Chard Development's The Royals rental project in North Vancouver
As developers struggle with weak condo sales, here come renters to the rescue
No matter how old you are, the incredible real estate boom that inflated home prices across B.C. has made housing unaffordable. But few people feel this pressure more acutely than the millennial generation, whose growing desire for mobility and freedom includes opting to rent instead of purchase and saddle themselves with a mortgage.
Many are veering away from the traditional path of their parents, most of whom chose to buy a home in the suburbs and settle down for the long haul. It appears that developers are taking notice, or at least being nudged by market forces to shift their business model in sluggish conditions.
With activity at presales centres much quieter, some new condo projects are getting delayed or turned into purpose-built rentals. As a result, rental construction is thriving throughout the province, especially in Metro Vancouver. In June, the region had 4,226 rental units underway, according to Canada Mortgage and Housing Corp., just shy of record highs set earlier this year.
The pipeline looks plentiful, given that rental housing starts are also well above historical averages. This is encouraging news after rents have outstripped wage growth over the past few years, growing by double digits annually in many B.C. cities.
However, there are signs that the rental market is finally stabilizing. Property management companies are reporting more vacancies and, in some cases, lower rents for single-family homes. Some of these properties have been forced onto the market by the provincial government’s speculation and vacancy tax, which requires homes to be occupied for at least six months a year to avoid stiff penalties.
Also, home purchases remain weak, British Columbia Real Estate Association numbers show. January through July, sales fell 14.4 percent year-over-year, while the average price dipped by 5.3 percent year-to-date, to $687,413. For developers who want to push forward while mitigating risk, building rentals looks increasingly favourable, despite recent rent controls that may reduce future profits.
After years of neglect, renters are finally getting some attention. Developers must be equally relieved.