Practical Solutions to Ease Steep Entry-Point Into Vancouver Housing Market
Affordability has played a serious role in the decline of ownership in the Vancouver housing market – Canada’s most expensive place to live. Home-ownership levels sat at 62.1 per cent in Greater Vancouver in 2021, down from 65.1 per cent reported by StatCan Census Data in 2006, while the average price for residential properties more than doubled.
A finite supply of homes—ranging from detached and attached, to more affordable strata condominium properties—on a limited stretch of land has proven challenging for first-time buyers looking to make their foray into the Vancouver housing market. Accumulating a downpayment remains a significant obstacle, with expensive rentals preventing savvy would-be homebuyers from building their savings. Additional costs implemented by the municipality and the province add another 10 per cent to already high closing costs. The decline in first-time buyers has thrown a wrench into the city’s fine-tuned housing market, which relies on entry-level buyers to support the move-up segment.
Affordable rentals are few and far between, and those renters fortunate to live in these units are unwilling and unable in some cases to move, presenting a conundrum to the market. Much of the housing stock available in the city and suburbs consists of either detached homes or condominiums. The attached home is the missing middle here. Demand for these types of homes is strong in the Vancouver housing market, yet the category represented just 20 per cent of the overall market in 2024. Not surprisingly, the attached home was the only housing type that reported an increase in sales in 2024, rising almost 11 per cent year over year, according to Greater Vancouver Realtors.
Intensification continues to be the municipal focus, but high-density housing is not necessarily the answer for young families. The micro-condominiums currently in development may be well-situated, but at 400 sq. ft., they often fall short of the needs of today’s homebuyer. Some first-time buyers are looking at older condominium housing stock built in the 1990s for empty nesters and retirees in suburban areas. These large units, ranging from 1,000 sq. ft. to 1,500 sq. ft., are attracting a growing audience, especially given that many downsizers are staying put, unwilling or unable to pay the transactional fees now associated with a move.
Townhome projects that would be underway in the suburbs are being temporarily halted until there is some clarity surrounding the tariff dispute from the U.S., with many builders and developers uneasy about the prospect of a potential 25-per-cent increase in building costs.
Over the 15-year period between 2006 and 2021, population levels have climbed but nothing prepared major Canadian centres for the population surge that occurred during the pandemic. The Vancouver CMA is now home to more than 3.1 million people, despite the loss of close to 50,000 between 2021 and 2024 due to interprovincial migration. Ultra-low interest rates accelerated home-buying activity during the pandemic, but as rates edged up, many buyers struggled. Still, Vancouver has one of the lowest mortgage delinquency rates in the country, according to Canada Mortgage and Housing Corporation-Equifax data, hovering at 0.14 per cent in Q3 of 2024.
For buyers taking the plunge as interest rates decline, condominiums outside of the city tend to represent the best bang for their buck, offering space and value as opposed to the micro condos in the city core. Purchasers willing to go farther afield can find a townhome in Langley at an affordable price point but will likely require a car to move around. And while the outflow to B.C. has slowed, there is always the option of moving to Alberta where housing is more affordable, and taxation is minimal.
The stress test had its moment during the pandemic but it’s no longer necessary, preventing some buyers from making the foray into home ownership. Furthermore, taking the plunge is still a challenge for many as employment and wage growth have failed to keep pace with rising housing values, particularly in B.C. Those who are sitting on the sidelines generally look to rentals, with current prices slightly lower than the carrying costs of a condominium or townhome.
“To address the obstacles to home ownership, municipal, provincial and federal governments need to work together to increase accessibility, including the introduction of more practical first-time buyer programs, given the steep entry-point in the Vancouver market. Some ideas for consideration include a matched/vested program, whereby the government matches first-time buyers’ costs for a stake or interest in their home. Other options include mortgage insurance for properties, even with five per cent down, and longer amortization periods of 30, 35 and 40 years – similar to those that stimulated strong home-buying activity between 2005 and 2008. Loan grants could also be offered to homeowners to build rental suites or coach houses to help bolster affordable rental inventory. These can all have a significant impact on the cost of carrying a property. But without this intervention, we are creating a nation of renters, who like generations before them, may remain locked into the rental housing model without much hope of ever owning a home.”
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