In the no new news here department CBC reports that a study released by RBC has confirmed what we all know: housing “affordability deteriorated ‘significantly’ in British Columbia — particularly for bungalows and townhouses.” The average person needs to spend 60%+ of their income on housing. The startling conclusion, “all RBC measures stand well above long-term averages. Such poor affordability levels represent an element of risk that could weigh heavily on markets when interest rates start rising.” Who would have guessed? I’m currently renting for 1/3 of what it would cost me to service the mortgage on the same unit.
So why are homes so unaffordable in Vancouver area? I’m sure it’s not related to this strategy by Century 21 reported on in the Globe and Mail: “Century 21 will unveil a new Chinese version of its website this week, the first major real estate company to do so in Canada. The site is the cornerstone of a strategy that will see the company increasingly marketing properties directly to consumers in mainland China.” That sounds great for the commissions, not so good for the average Vancouver resident.
There are already 10s of thousands of apartments, townhouses, condos, etc. sitting empty because they are owned by foreign residents as investments and/or vacation homes. The majority of foreign owners are American according to this study done by Bing Thom Architects which concludes that 5.5% to 8.5% of all downtown Vancouver condos are currently sitting empty in an area with a less than 1% vacancy rate. This would equate to between 1200 and 2040 empty units in downtown Vancouver alone. In addition some 60% of units are non-owner occupied, in other words they are being rented.
The BC and Vancouver governments’ plan seems to be to employ everyone building housing for people who will never live in it. We’ve been hearing for years about shortages in skilled builders but what we don’t hear about is that we are unnecessarily building thousands of units and building units that are too small for habitation, let alone raising a family. A 270 sq foot apartment is good only as a financial investment and can only be justified by such egregious logic as this,
“So many people contact us, not with a specific size they want, or specific amenities, but they tell us where they want to be in the neighbourhood and how much they can pay. So often that amount is just not achievable for anything but a very specialized product like this [270 sq ft walk in closet],” John Stovell, general manager of Reliance Properties said. “By cutting away the non-essentials, that is the only way to get to that price-point [$750/month] in Vancouver.”