UDI luncheon: the hype of the housing crisis
May 01, 2019
Speaking to a sold-out crowd of almost 700 industry leaders, on April 18 Andrew Ramlo, vice-president of Rennie Intelligence, took an in-depth look at the hype and the reality of Vancouver’s much reported housing affordability crisis – starting with three myths he busted open.
Myth One: Millennials are fleeing Vancouver
Busted: The number of Millennials (age 20-24) in the Lower Mainland increased by approximately 52 per cent from 2011 to 2016. More significantly, many who had been living with Mom and Dad in the ‘burbs are now moving to… you, guessed it, Vancouver. We are swimming in Millennials.
Myth Two: #Don’tHave1Million
Busted: Despite on-going media hype that it’s impossible to purchase a new home in Vancouver for less than $1 million, Ramlo’s research presented a different take on the market. In 2018, 74 per cent of sales in the Lower Mainland fell below the million-dollar mark as were 61 per cent of sales in the City of Vancouver. Even more telling, the median price of a Vancouver home in 2018 was $685,000: Remove the top 20 percent of ultra-luxury, crazy priced homes and that number drops to $629,000. #Don’tNeed1Million
Myth Three: We have more than enough supply to accommodate demand
Busted: Based on immigration numbers and increasing first-time buyers entering the market, the next decade would see an average of almost 23,000 homes needed annually to accommodate our growing and changing population: Starts need to be in the range of 25,000+ units annually, well below levels that currently characterize the market. Add in the fact that one-in-seven housing starts is associated with a demolition, and Ramlo predicts a shortfall of just under 70,000 homes.
Looking specifically at the Millennial front, in 2016, some 58 per cent of Millennials were still living with Mom and Dad. During the next decade, more than 3.8 million of them plus another 531,000 Gen-Xers will fly the coup as they move into homes of their own.
And let’s not forget the ever-advancing silver tsunami. As our population ages, the ratio of working individuals compared to seniors/retirees is plunging dangerously. In 1971, for every senior, there were 6.6 people actively employed. By 2018, that number dropped to 3.6. And if this trend continues, 2036 will see only 2.3 employed people for every senior.
In closing, Ramlo offered this final insight: “If we continue to squeeze household formation for new-home entrants, the region would need to add roughly 100,000 net new homes to accommodate demand from those entering the market over the next decade. So, in order to extend the same housing opportunities to the generation entering the housing market that was enjoyed by the previous generation, we would have to add another 50,000 units to the region (a 50 per cent increase) over the same period. That’s like building six more River Districts.”
Andrew Ramlo can be contacted at aramlo@rennie.com where you can also request a copy of The Rennie Landscape, a quarterly publication that tracks the demographic and economic indicators influencing the Metro Vancouver housing market.