Vancouver still has the least affordable housing in the country, RBC Economics reports.
During the first quarter, the price of the average Vancouver residence will devour 82 percent of median household income — the first time the index has risen this far since the first quarter of 2019.
“The bad news is that it is likely to get worse,” wrote RBC chief economist Robert Hogg, referring to the impact of higher interest rates, which have increased sixfold since March and are likely to jump again on July 13. It is preparing to hit domestic buyers disproportionately and the outlook for the market has already changed. Reselling activity is down by a third this spring and we see the weak trend continuing in the coming months.”
The standard definition of affordable housing is anything that requires less than a third of a household’s income.
RBC does not provide any solutions to improve affordability. Instead, she says, affordability will follow as wages rise and home prices fall. It expects a 13 percent drop in home prices this year in British Columbia
Some say the decline is already underway, with the Greater Vancouver Real Estate Board reporting that the record price of residential property fell 0.3 percent in May to $1,261,100.
According to the development sector, more homes are the way forward. By providing a larger selection of units at a greater range of price points, potential buyers will have more choices and upward price pressure will spread.
“Part of the essence of oversupply is not just to create more single-family homes or more condominiums, it is to create more supply to give citizens a better chance of getting into housing that fits their needs and suits their needs,” said Shane Styles, president of Epic Real Estate Solutions in Kelowna. Some of these needs are financial and some are geographical. Some are family related. …affordability is not just what my monthly rent or mortgage is. It’s also how much I have to pay in fuel to get to my job, or take my kids to their activities.”
According to a report by Mortgage and Housing Canada last week, 570,000 new homes are needed in British Columbia by 2030 to restore any semblance of affordability — which CMHC defines as housing requiring 44 percent of disposable income. Currently, British Columbia residents need 58.3 percent of their income to purchase a home, based on the average price of homes listed and sold through the MLS platform.
“How will supply improve affordability? More housing units created in the housing market will create opportunities for families to move into housing that responds to their demands.” In addition, this “liquidation process” is likely to lead to housing availability to improve affordability. housing over time.
However, CHMC also urged separating home ownership from the rental system “because an increased supply of rental units will play an important role in achieving long-term affordability.”
But the two are linked. Higher home ownership costs tend to keep people renting for longer, and the higher cost of housing means that there is a need for an increased supply of rental housing. But even it’s not coming fast enough.
“Housing affordability is a growing concern for all market buyers, particularly given the inability of all levels of government to accelerate the construction of new rental supply,” said Michael Ferreira, director of Zonda Urban, Vancouver.
There are 21 new purpose-built rental projects with just over 1,600 units due to be completed by the end of this year. This is a fraction of what is needed to meet current demand, not to mention new demand resulting from significantly higher immigration targets over the next few years.”
The result is upward pressure on rents across the market, because supply cannot keep pace with demand.
In some markets, Ferreira said, monthly rents have risen by $6 per square foot — an unprecedented level in the region.
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