Record 33,000 homes began construction in Metro Vancouver in 2023

Construction progress on the first phase of Senakw, as of February 2024. (Nch’ḵaỷ Development Corporation)

An all-time record number of housing starts was recorded in Metro Vancouver in 2023, according to a new report by Canada Mortgage and Housing Corporation (CMHC).

A total of 33,244 new housing starts were recorded in Metro Vancouver, representing a 28% increase from 2022. Generally, housing starts are defined as the beginning of construction work on the building.

Metro Vancouver saw the highest year-over-year percentage growth in housing starts amongst Canada’s six largest metropolitan areas — just behind Calgary’s increase of 13% to 19,579 units, which was their all-time record, and Greater Toronto’s increase of 5% to 47,428 units, which was their second-highest level since the 1960s.

Steep declines were experienced for Montreal (-37% year-over-year to 15,235 units), Ottawa (-20% to 9,245 units), and Edmonton (-10% to 13,184 units).

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Like Greater Toronto, the housing starts in Metro Vancouver were driven by new apartments, which accounted for 83% of the region’s total housing starts. Both market strata condominiums and secured purpose-built rental apartments reached record-high housing start levels.

About 33% of the 60,000 units under construction at the end of 2023 were secured purpose-built rental homes, which was the highest proportion of such rental homes under construction in the past 30 years in Metro Vancouver.

The high level of condominium starts in 2023 was a result of strong pre-sales in 2021 and 2022, when there were record-low interest rates, rapidly increasing rents, and home price appreciation. Many developers that began construction on their condominium projects in 2023 secured construction financing earlier when interest rates were still low, and more of these developers at the time were involved in multiple projects and had higher levels of upfront equity.

Condominium starts are expected to be slower in 2024 due to significantly higher borrowing costs, with slower demand making it harder to reach the sales target threshold for construction financing, which could lead to the delay or cancellation of projects.

Over the years, a growing number of condominium projects have been converted into secured purpose-built rental housing due to poor market demand for condominiums and higher demand for rentals, made apparent by the pace of rent increases.

Such rental housing projects have also been impacted by the same construction financing issues due to high borrowing costs, but various low-cost construction financing programs by the federal and provincial governments have been able to offset the impacts for many major projects.

It is also noted that rental housing starts in Metro Vancouver were concentrated primarily within the City of Vancouver, with seven of the top 10 rental housing projects located within Vancouver. This includes the first phase of Senakw on Squamish Nation’s reserve at the south end of the Burrard Bridge, where over 1,000 rental homes are being built. The second phase of Senakw’s four phases also began construction earlier in 2024.

However, Metro Vancouver areas outside Vancouver — particularly Surrey and Burnaby — saw stronger housing starts in condominiums, which is due in part to the lower land costs of these suburban cities compared to the City of Vancouver, according to CMHC.

While there are now record levels of new rental housing construction, the benefits of the influx of these new rental homes to the region’s tight rental housing supply and high rental rates will not be seen for years, until these projects actually reach completion.

“Though we still need many more homes for the people that are coming to our region—as well as, don’t forget, the ones that are already here — it’s far from insignificant that we began construction on a record number of homes this past year,” said Ryan Berlin, head economist and vice president of intelligence at Rennie.

“Having said that, this record-setting housing starts activity was not enjoyed by all parts of Metro Vancouver evenly, with more than one-third of municipalities recording below-average starts last year. There’s an opportunity to do more.”

While multi-family buildings saw housing start strength in 2023, the same cannot be said for ground-oriented housing types, with new single-detached houses falling by 16% year-over-year to a level last recorded in 2009. According to CMHC, this falling trend for single-detached houses first began in 2016, and it is due to the limited greenfield land and the higher opportunity costs of redeveloping single-family lots into new single-family detached houses.

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