By Andra Hopulele
Emina’s proposal to collaborate on this new piece for her real estate blog came at the perfect time. Point2 Homes has just released a new study focusing on the number of empty homes on the Canadian real estate market, and the staff here would love to share the findings with Emina’s clients and newsletter subscribers.
Canada’s home vacancy issue became apparent back in 2001, when the government began collecting data on occupied dwellings. Although historical data is unavailable prior to that year, the first numbers showed that 7.8% of all homes in Canada were vacant. Since then, the rate has only increased.
In 2006, the vacancy rate spiked at 8.4%, followed by slower growth before reaching 8.7% in 2016.
Although foreign buyers and affordability might be part of the problem, they are not the only reasons for the growing number of empty homes. For example, in Vancouver and Toronto, investor speculation and short-term rentals have the greatest influence on the vacancy rate. In other regions, however, it is a combination of decreasing populations and fluctuations in local economies.
In a study of Canada’s 150 largest cities, Point2 Homes analyzed the demographic and housing data in the decade between 2006 and 2016. The results showed that there are significant fluctuations at the local level, with home vacancy rates increasing at staggering rates in some markets, while going down in others.
Of Canada’s largest cities, the Vancouver housing market has the highest share of empty dwellings; its vacancy rate increased by 9.6% between 2006 and 2016 – the equivalent of approximately 25,000 vacant homes. At the same time, Toronto saw a decrease of 4.7%.
British Columbia: North Cowichan & Port Moody See Largest Changes in Vacancy Rates
In British Columbia, North Cowichan and Port Moody are at different ends of the spectrum: the former experienced an increase of 82.6% in its vacancy rate, while the latter reduced its number of empty dwellings by 50.4%. Of the 28 cities in the region, vacancy rates decreased in only cities.
Vancouver’s vacancy rate reached a staggering 8.2% in 2016. This is the main reason why the Vancouver City Council approved a tax on empty homes. Officials have yet to determine whether this tax served its main purpose, which was to encourage owners to rent out their empty, unused properties.
The only city surpassing Vancouver’s 8.2% vacancy rate is West Vancouver. In 2016, it had the highest percentage of deserted properties in the region with 9.2%.
The Prairies: 3 Alberta Cities See Largest Increases
An uncertain economy and harsher labour market conditions – in addition to mortgage rates and tougher mortgage financing rules – caused the number of empty homes in Alberta to skyrocket. It is the only region where three cities (Grande Prairie, Leduc and Fort Saskatchewan) more than doubled their numbers of empty homes in a decade.
The Prairie cities with the highest vacancy rates were Wood Buffalo, AB; Grande Prairie, AB; and Prince Albert, SK. However, three more Alberta cities – Okotoks, St. Albert and Airdrie – logged a drop in the number of vacant homes.
Québec: Baie-Comeau & Saint-Georges Have Changed the Most
While the vacancy rate increased by 63.8% in Baie-Comeau, it plummeted by 47.1% in Saint-Georges, dropping from 5.4% to 2.9%. Shawinigan, Sherbrooke and Montréal have the highest percentages of empty homes in the province.
Notably, renting is favoured over buying in Québec, and the region has the lowest rates of home-ownership in Canada. In Montréal in particular, the situation doesn’t show any improvement, with almost half of its properties being rentals. In 2016, there were a little over 64,000 empty homes in the city.
Ontario: North Bay & Ajax at Opposing Poles
In Ontario, Ajax managed to decrease its vacancy rate by 53.1%. Unfortunately, the same cannot be said about North Bay, where the rate went up by 68.2%. But Ontario does have 16 cities with a vacancy rate under 3%, and only five cities have more than 10% of their homes uninhabited.
Toronto has decreased its vacancy rate over the years; it is currently at 5.6%. According to hydro data, there are approximately 15,000 to 28,000 empty homes in the city, which is about the same as the number of new properties that enter the market in a year.
Atlantic Canada: All Large Cities Post Vacancy Rates of 5%+
Saint John, NB, and Charlottetown, PEI, posted the biggest changes in Atlantic Canada in the decade studied. The former increased its vacancy rate by 22.7% and currently stands at 10.6%; the latter decreased its rate by 24.8% to land at 6.4%.
Completions of multi-residential homes in the Atlantic region are forecasted to decline over the course of the next 20 years following a slowdown between 2012 and 2016.
Despite the many swings and changes between 2006 and 2016, the outlook appears to be more balanced. Moderation may be the answer as housing stocks align more accurately with the current demographic conditions and economic outlook.