CHANGING RENTAL HOUSING DYNAMICS & THE PANDEMIC
this point onwards listings remained stable, hovering around the 6,200-mark up until April of 2020 (the month following the Canadian border shutdown and government restrictions to address Covid-19). Since then, the number of active Airbnb listings in the city of Vancouver has decreased by an average of 2.5% per month, eventually falling to 4,674 by January of 2021. In the most recent month, February 2021, listings fell by 7.1% to 4,340 (the largest decline in active listings since the policy-induced decline of September 2018). Overall, from the 6,220 listings in March 2020 (before the pandemic hit), listings have fallen 30% as of February 2021. As short-term listings began to ebb in April 2020, long- term secondary rental listings began to flow. Between March and April 2020, new long-term secondary rental listings in the city of Vancouver increased by 9%, which was above the 2% increase seen one year earlier (between March and April 2019). With this being said, the average number of new monthly listings on the long- term secondary rental market throughout spring and summer (that is, fromMarch through August) was 35% higher in 2020 than in 2019. While the softening of the short-term rental market may have played some role in this, it was just one of many factors that affected the long-term rental market (along with the above-noted demographic and economic changes that were experienced).
the most significant culprits of rising vacancy rates and slowing rent growth are more likely demographic and economic in origin. More specifically, slower population growth through reduced migration, combined with the jobs of younger, part-time workers being most negatively impacted by the pandemic, would have conspired to reduce rental housing demand in 2020. Notably, these pandemic- induced changes will almost certainly be temporary, as both migration and the regional economy rebounds through 2021 and beyond. Within the next year, therefore, the rental market is expected to look considerably more like it did before the pandemic than it does now, at least from a demand perspective. On the supply side, the 11,200 rental housing starts from the past two years (2019 and 2020)—the most rental starts over any two-year period in at least 30 years—will, once they become completions, help to maintain some semblance of balance. It is here worth noting that there are a number of hurdles that make the transition of a home from short- term to long-term rental an arduous and uncertain process for the owner of the unit. First, while 70% of active Airbnb listings across the city of Vancouver are classified as entire homes/condos, the remaining 30% are private or shared rooms within an existing home. In other words, close to one-third of the city’s Airbnb market would not reasonably be in a position to transition into a traditional long-term rental format. Second, there are separate applications and fees for short-term and long-term rentals in the city of Vancouver, creating a bureaucratic hurdle for those who were looking to transition to the long-term rental market. Finally, and as established earlier in this report, the region’s and the city’s long-term rental market was already undergoing a change in its supply-demand dynamic that would have been unfavourable for new landlord entrants. While the short-term/long-term rental dynamic was dominating headlines early on in the Covid-19 pandemic, it is important to note that the city of Vancouver has approximately 125,000 rental units (both purpose-built and in the secondary market); this means that even if all short-term rental listings as of February 2021 were converted to long-term rentals, they would only expand the supply of long-term rental units by 3.5%—a small margin.
04. CONCLUSION
It is clear that over the past year (and into 2021) the Covid-19 pandemic has created challenges for virtually all individuals, businesses, and sectors of the economy. Housing markets have bifurcated, with the for-sale segment of Canada’s housing markets, including here in Metro Vancouver, seeing demand soar while supply remains constrained. Metro Vancouver’s rental market has undergone changes that have contrasted with those in the ownership market, with the vacancy rate rising and rent growth slowing. While a full quantitative deconstruction and evaluation of the drivers to these changes will undoubtedly be conducted in the coming years as additional relevant data becomes available, this report seeks to both summarize changes in the rental market while exploring possible causes. To wit, while much ado has at times been made about the impact of the conversion of short-term rentals to long-term ones on the overall rental market (through the expanded availability of long-term rental supply)
APR I L 202 1 — P A G E 9
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