After the pandemic pause and uncertainty of 2020, the dam officially burst in 2021.
Last year’s fourth quarter set records more than 10% higher than the previous all-time high — 7,655 new multi-family homes hungrily absorbed into the market. The entire year was a dazzling 26,291.
The Fifth Dimension Winter Edition 2022 report explores the Metro Vancouver multifamily market over the course of a stunning year, capturing a remarkable market recovery before the pandemic recovery even began.
When 2020 ground the industry to a halt, it created a bottleneck of demand. Not a single tower launched that year, says Fifth Avenue Real Estate Marketing Ltd. President Jamie Squires.
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“I think 2021 was big because, over 2020, everyone was unsure about remote work,” Squires says. “The pandemic moved work to this new model, everywhere, but now everyone’s comfortable. Now they have job security — as long as they [are] in the right industry — and now they’re looking for homes, but they don’t have to commute. So all of a sudden their options have expanded.”
With immigration and foreign buyers on hold, it was a competitive local market among Canadian buyers, Squires says, with some coming from out-of-province in seek of British Columbia’s milder winters. City dwellers, now working from home, decided to trade up for more space in surrounding municipalities — bringing heat to those markets.
“I’d never seen homes in Chilliwack go in multiple offers, and almost every home in Chilliwack went into multiple offers in 2021,” Squires says. “It was crazy. Abbotsford — trying to find a townhouse there, you couldn’t. Or any single family home. As soon as one came on the market, the same five people would all be making the same offers.”
Low supply has been BC’s chronic condition and with demand still strong, the report predicts even higher housing prices in 2022. And as the market anticipates interest-rate bumps this year, end users and investors are encouraged to buy into pre-sale condo developments years before they are built, instead of resale units.
In terms of buying power, however, interest rates are not the big story — instead, Squires says market watchers should consider a possible change this summer to the stress test.
“What’s really affecting people is the stress test that the government has here,” she says. “If the government increases the stress test, some of that buying power is eliminated. They introduced the stress test in the month of June, the last increase they did was the month of June. So I'd be watching the month of June to see if the government increases that again.”
With some buyers chasing affordability and more space outside the city centre, strong economic activity is brought to smaller municipalities, the winter report notes.
“As young people continue this regional shift and seek to put down roots in communities outside of Metro Vancouver, “ the report says, “we will also see those communities benefit from new spending, creativity, investment, and business creation in the coming months and years.”
This shift presents an enormous opportunity, driven by remote and hybrid work arrangements — so, which municipality stands to gain the most? As the report points out, these suburbs need to update their planning and development approvals processes if they want the lion’s share.
Developers that have carefully followed every rule and ticked every box are still waiting a year to be approved, Squires says. These delays hold back the supply that's desperately needed to balance the market -- and to make the dream of homeownership attainable for more Canadians.
If municipalities won’t step up, Squires says, the province should step in.
“I think our provincial government, if they are wanting to solve this issue, they need to look at the root cause, put in a new process, [and] start overseeing the planning department as a province, not just by municipality."
Read The Fifth Dimension Winter Edition 2022 report in full here.
This article was produced in partnership with STOREYS Custom Studio.
