New data shows Canada still has 1.3 million vacant homes, some improvements seen

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The problem of vacant homes in Canada is improving, but not very quickly. Statistics Canada (Stat Can) Census data from 2021 shows that vacancies are down from 2016. Resort towns have the highest share of vacancies. This happened despite the boom in year-round residents in these cities. Let’s dive into the data.

from Canada Vacant houses

The term vacant house is a trigger for some, so let’s quickly review what they are (and aren’t). Canada only measures the number of private dwellings occupied by usual residents. That leaves us with the total number of private dwellings and principal residents. Subtracting usual residents from total private dwellings yields vacant dwellings.

Most people think of a vacant house as a dilapidated property with windows knocked out. The kind you see when you’re walking drunk down a side street at 2 a.m., and it’s clear no one could live there. This number includes more however, including any second home or vacation home. New homes built and ready for occupancy, but not yet occupied, are also included in this number.

In real estate-crazed Canada, the term is more controversial than the rest of the world. A similar criteria are used in the United States, where they do an annual vacancies count and call it that. the The OECD also uses a similar criterion, but some people aren’t a fan of calling a vacation home a vacant home. Oh, muffins. Boost morale. One person’s vacation home is another person’s vacant home. It’s not personal.

There is a misunderstanding about the numbers. A key point often raised is that students and temporary residents are not included in the data. That’s not true according to Stat Can, which understands both as habitual residents.

Any further, private homes require not to cross the living space of another person (or people). This means that dormitories and long-term care facilities are not even counted as private dwellings. So yes, these students are excluded, but so are the accommodations they live in. Regardless of whether collective dwellings are occupied or not, they are not included.

Canada still has 1.3 million vacant homes

Canada still has an unusually high number of vacancies, but they are falling rapidly. There were 1.31 million vacant homes in 2021, down 2.62% from the previous census in 2016. This translates to a drop of 35,070 units, which is impressive for such a short period. There will always be vacancies as people move in, but that’s still high for a small population.

Number of vacant houses in Canada by province

The number of houses that were not occupied by the usual resident at the time of the census, by province.

Source: Statistics Canada; Live better.

Canada delivered a lot of houses during this period, which lowered the vacancy rate. The share of vacant private homes fell to 8.0% in 2021 from 8.7% in 2016. Almost one in ten vacant homes seems like a high number, but it is lower than in the United States at 11 % of vacant stock. It’s still 9 times bigger than the UK, and they consider it a serious housing problem.

The Canadian real estate industry has criticized the OECD for using 2016 data in its recent vacancy study. After all, the market started to explode after that, so it must have fallen. Blade, that’s outdated data, right? Again, the 2021 data shows some improvement, but not to the extent implied.

Canada’s ‘resort towns’ have the most vacancies

The highest share of vacant homes was in seaside resorts where the population is booming. Canmore’s housing stock had the largest share at 25.9% in 2021, but that’s down from 27.9% in 2016. Wasaga Beach is in second with 21.5% of the stock, in down from 28.1% over the same period. The city of Sainte-Agathe-des-Monts is third with 19.9%, down from 25.9% at the last census. High rates in small places considered vacation spots are somewhat expected.

The markets above are some of the fastest growing in terms of price and population. RBC has observed that these “resort towns” have the fastest growing populations in Canada. They attribute this to high-income city dwellers moving to where they can afford to. At the same time, the bank says it erodes affordability for residents. As towns used for vacations turn into cities, there will be a lot of debate about what a valid use for housing is.

Toronto now accounts for 1 in 10 vacant units

Real estate in Toronto is the largest market, so it’s no surprise that it has the most vacancies. There were 131,730 vacant homes in 2021, up 32.75% from the 2016 census. This equates to about 30,000 homes, or about 1 in 10 vacant homes across the country. That’s almost half the size of all vacant homes in the UK.

Although Toronto is building as fast as it can, the share of vacant units is also increasing. About 5.5% of the city’s housing stock was vacant, down from 4.4% during the same period. Considering 1 in 4 homes in the area are sold to investors, this should come as no surprise. It’s a challenge to find another city with 200 vacant units in a purpose-built apartment building complex.

Number of vacant homes in Canada by city

The number of houses that were not occupied by the usual resident at the time of the census, by the top 50 cities.

Source: Statistics Canada; Live better.

Vancouver vacant homes see a sharp decline

Real estate in Vancouver has become famous for vacant homes, but it is improving at a rapid pace. There were 61,213 vacant homes in 2021, down 8.25% from 2016 census data. Can you imagine an eight point drop in anything other than vacant homes, and not hearing about all of them? days ? It’s enormous.

Metro Vancouver added a ton of units while lowering the vacancy rate. Vacant homes represent 5.5% of the region’s housing stock, down one full point. Although it is now at the same pace as Toronto, they are both heading in opposite directions. British Columbia recently implemented a vacancy tax that applies a penalty for low usage. There are many exemptions and loopholes, but this clearly requires careful scrutiny of usage.

Andy Yan, Director of SFU’s Planning Department, describes the change as “astonishing” to the Vancouver Sun. It studies housing utilization in Greater Vancouver, particularly underutilization. He attributes the drastic change in behavior to a number of political changes in British Columbia.

Canada is designing a national tax on vacant homes

The City of Toronto and the federal government are scrambling to create a vacancy tax. Toronto is likely to have it live first, largely modeling it after Vancouver. However, don’t expect the same results from the federal government’s vacancy tax. Exemptions are being discussed which will not appear in the legislation, according to a parliamentary committee. An example will be vacation properties which do not yet have a definition.

Canada is making progress in reducing vacancies in its major urban areas. However, as Millennials are pushed out of cities, they are fleeing to “vacation” towns. Many of these homes are three season, so it’s easy to think of them as “obviously” a vacation home. However, the government misses many millennials buying them for year round occupancy. Seems like another failure for privileged decision makers who would never consider living full time in a 3 season home. Millennial shoppers simply isolate them. This is undoubtedly one of the reasons why the cottage region leads in price growth in Ontario.

Essentially, progress is being made. However, adding another political inefficiency is likely to shift the problem from big cities to small towns.

This seems like a complicated way to approach a problem that would largely be solved with higher interest rates.

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