interested in other markets?
Alongside the Vancouver edition of the rennie landscape, our intelligence group also produces editions for the Victoria and Kelowna markets. Read them at the links below.
Victoria editionKelowna edition05. housing
a construction transformation is appa-rent
Across Canada, purpose-built rental housing construction has experienced renewed interest the past few years. This has been happening because of a mix of market conditions (the pre-sale market has been sluggish in most Canadian markets, including Metro Vancouver, which we discuss in later sections) and policy incentives (like the availability of low-cost CMHC financing).
Overall construction activity has been robust of late in Metro Vancouver. Total starts across the region reached a new high in 2023 of more than 33,000, before declining to 28,000 last year. An increasing rate of new purpose-built construction has been a major contributor, with the annual total surpassing 10,000 homes in each of the past two years. In fact, last year’s total was 59% higher than the past-decade average, while ownership starts (just shy of 18,000) were 21% below their long-run average. Ownership starts still make up the majority of construction activity in Metro Vancouver, but their share of the total has been declining, with last year’s 63% the second-lowest (after 2022) since 1990.
Last year’s pre-sale market saw declining sales counts—to fewer than 10,000—suggesting that ownership starts are likely to drop further in 2025. We expect overall starts to decline in 2025, although a healthy pipeline of upcoming rental projects across the region will keep the total from falling much further. Housing availability remains constrained in Metro Vancouver, though the renewed growth of our purpose-built rental housing stock has increased the overall stock by 8% over the past three years, while the vacancy rate rose to its highest level last year since 2013 (outside of 2020). We have a long way to go in growing housing supply, both ownership and rental, but it’s a start.
Seattle editionPurpose-built rental housing development is making a comeback in BC after years of being dormant. The overall pace of construction, however, is slowing.
BUILDING WITH PURPOSE
DATA: HOUSING STARTS BY INTENDED MARKET, ANNUAL, 1990-2024, METRO VANCOUVER
SOURCE: CMHC
buying time
The rules governing the early marketing period for the pre-sale of new homes have been relaxed for larger projects. That has the potential to impact a sizable share of the future housing supply in Metro Vancouver.
We noted in the Fall 2024 edition of the rennie landscape that the Real Estate Development Marketing Act (REDMA)—the consumer protection tool used to govern the marketing and pre-sale of new homes in BC that came into effect in 2004 — was no longer suited to the size and complexity of new home developments today. So it is heartening that the BC Financial Services Authority announced a new pilot program which will allow new home developments with 100 or more homes to opt in to an 18-month early marketing period to meet the sales thresholds required for construction financing. This should make more projects viable, and in-turn bring more supply to the market.
In Metro Vancouver, there are currently more than 55,000 homes in actively-selling condominium projects. Those that have at least 100 homes, are in the pre-construction phase, and are less than 70% sold, account for nearly 10,000 homes that could benefit from the extra time. Of the future developments in various stages of planning across the region, nearly 20,000 homes are potentially ready to market in the next 12 months in projects large enough to qualify, suggesting this change could have a tangible impact on the region's supply of new housing. This policy change won’t impact demand, however, and increased supply will also bring increased competition for buyers.
POTENTIAL PILOT PROGRAM PARTICIPANTS
DATA: CURRENT ACTIVE & CONTEMPLATED NEW HOME CONDOMINIUM PROJECTS AS OF Q4 2024, METRO VANCOUVER
SOURCE: ZONDA URBAN
buying with intention
Individual investors have historically played a major role in bringing new housing supply to BC’s largest markets. Their participation, however, has waned of late.
Residential development in BC has relied on investors putting down deposits to secure pre-sale homes in order to make projects viable. Condominium investors were the driving force in adding rental housing for decades (until recently as we just discussed), accounting for 79% of the rental additions to Metro Vancouver's housing stock since 2007.
Putting down a sizable deposit to secure a pre-sale home to be delivered years later requires making a big commitment. Investors are often better suited to make that transaction, as they are investing in future returns. End-users, on the other hand, are often making a down payment on a home they need to occupy right away. Those investors, however, have pulled back from the pre-sale market due to a mix of high interest rates, new policies on taxation and short-term rentals, changes to the residential tenancy act, and new sources of uncertainty. Across all rennie marketed new home projects, the share of investor buyers has declined by half in the past year to levels not seen since 2019 and 2020, when the new home market had its fair share of challenges. The sluggishness of the pre-sale market is a direct result of these absent investor buyers, and they’ll likely need more clarity around interest rates, inflation, and policy from all levels of government (domestic and foreign) before they return in greater numbers.
MAKING USE OF OUR HOMES
DATA: SHARE OF NEW-HOME PURCHASERS BY INTENDED USE, RENNIE PROJECTS, ANNUAL, 2019-2024
SOURCE: RENNIE INTELLIGENCE
complete-ly new territory
The pace of homebuilding has reached new heights in BC the past two years, and with that more homes are being delivered—including many that remain unsold.
Metro Vancouver has experienced record-setting levels of homebuilding the past two years. After a record year for housing starts in 2023 at more than 33,000, completions followed in 2024 with more than 28,000. Meanwhile, pre-sale market activity has waned with just 11,500 pre-sale transactions in 2023 and fewer than 10,000 in 2024. This has led to elevated levels of available new home inventory (around 16,000 unsold homes) and also an increase in the number of completed homes that remain unsold (to almost 2,200).
Over the next 12 months, expect that completed inventory number to grow. The number of homes under construction today remains close to record levels, and we forecast housing completions to rise in 2025. Within the condominium sector, there are more than 2,700 unsold homes in buildings set to complete this year. Based on current absorption rates, and the number of projects that have already completed construction or will complete this year, our expectation is for just under 1,500 sales of completed or completing homes. That would lead to a 60% increase in the completed and unsold inventory across the region this year. This means higher carrying costs for those holding that inventory, which will reduce their ability to bring more developments to market.
NOT MAKING USE OF OUR HOMES
DATA: UNSOLD INVENTORY, FORECAST ABSORPTION, AND FORECAST UNSOLD INVENTORY OF COMPLETED AND COMPLETING CONDOMINIUM PROJECTS, 2025, METRO VANCOUVER
SOURCE: ZONDA URBAN, RENNIE INTELLIGENCE
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Disclaimer: This representation is based in whole or in part on data generated by the Chilliwack & District Real Estate Board, Fraser Valley Real Estate Board or Real Estate Board of Greater Vancouver which assumes no responsibility for its accuracy.
Disclaimer: This representation is based in whole or in part on data generated by the Chilliwack & District Real Estate Board, Fraser Valley Real Estate Board or Real Estate Board of Greater Vancouver which assumes no responsibility for its accuracy.
Disclaimer: This is not an offering for sale. Any such offering can only be made by way of disclosure statement. E&OE. The developer reserves the right to make changes and modifications to the information herein without prior notice. Photos and renderings are representational only and may not be accurate.
Disclaimer: This is not an offering for sale. Any such offering can only be made by way of disclosure statement. E&OE. The developer reserves the right to make changes and modifications to the information herein without prior notice. Photos and renderings are representational only and may not be accurate.
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