic between the short-term and long-term rental markets has come into focus. The discourse is often centred on the effects that the decline in travel and tourism have had on short-term rental demand and the notion that this in turn has led short-term rental owners to transfer their listings into the long-term rental market. Against the backdrop of anecdotes and conjecture, the purpose of this report is to synthesize rental market data from a number of sources to provide insights into the likely causes, more and less, of the softening of Metro Vancouver’s rental market in 2020. DATA & DEFINITIONS • As Metro Vancouver and the city of Vancouver are frequently referenced throughout this publication, Figure 1 presents the boundaries for each.
FIGURE 1: BOUNDARY MAP
METRO VANCOUVER CITY OF VANCOUVER
• Data on vacancy rates and average rents for
apartments in the purpose-built (or primary) rental market and secondary rental market have been obtained from Canada Mortgage & Housing
APR I L 202 1 — P A G E 3
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