I remember seeing a movie starring George Clooney as a commercial fisherman out at sea and everything lines up to create the perfect storm. The storm catches these unaware fishermen by surprise and puts them in mortal danger. Vancouver housing is becoming the perfect storm of unaffordable and will hit us within a few years.
The government has stepped in trying to slow the real estate market by introducing new taxes, which has inadvertently created an even greater housing crisis. By adding these taxes, combined with the inefficiency at City Hall, builders simply can’t afford to build. Nothing new is going up and existing projects have been put on hold. If builders aren’t building and people are still continuously moving to our beautiful city, based on supply and demand we will have an even greater housing crisis.
As I mentioned in other newsletters there are roughly 40,000 - 50,000 people moving into the lower mainland every year. Even though new housing isn’t being created, these people will still be moving here. They won’t be looking for high end houses, they will be searching for affordable housing.
If you look around you’ll see the majority of rental buildings in Vancouver were built in the 1960’s and 1970’s when the government was promoting builders to create rental housing. In many cases now, the city is trying to promote the rental housing while adding an exorbitant amount of fees and restrictions, making these projects impossible.
What can we do to prepare? It’s simple, buy real estate. When the news media is talking about how bad the market is and everybody is running for the hills, it’s time to buy. If you want to buy your first investment I recommend bachelor suites and one bedrooms downtown. If you want to buy and hold for redevelopment I recommend buying into Cambie Phase 3, where the density has increased and many properties that were to be assembled have not gone through. If you’re looking to move up, buy a house with rental suites. Right now you can buy a house with basement or laneways providing excellent revenue. Also large houses with many rooms, as house sharing will become more common in the city.
At some point the city and the provincial government will wake up and realize that they made the housing market unaffordable. Money laundering or foreign buyers have nothing to do with affordability, the simple fact is that the government hasn’t done anything to support densification fast enough for this growing city. The only way to solve this problem is to create density and make it easy for developers to create housing for people.
Mark Hammer PREC*
RE/MAX Crest Realty