High housing costs have repeatedly won Vancouver top spot among the least affordable cities in Canada. The status was solidified in the most recent RBC Economics report, which indicated the average household in Vancouver required 82 per cent of its monthly income to buy a home. (An apartment was the most affordable option, requiring just 44.7 per cent of monthly income.)
But census data released this week shows that a lower percentage of homeowners and renters are spending more than 30 per cent of their income – the standard threshold when it comes to affordability – on shelter costs.
Within the city of Vancouver, fully two-thirds of households spent less than 30 per cent of their income on shelter in 2021, up three percentage points from 2016.
Provincially, 74.5 per cent of households spent less than 30 per cent of their income on shelter, up 2.5 percentage points from 2016.
This isn’t to say housing is within reach. Census data indicates that home ownership is more expensive in Vancouver, averaging $2,084 a month versus the national average of $1,498. This compares to $1,660 a month for rented accommodation.
But surprisingly, just 26.3 per cent of Vancouver homeowners spend more than 30 per cent of household income on shelter compared to 39.4 per cent of renters.
Rents are so daunting that the census estimates that nearly 26 per cent of tenant households are in “core housing need.” This is more than twice the proportion of homeowners in a similar predicament.
Statscan defines “core housing need” as when “a private household's housing falls below at least one of the indicator thresholds for housing adequacy, affordability or suitability, and would have to spend 30 per cent or more of its total before-tax income to pay the median rent of alternative local housing that is acceptable.”
The challenges facing renters is even more severe in Metro Vancouver as a whole, with more than 27 per cent of tenant households in core housing need. The national average is 20 per cent.
While the challenges facing first-time homebuyers are well-known, rental housing remains a stubbornly entrenched issue. Starts peaked in 2016 at 6,841 units, according to Canada Mortgage and Housing Corp. statistics, a positive shift from 1,277 units in 2012 but not yet matched.
Despite the strong market for purpose-built rental units and the interest developers such as Adera Development Corp., Cressey Development Corp. and Mosaic Homes – which recently launched a dedicated rental division – have taken in building rental, starts last year totaled 6,683 units.
This year could come close, however, with 5,644 units started through the end of August.
Nevertheless, significant hurdles exist as projects face lengthy approval processes and opposition from communities. This has slowed the delivery of units, leaving many builders hoping for stronger measures on the part of government to encourage new rental units.
“Demand is far and away outstripping supply, and that’s affecting both rental – below-market and market housing,” said Ron Rapp, CEO of the Homebuilders Association Vancouver (HAVAN).
Government intervention could improve conditions, however, assisting affordability across the housing spectrum.
Hani Lammam, vice-president, development and acquisitions with Cressey, recently told Western Investor he expects the federal government will step in with incentives.
Ottawa recently pledged $1.4 billion to support construction of 3,000 rental homes at Squamish Nation’s Sen̓áḵw development at the south foot of the Burrard Street bridge, for example. The low-interest loan is from a five-year-old fund managed by CMHC aimed at building 71,000 rental units nationwide.
“We think the province will take the necessary steps to grease the wheels on the municipal front, make approvals easier,” Lammam added.