Dan Fumano: Shift from condo to rentals continues in Vancouver

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Vancouver is seeing a clear and continuing shift away from adding homes for people to own and toward more rental housing.

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Slightly more than half of Vancouver households rent, census data show, and city hall officials expect that proportion is likely to grow as Vancouver becomes, increasingly, a city of tenants.

Over the last decade or so, both the current and previous city councils have implemented policies intended to boost construction of rental housing, and those moves seem to have at least some of the desired effect, a new report shows. But the report also illustrates how much of a challenge remains in improving chronically low vacancy rates and the crucial question of affordability.

The shift continued in 2021 when city hall approved 2,956 rental homes, more than three times the total number from four years earlier and more than any single year since the 1970s. In 2008 and 2009, Vancouver approved zero rental units, while condo construction was booming.

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The new numbers come from a report released Wednesday outlining the city’s progress at the halfway point of the 10-year housing strategy approved by the previous city council in 2017. The progress report doesn’t include single-detached houses and duplexes, but focuses on purpose-built rental homes, condos, social and supportive housing, laneway houses, coach houses and townhouses.

In 2014, 76 per cent of homes approved in Vancouver were intended for ownership (condos and townhouses), and 24 per cent for the primary rental market (including apartments, laneway homes, and social and supportive housing). That percentage of rental approvals increased over the subsequent years, and in 2021, 52 per cent of approvals were for rentals, the second consecutive year over 50 per cent.

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But the report also makes clear that serious challenges remain. The 2017 strategy set a target that 50 per cent of approved homes should be affordable for households earning less than $80,000, but in its first five years, the city only hit 31 per cent. That’s significant because Vancouver’s median household income, which can include more than one earner, is only $50,250. (For homeowners, it’s $88,431).

To be clear, those targets aren’t aiming to produce homes that can be owned by households earning $80,000 or less — that’s the target for rental homes. Home ownership in Vancouver is basically out-of-reach for most average-income families, and many above-average earners, except in cases where buyers receive significant outside funds such as intergenerational wealth.

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“We’ve kind of reached the limits of what a municipal government can do alone to meet the needs of households under $80,000,” said Edna Cho, a senior housing planner with the city. “And that’s where we really need the partnerships with senior levels of government to make that a reality.”

One positive thing, Cho said, is those senior governments are more willing partners on the housing file now than they have been at any time so far in her 20 years at city hall.

Dan Garrison, Vancouver’s assistant director of housing policy and regulation, agreed that provincial and federal housing support has been stronger in recent years, adding: “And we’re still falling short … so we’re going to need even more investment than we’ see seen to date.”

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There has been some criticism in the local real estate industry of city hall pushing rental over condos. The Goodman Report, a local newsletter for commercial real estate, wrote in a Wednesday newsletter about the Broadway Plan, which is currently under development with a significant focus on rental construction, stating that one drawback of the plan is its “limited opportunities for condo ownership.” .”

But some in the private sector seem to have embraced the shift from condo to rental. Tim Grant, president of local developer PCI Group, said that a decade ago Vancouver’s market and regulatory environment meant building rental housing was much less financially viable than condos. But Vancouver’s efforts to boost rental construction, both by opening up more land for apartment construction and giving incentives like increased density, have made rental projects more viable, he said.

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“Groups are pivoting (from condo to rental), seeing the need and seeing the city’s priority on it, and the incentives that make it viable,” Grant said, adding federal supports, like low-cost rental financing, and provincial efforts have also helped the shift.

PCI is active now in the Vancouver rental market, with two developments under construction in Hastings Sunrise, totaling 212 homes, and a 116-unit rental project breaking ground soon in Arbutus Ridge. The developer is also in early talks with the city about a proposed South Vancouver project with 850 rental units, Grant said, adding that all those projects involve 80 per cent market rentals and 20 per cent below-market units.

Thursday evening, PCI’s proposal for a 223-home, 39 storey tower directly above the subway station now under construction at Broadway and Granville streets, will enter its third night of public hearing. That application has drawn both sharp criticism as well as support, including from BC Housing Minister David Eby.

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In a letter this month to Vancouver city council, Eby wrote that PCI’s project “will bring urgently needed rental housing to the community,” encouraging the city to “urgently advance” the project so the “proposed new rental homes can be built as soon as possible.”

Vancouver’s housing progress report is included in a 158-page document going to council next week.

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