New housing data show a sluggish turnover rate

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As Ottawa continues the drip of new data, a clearer picture of Metro Vancouver’s housing crisis emerges, which will hopefully lead to smart policy-making decisions.

The latest contribution from the Canadian Housing Statistics Program, released earlier this month, is the turnover rate of home sales. The turnover rate is the number of homes that change hands in a given year divided by the total number of homes in an area. The turnover rate is important because it illustrates neighbourhood change. It also helps planners plan and is a barometer for the economy.

Turnover rate varies greatly according to housing type and the year the house is built. The detached house is the place where homeowners settle in for decades, and as they get older, they become less willing to move. Recent census analysis by Andy Yan, director of Simon Fraser University’s City Program, showed that for Metro Vancouver homeowners in the over-65 age group, 44 per cent of them live in detached houses.

His study findings are supported by the turnover rate released by the CHSP, a data project of Statistics Canada.

The data cover the year 2018 and comprises market sales and “non-market sales,” where transactions occur without going to market, such as in a foreclosure or when adding a relative to the title.

The overall turnover rate for Metro Vancouver is slow, says Mr. Yan, at 7.66 per cent, with 60,120 houses of all types changing hands out of a total stock of 784,570 houses.

There were a total of 266,825 detached houses in Metro Vancouver in 2018. Those sold on the market numbered 7,955 – a turnover rate of 3 per cent. If non-market sales are added in (4,875 additional houses) the turnover rate is higher, at 4.81 per cent.

The new data set gives us a peek at the market and non-market transactional flow of residential real estate in Vancouver, Mr. Yan says. “Change is slow but small numbers can have big effects. A small amount of the market sales determines the values of the region’s entire residential real estate. It highlights how a small number of domestic and foreign actors, as well as disruptive practices like short-term rental, can set and reset the stage of local real estate.

“These numbers provide new reference to calibrate housing policy and community plans for the public, for planners, and for policy makers.”

As well, data show the more expensive the house, the slower the turnover. On the flipside, the cheaper the home, the higher the turnover rate.

A condo apartment, for example, in both market and non-market sales categories, has a turnover rate of 10.14 per cent. In other words, one in 10 condos sold that year. There were 260,905 condo apartments in Metro Vancouver, nearly the same number as detached houses. Of those, 26,465 changed hands. The explanation is clear: Condos are often starter homes where people go to get into the market, before they’ve had families and need to upsize.

“I think understanding how people start in home ownership is important,” says Jean-Philippe Deschamps-Laporte, chief of the CHSP. “Whether they’re row houses and affordable condos and affordable semis to begin with, is of relevance. And then do you have policies that allow such properties to break ground? I think that’s the link with policy making and urban planning, if you only have a bunch of single detached and only have a bunch of one-bedroom condos, if you are missing a certain type of property that people use to work their way up, then [the data] can be of use for decision making, in my opinion.”

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Scot Hein is a retired architect who worked as Vancouver’s senior urban designer for most of his 20-year career. He is now an adjunct professor of urban design at the University of B.C.

Mr. Hein has been studying ways to activate the detached house segment of the market to increase non-market and other types of housing tenure. His idea is to develop new niche markets by building on laneways, infill, duplexes and stacked townhouses. By doubling the number of units of housing allowed on a 33- or 50-foot-wide lot, the homeowner could tap into the equity they’ve gained over the decades, while maintaining a decent profit.

If the City allowed six units, for example, a homeowner could age in place, offer a home for grown children as well as rental units, both market rate and non-market. And the City could make the process efficient.

The idea is to prevent land assemblies and skyrocketing land values, which ultimately lead to unaffordable housing.

“Is the lack of single family lot turnover or churn a good or bad thing?” Mr. Hein asks. “It’s potentially a bad thing if owners just sit on their home and land equity, waiting for the City to up-zone so they can cash out. The prospect of the city-wide plan may be opening the door for that. That would not be a good outcome.

“The upside, where I am optimistic, is that if those assets are getting passed down intergenerationally and the older houses are mortgage free, which you can assume, then you’ve got land and in some cases heritage or character houses, through redevelopment at higher densities, can contribute to new affordable options. You have these assets sitting there, but all that unearned paper wealth equity Mom and Dad earned by buying in the 80s or 70s cannot be accessed under current single-family zoning.”

The current system is based on profit, he says, and the development industry has the ear of city council. The result is programs aimed at providing affordable housing, but compel overpriced land assembly and big, expensive projects. Land values continue to go up.

Mr. Hein suggests that council shifts the conversation from rezoning to changing existing zoning to allow more density in exchange for social amenity contributions, such as affordable rentals.

“More evolved single-family zoning will introduce better, faster and cheaper housing than current city-wide rezoning policies are producing.”

Michael Geller, developer, former architect and real estate consultant, says the turnover rate will flatten further because of COVID-19. The pandemic has convinced older homeowners that space is too valuable to give up. New apartments are too small to convince them otherwise. They need more options. He also believes that the tax deferral program, which allows seniors to defer their property taxes, should be based on income. Wealthy seniors shouldn’t be allowed to defer their property taxes.

“I know from anecdotal experience, and talking to a lot of developers, people who were just about ready to sell their house and move into a large apartment as a result of COVID don’t want to move,” Mr. Geller says.

He is a proponent of fee-simple row houses, which are owned individually, rather than by strata ownership, which can be more complicated and a turnoff for people who’ve never had to deal with a strata board.

“If we do want to encourage people to move out of single family houses, either so properties can be redeveloped, or so that a family with children can move into that house, then we need to create the types of housing that those people will move into.

“I think it means ground-oriented smaller houses, 1,200-square feet on small lots.”

It’s not that change isn’t happening, he adds, but it’s not the right kind of change to transform neighbourhoods quickly.

“We are starting to see new condos developments being built in Dunbar for instance, but too often the units being built tend to be smaller one bedrooms and smaller two bedrooms, because that’s what [marketers] Bob Rennie and George Wong tell the developers to build if they need to presell. And they do need to presell to arrange financing, but the problem is, those are not the units that someone wants to move into If they are coming out of a 2,000-square-foot house or larger.”

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