This is a response piece to the Dailyhive article “Rental rates falling in Seattle due to flood of new supply from building boom” by Kenneth Chan, drawing parallels to the current situation in Vancouver. Full article linked below.
Vancouver is an expensive place to live. With housing prices so far out of reach for many, renting is the only option for the foreseeable future. Renting though, is not that easy. Vancouver sits at a vacancy rate of just 0.8%, which means any opportunity to rent is met with fierce competition, multiple applications, and bidding wars which may drive up rental rates giving the highest bidder opportunity to take over the space at a further inflated cost per month.
Purpose-built rental buildings have seen little increases over the years, nothing in comparison to the period of 1960’s-1970’s. According to CMHC, purpose-built rental stock between 1990 and 2018 saw an increase of only 3,960 additional units.
The discussions we have today have not changed from discussions which can be found in reports to Council dating back to 2007. Simply put, developers will go to the path of least resistance. If it takes just as long to get a project through the approval process and construction, and costs do not change whether the building is rental or condo, then what is their incentive to build rental at a lower return in comparison to market condo? The private sector is in the business of making money, so that they can continue to operate and churn out other projects.
The City’s rental problem is not something new, and nothing has worked over the last thirty years to spark a large influx in purpose-built rental. You must further incentivize developers to build purpose-built rental in order to sway them from building market condos in today’s housing climate. If we are in a crisis when it comes to affordability and housing, then drastic steps need to be taken in the short-term to get us out of this state.
Seattle, facing similar housing issues to Vancouver, did just that and is now seeing the results of a drastic increase of supply in purpose-built rental. The city of Seattle stands at a vacancy rate of 10.5%, with rental rates that have fallen year-over-year. In contrast to Vancouver, renters are receiving incentives from landlords in attempt to lure them to their units over others.
Seattle being the 15th largest urban area in the U.S. in terms of population, had the fourth-most number of multifamily units approved in 2018. Permit approval numbers were only higher in New York, Los Angeles, and Dallas.
Staff within the City of Vancouver should be having long discussions with Seattle’s planning and housing department and take note to what has worked there. Further discussions should also be had with our local developer community regarding what could sway their decision to build more rental stock. The City needs the private sector’s help if it has any hope in meeting the growing demand for rental stock today.
To read the full article referenced in this piece, please visit: https://dailyhive.com/vancouver/seattle-rental-housing-market-january-2019