Vancouver’s scorching housing market badly needs more supply. Analysts say excessive red tape and wasteful zoning are preventing supply from meeting ferocious demand. It’s another challenge for politicians who have just taken steps to cool demand from foreigners.
Vancouver’s real estate market attracts international attention for its natural beauty, with mountains, the ocean, and a temperate climate. The provincial economy is booming: British Columbia has the lowest unemployment rate in Canada at 5.6 percent with 85,000 jobs created in the last year.
Home prices in Vancouver are up 33 percent over the last year and have doubled in the last 10 years. Because of Vancouver—and Toronto to a lesser extent—Canada has one of the most overvalued housing markets in the world, according to the Organisation for Economic Co-operation and Development (OECD). The Bank of Canada and private sector observers keep warning of a potentially messy popping of the real estate bubble.
While the province is targeting foreign buyers with additional taxes, the locals, who have seen home price appreciation dwarf their income growth for years, are left with a highly unaffordable market.
Ineffective Zoning
“The only way to have a decisive impact on affordability would be to weaken the building restrictions that sharply restrict new housing supply in most of Vancouver and the Lower Mainland,” said the B.C. Housing Affordability Fund, a group led by local real estate economists including Thomas Davidoff.
