Metro Vancouver's housing shortfall rises to over 45,000 units
The housing shortfall in Metro Vancouver reached 45,541 units as of 2023, and if the trajectory holds, it will peak at about 49,000 units in 2031.
A falling cycle would begin in the early 2030s, reaching a shortfall of 48,969 units, according to a new market report by real estate marketing firm Rennie.
Since 2001, the average incremental housing deficit accrued per year has been 2,070 units. When demolitions of 16% are accounted for, the region should be building over 2,400 more homes annually.
According to Rennie, a housing shortfall did not exist in 2000.
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The current deficit figure of 45,541 units is equivalent to providing enough homes for 110,000 people, equivalent to the population of Delta or Maple Ridge, based on the average of 2.4 persons per household.
The figure of about 49,000 units in the early 2030s is equivalent to the entire housing supply of Langley Township.
“With continued population growth expected in the coming years, we’ll need to substantially increase the pace of housing supply just to keep the deficit from growing — let alone reduce it,” states the report.
10-year historical population growth (left) and 10-year population growth forecast (right) in Metro Vancouver. (Rennie)
Over the past decade, between 2013 and 2023, Surrey led Metro Vancouver’s population growth, with a net gain of 144,078 residents and a growth rate of 28%. This was followed by Vancouver with 89,598 (+14%), Burnaby with 47,346 (+20%), Langley City and Langley Township with 48,462 (+35%), Coquitlam with 28,715 (+21%), Richmond with 34,642 (+17%), and North Vancouver City and North Vancouver District with 22,999 (+17%).
Moving forward, the projected population growth over the 10-year period between 2023 and 2033 will still be led by Surrey with 188,795 (+29%), followed by Vancouver with 78,149 (+11%), Burnaby with 68,372 (+23%), both Langley with 58,036 (+31%), Coquitlam with 41,973 (+25%), Richmond with 34,434 (+15%), and both North Vancouvers with 30,109 (+19%).
The provincial government’s population growth forecast also shows Surrey will become BC’s most populated city when it reaches 785,619 residents in 2029 — squeaking past Vancouver’s expected 780,075 residents. The gap led by Surrey will grow with each passing year afterward.
Surrey is also expected to become the first BC municipality to reach one million residents — by 2042. In the same year, Vancouver will trail behind at just over 936,000 residents.
Metro Vancouver’s population is expected to reach and exceed three million residents in 2024, and if the projections hold, another one million people will be added to the region by 2041, for a total of four million residents.
10-year historical population growth (left) and 10-year population growth forecast (right) in Metro Vancouver. (Rennie)
Although the federal government has announced its intention to slow down the pace of non-permanent resident immigration following two consecutive years of record growth, the population growth is still expected to remain elevated.
Rennie notes that Metro Vancouver usually sees less housing market activity, relative to population, than other markets of the province, but not this year.
Some input factors to consider include Canada’s weakening labour market from unemployment trending upwards for more than two years, now nearing a 25-year low, while job vacancies have returned to pre-pandemic levels, coupled with the country’s worsening labour productivity.
Borrowing is on the rise again in Canada, and high inflation is a thing of the past, although the Bank of Canada still has a long runway before reducing the policy interest rate to a relatively neutral rate.
Rennie asserts the federal government’s new interventionist policy of increasing capital gains taxes has deterred investment in new housing supply.
The provincial government’s interventionist policy on curbing short-term rentals, such as Airbnb and Vrbo, has also not made a notable impact on housing supply but is having negative implications for overnight visitor accommodations, which impacts the tourism industry. Rennie suggests a limited number of short-term rental homes are suitable for long-term rental housing for people who live, work, and/or study in their communities.