Vancouver continues to have the least affordable housing in the country, reports RBC Economics.
During the first quarter, the price of the average home in Vancouver would devour 82% of the median household income – the first time the index has been this high since the first quarter of 2019.
“The bad news is that it is likely to get worse,” wrote RBC chief economist Robert Hogue, noting the impact of rising interest rates, which have increased sixfold since March and will likely jump again on July 13. about to hit local buyers disproportionately and the market outlook has already changed. Resale activity has fallen by a third this spring and we see the downward trend continuing in the months to come. »
A standard definition of affordable housing is anything that requires less than one-third of household income.
RBC does not offer any solutions to improve affordability. Rather, it indicates that affordability will follow as wages rise and housing prices fall. It predicts a 13% drop in home prices this year for British Columbia
Some say the decline has already started, with the Real Estate Board of Greater Vancouver reporting that the benchmark price for residential properties fell 0.3% in May to $1,261,100.
According to the development sector, more houses are the way to go. By offering a greater selection of units at a greater price range, potential buyers will have more options and upward price pressure will be diffused.
“Part of the essence of increasing supply is not just to literally create more single-family homes or more condos, it’s to create more supply to give citizens a better opportunity to access housing that meets their needs,” said Shane Styles, President. of Epic Real Estate Solutions in Kelowna. “Some of these needs are financial, others geographical. Some are family related. … Affordability isn’t just about my monthly rent or my mortgage. It’s also how much do I have to pay in gas to get to my job or take my kids to their activities.
According to a report by Canada Mortgage and Housing Corporation last week, 570,000 new homes are needed in British Columbia by 2030 to restore any semblance of affordability – what CMHC defines as housing needing 44% disposable income. Currently, BC residents need 58.3% of their income to buy a home, based on the average price of homes listed and sold on the MLS platform.
“How will the offer improve affordability?” More housing units created in the housing market will create opportunities for households to move into homes that meet their demands,” CMHC said. “Furthermore, this ‘screening process’ likely frees up housing to improve housing affordability over time. »
However, the CHMC also advocated a separation of home ownership from the rental system “because increasing the supply of rental accommodation will play a critical role in long-term affordability”.
But the two are linked. High home ownership costs tend to encourage people to rent longer, and the high cost of housing means a greater supply of rental housing is needed. But even that doesn’t come fast enough.
“Housing affordability is a growing concern for all buyers in the market, especially given the inability of all levels of government to accelerate the construction of new rental offerings,” said Michael Ferreira, director of Zonda Urban. , from the Vancouver market.
“There are only 21 new purpose-built rental projects with just over 1,600 units expected to be completed by the end of this year. This is a fraction of what is needed to meet existing demand, let alone the new demand created by significantly higher immigration targets over the next few years.
This results in upward pressure on rents across the market as supply cannot keep pace with demand.
In some markets, Ferreira said, monthly rents are pushing $6 per square foot — an all-time high for the region.
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