Metro Vancouver is heading for a rental housing crisis this fall as a “perfect storm” of factors pushes an already record low vacancy rate even lower, says a leading Vancouver-based real estate firm.
“There has traditionally been a shortage of rental housing for students when they start school in the fall, but this year it looks like that shortage is going to be a lot worse,” said Nick Marini, vice-president at Macdonald Property Management.
Based on government statistics, Macdonald is forecasting a seven-per-cent increase this year in international students attending B.C. educational institutions. Meanwhile, the market-dampening 15-per-cent foreign buyers’ tax and tighter mortgage qualification requirements mean that parents of students are less likely to buy homes for their children, said Marini. As a result, a larger number of students will be hunting for rental housing this fall, increasing demand for accommodation.
Marini said the government steps to cool the red-hot housing market — such as the 15-per-cent foreign buyers’ tax and mortgage restrictions requiring that first-time buyers have higher incomes — have only pushed the housing affordability crisis to the rental market.
About 360,000 foreign students are enrolled in Canadian educational institutions every year, and about 100,000 of those attend schools in Vancouver. Contributing to the expected inflow this year is the fact that foreign students and their families are finding the United States a less hospitable environment. With President Donald Trump’s travel bans and other treatment of foreigners, Canada, already seen as a safer and more tolerant society, has become more attractive as an educational destination.
Real estate expert Tom Davidoff at the UBC Sauder Business School agrees that this fall will be far worse than past years for rental housing availability.
“The biggest impact is people deciding not to get into the owner market,” Davidoff told CBC. “Policies that result in decreased demand on the owner side will likely result in increased demand on the renter side.”
“Our view is that demand for housing from international students coming to B.C., generally, and Greater Vancouver, in particular, is likely to reach a new peak this academic year,” says Dan Scarrow of Macdonald Realty in a brief. He predicts there will be a net increase of 9,000 foreign students coming to B.C. this academic year, with about 6,300 of those settling in Metro Vancouver. Also contributing to the student inflow is the fact that Canadian immigration policies are clearer than U.S. ones and encourage students to come here to study and ultimately apply for immigration, said Scarrow.
Agreeing with Davidoff, Scarrow adds that government efforts to make housing more affordable for owners have been well intentioned, but have produced “unintended consequences that have made the situation dire for renters.”
Rental demand is a local factor that can’t be controlled by regulation or other measures, Scarrow said. That leaves finding ways to increase the supply of housing as the only solution to the issue of rental housing affordability. Governments could alleviate the rental crisis by encouraging developers to build rental housing and by streamlining and accelerating approval processes at the municipal level.
For his part, Marini believes the one-per-cent vacancy tax will encourage some homeowners to rent, but it’s “nibbling around the edges” of the problem.
Written for The Vancouver Sun online Aug 2, 2017 and The Province Aug 6, 2017 print edition.