Vacancy rates in British Columbia’s largest urban area were cut by more than half in 2021 in a return to pre-pandemic levels, according to a new Canada Mortgage and Housing Corporation (CMHC) report.
By dropping to a 1.2 per cent vacancy rate from 2.6 per cent in 2020, Metro Vancouver’s rental market has once again tightened in ways not seen across other large centres in Canada, found the CMHC.
“With the return of economic growth, rental demand increased faster than supply in 2021. The Vancouver rental market again faces many of the same imbalances as in 2019,” said CMHC senior specialist Eric Bond in a prepared statement.
The region continues to have the highest average rent in Canada, where last year the cost to rent an average purpose-built, two-bedroom unit hit $1,824. In the condominium rental market, a two-bedroom rental averaged $2,498.
“Our data shows that lower-income households face significant challenges finding units that they can afford,” stated the report’s analysis of Metro Vancouver’s rental market.
By comparison, Toronto's vacancy rates rose 4.6 per cent, and in Montreal, where the average purpose-built, two-bedroom rental goes for $932, the vacancy rate held steady at 3 per cent last year. Nationally, vacancy rates held steady through 2021, a trend largely influenced by Montreal's outsized rental stock.
FAMILIES, LOWER-INCOME RESIDENTS PRICED OUT
The CMHC says an affordable home is one where a renter spends no more than 30 per cent of its gross income on rent.
Using that benchmark, someone earning an average hourly wage would have to work nearly 50 hours per week in 2021 to be able to afford a two-bedroom, purpose-built rental apartment, found the CMHC. That’s up slightly from the year before.
Lower-income people face the biggest barriers in finding an affordable place to live.
Less than a quarter of purpose-built rentals in Metro Vancouver would be considered affordable for a household earning less than $48,000 a year. And only one in 1,000 purpose-built rental units were offered to the poorest 20 per cent of households, found the CMHC report.
Even if a lower-income household found a place they could afford, most lower-priced units were too small for families.
“Beyond the overall rental market tightening in 2021, these results reinforce that lower-income households, particularly families, face significant imbalances and pressures when accessing rental housing they can afford,” said the report.
People moving into a new unit pay more on average as landlords raise rent. According to the report, the average asking price for a vacant unit was 10 per cent higher than the average paid by already-occupied units in Vancouver.
Newly completed units had the highest rents, averaging $2,522 for two-bedroom units, roughly $500 more than the asking rent of older units and $700 more than the average occupied rent of existing units.
Across the Metro Vancouver region, the City of Vancouver accounted for the most new purpose-built rentals in 2021, accounting for 41 per cent of the nearly 8,000 built last year. Some cities, like West Vancouver and Richmond, produced zero new purpose-built rentals in 2021.
INTERNATIONAL MIGRATION REBOUND
The COVID-19 pandemic hit young renters hard in 2021, but the CMHC report notes employment in the 15- to 24-year-old demographic had stabilized in Vancouver by the summer of 2021.
Renewed employment in the region led to new rental households, especially in central urban areas with high rents that had been vacated in 2020, notes the report.
Young people looking for a rental at the University of British Columbia faced a tougher search last year. A vacancy rate of 13 per cent at the University Endowment Lands in 2020 evaporated in 2021 to zero per cent.
“This sudden and complete disappearance of vacancy occurred despite increasing supply in the area over the past year,” noted the report.
International migration slowed at the start of the pandemic, dropping newcomer rental demand to historic lows. But by the first half of 2021, the easing of pandemic restrictions led international migration to accelerate once again — particularly in B.C. and Quebec — though it remained 36 per cent lower than in 2019, according to data pulled from Immigration Refugee and Citizenship Canada.
“This implies that net international migration is likely to continue to fuel growth in rental demand and place further downward pressure on vacancy rates, assuming migration continues to recover to pre-COVID levels,” noted the report.
All census areas surveyed in B.C. saw the number of new permanent residents rise above pre-COVID levels. Meanwhile, international students admitted to Canada between October 2020 and August 2021 increased over 44 per cent compared to earlier in the pandemic, though they still remained nearly 7 per cent below pre-pandemic levels.
RENTAL CRUNCH A B.C.-WIDE PROBLEM
Elsewhere in British Columbia, Abbotsford and Mission were the only urban areas in the province that saw the supply of purpose-built rentals outstrip demand in 2021.
In Kelowna, rental vacancy rates sat at 0.6 per cent, and in Victoria, rates dropped to one per cent last year, with the average two-bedroom rental climbing to $1,571.
Living in Vancouver Island’s biggest city, a renter would have had to work just over 40 hours per week, a slight decline from the previous year, to afford a two-bedroom purpose-built rental. (Full-time employment is considered 37.5 hours per week).
That’s in a city where vacancy rates for condominium rentals fell to zero last year.
Households earning less than $42,000 a year could not afford to rent a bachelor unit in Victoria, with the asking price of such units $350 more than what they could afford.
And those earning $64,000 or less would have to have spent $400 more than what they could reasonably afford for a two-bedroom unit.
“The majority of rental households, especially low-income households, remain in dire need of affordable and suitable rental housing,” said the CMHC.