Soaring home prices in Canada's hottest housing markets are making would-be buyers doubt whether they'll ever be able to purchase a home.
But affordability isn't just a concern for those looking to join the homeownership club.
Rental markets are overheating too, especially in Vancouver, where vacancy rates are the lowest in the country. Only 0.6 per cent of rental units – that’s 6 out of 1,000 – are available at any given time, according to data released by the City of Vancouver in April.
Sarah Crover, a thirty-six-year-old sessional professor at the University of British Columbia, told BNN that owning a home has always been a dream, but with rental rates so high and amid a lack of available units, she doesn't know if that's possible.
“There’s just no way I could afford to move. It’s quite likely to pay $1,100 for a one-bedroom apartment,” she said in a phone interview, referencing the minimum rent she’d likely have to pay if she moved out.
Crover, originally from Victoria, B.C., is hesitant about giving up her $825-per-month basement apartment in Vancouver’s Dunbar neighbourhood in fear of not being able to find a place that’s in her budget. What she's paying now is considered a steal and is "unheard of" in the city. Crover moved into her apartment in 2013 and city by-laws prevent her landlord from jacking up the rent each year.
“I’m still paying more than I can afford. It’s really hard to live here expense-wise. Last year I made $17,000. I buy most of my clothes second-hand,” she said.
A report released by credit union VanCity last month concluded that renting is no longer an affordable alternative to buying in Vancouver. Rents in the area increased by an average of 11.4 per cent between 2011 and 2015, according to the report.
People of all ages are feeling the effects of the tight rental market. Millennials account for only a third of renters in the city, and despite the perception that most people who rent have jobs in the service industry, VanCity found that renters are employed across different sectors.
Twenty-eight-year-old Elenor Ball-Banting, who moved into the Vancouver neighbourhood of Kitsilano with her partner in January for a more laid-back lifestyle, is one of these renters.
She secured her one-bedroom condo for $1,900 per month plus utilities three months prior to moving across the country and landing a management job in UBC’s faculty of medicine. Before that, she was renting on King St. West in downtown Toronto where she was paying 20 per cent less for an apartment with more space.
“We’re in our 20s. We should be on track to buy something – but that's impossible,” said Ball-Banting, who, along with her partner, makes enough money to live comfortably.
Even after living in Vancouver for less than a year, Ball-Banting says she is worried about what the future might hold.
“I really hate to say it, but Vancouver is kicking us out – it’s kicking everyone else our age out,” she said.
Ball-Banting hopes to stay in the same condo next year, but says she sometimes looks up places “as a joke” and notes that “there’s nothing.”
Crover echoed this sentiment and worries that people who do essential jobs will be priced out of the city.
“If you have a lot of money [Vancouver] is a desirable place to live,” she said. “But pretty soon there will be no one left to mow the lawn or be a part of the community.”
“I feel like it’s just going to become this ghost town.”
The alternative, for many, is to move into the suburbs like Surrey, Richmond or Langley – or in Kyle Miller’s case, back home.
Up until four months ago, the thirty-three-year-old was living in the Vancouver suburb of New Westminster. He and his roommate were splitting a two-bedroom apartment that cost $1,575 per month. But the high cost drove Miller to move back to his mother’s home in White Rock, a suburb an hour from downtown Vancouver.
Miller has given up the idea of buying all together.
“I don’t think I’ll be able to own in my lifetime,” he said. “It’s too expensive.”
Miller, who recently quit his 10-year stint as a Starbucks manager, plans to stay at home until he saves enough money go back to school. He believes that people of his age need to adjust their expectations about buying and notes that owning a home isn’t the norm across the globe.
“My generation has this mindset that they need to buy – but I think they’ve got to get over it,” he said.
In recent weeks, the B.C. government has taken action in an attempt to cool the city’s housing market with a 15 per cent property transfer tax on buyers who are not Canadian nor a permanent resident of the country.
The province has also put forward changes that would allow the City of Vancouver to implement a vacancy tax in an attempt to increase the existing housing supply.
But Thomas Davidoff, an economics professor at UBC’s Sauder School of Business, told BNN that the foreign tax won't necessarily cool the rental market because high prices and low vacancy rates have been at the core of the issue for years.
“I’m surprised [rent] hasn’t gone up even more,” he said in a phone interview.
Anecdotally, Davidoff said rent has always been high but has gone up most noticeably in the last year. He said trouble in Alberta's oil industry has likely caused more people than usual to stay in Vancouver over the last 12 months, making the rental market more competitive.
Davidoff also blames zoning restrictions for the lack of new rental units and says single-family zoning is “is not really an acceptable public policy.” He argues there is too much land for single-family homes and urges the province to step in to allow the construction of more rental apartments.
But despite its supply issues, the city isn't expecting a slowdown in growth.
In April, Vancouver projected demand for 31,000 additional housing units by 2021, including nearly 11,000 rental units. Of the estimated rental units, close to 8,000 would be for low and moderate income households.
Even still, Davidoff doesn't think it's impossible for young people to eventually buy in Vancouver, and says there's nothing wrong with renting, especially if home valuations decrease.
He said the fear of missing out on being a homeowner only makes sense for people committed to staying in Vancouver. He added that young renters should find other ways to invest their money, like the stock market, to avoid "putting all [their] eggs in one financial basket."
Renting by the numbers
- 30 per cent of households across Canada rent
- The average rental household income in the country was $46,110 in 2011
- In Greater Vancouver, 34 per cent of households rent and the average renter household income is $54,081
- In Toronto, 45 per cent of households rent and the average household income is $52,635
- Landlords can only increase the rent once annually by an amount permitted by law, which changes each year
- The standard allowable rent increase for 2016 was 2.9 per cent for residential tenancies in Vancouver
(Source: 2011 NHS data compiled by http://rentalhousingindex.ca/)