A new study sheds some light on the troubling housing situation that we could see in Vancouver in seven years’ time, in regards to home prices if there are no significant changes to the housing market.
One of the most interesting parts of the Concordia University study from the John Molson School of Business and Equiton is that it was AI-powered.
As we’ve seen in many real estate reports addressing the seemingly never-ending issue of housing affordability, supply is a primary concern. This is something that Prime Minister Mark Carney has pledged to address.
“Using robust data, traditional econometric tools, and AI-powered forecasting models, we quantify how policy actions and market shifts can help realign housing supply with underlying demand.”
The AI tools the study uses forecast home prices across major Canadian cities, including Vancouver and Toronto, and “simulates increases in the existing rate of housing supply expansion by 0, 50 and 100 per cent.”
What’s Vancouver housing going to look like in 2032?
Mark Carney (Government of Canada)
According to the study, prices are expected to dip modestly this year, thanks to a reduction in immigration.
“But the effect is short-lived,” the study suggests.
“Prices resume their upward trend as population growth rebounds, with the median home price rising from $2.5M to nearly $2.8M under the baseline completion level by 2032.”
The study also highlights the staggering amount of completions that the country and city need to make to make a dent in that for cast. The study states that even a 50 per cent increase in completions doesn’t significantly slow the trend, “and prices still edge above $2.8M.”
The study states that supply acceleration is needed to prevent the worst-case scenario.
“Without supply acceleration, Vancouver median home prices may exceed $2.8M by 2032. Only the most aggressive supply increases may stabilize prices around $2.5M,” the study says.
“This reflects the deep supply-demand imbalance in Vancouver, where even aggressive construction is needed just to stabilize pricing.”
What prices look like today
Even if prices were to stay where they are, that doesn’t mean they’re affordable.
The report suggests that the median price of a home in Vancouver is hovering around $2.4 million today.
Concordia
We can gain further insights from other real estate reports. For example, Greater Vancouver Realtors analyzes benchmark home prices, which are essentially the typical prices for homes in a specific municipality. For a single-family detached house, Greater Vancouver Realtors said the benchmark price in Metro Vancouver last month was $1,974,400.
Looking at specific regions of Vancouver tells a different story.
The Vancouver West region had a benchmark price of $3,311,800 last month. Vancouver East saw a more reasonable benchmark price of $1,794,500.
The Concordia study says it’s more than just about building more, as labour and resource realities also need to be addressed.
“Canada’s housing market faces additional challenges: the intractability of housing affordability, lack of skilled construction labour, increasing material costs, and the time it
takes to increase the supply of homes, just to name a few. This is an area primed for further practical research. This first-of-its-kind research gives us some quantifiable direction
regarding policy surrounding this generational problem as Canadians demand solutions,” the report concludes.
Another study, which we reported on earlier this month, also shed some light on how “impossibly unaffordable” Vancouver was on the global scale.