How many homes should be built in the City of Vancouver over the next decade? The answer, it turns out, depends on a whole range of factors: immigration, crowding, average household size, jobs growth, the vacancy rate, homelessness and, maybe most significantly, *where* within the metropolitan region we decide to build new homes.

For the past 50 years, Metro Vancouver has focused growth in auto-dependent, suburban areas, even as planners and politicians have espoused a philosophy of dense, green, walkable development. Over this period, our actions haven’t matched our words, and despite the widespread image of shimmering condos in False Creek, the typical development in the region looks more like a townhouse in South Surrey than like a transit-adjacent Yaletown condo.

This article will consider some of the various drivers of housing demand and conclude that the City of Vancouver would need to build about 17,000 new homes every year to meet actual demand for housing in this city.

People who follow local politics will know that current targets in public discussion do not come close to this 17,000 home target. Take the Vancouver Housing Strategy, for example. Developed in 2017, this sets a target for 72,000 homes to be built over the next decade, or 7,200/year. And Councillor Hardwick has submitted an even less ambitious motion, estimating a need for roughly 30,000 homes in the City of Vancouver over the next decade.  Both of these targets would continue the past trend of focusing development in auto-oriented suburbs, and would put the lie to any claim that Vancouver is the “Greenest City.” The higher target proposed in this article would allow tens or hundreds of thousands of people to save money, sell their cars, live closer to work and school, and would save our governments billions on roads, transit and infrastructure.

When making these plans, we should also consider which type of mistake would cause more harm: underbuilding or overbuilding? We have seen the consequences of underbuilding in the City of Vancouver: entire neighbourhoods of properties costing over two million dollars. What, then, are the consequences of overbuilding? Only this: an overabundance of bedrooms, lower rents, more neighbours, and more people, shops, jobs, and services within walking distance of every new home.

In producing these estimates, we recognize that predictions are hard, especially about the future. But despite all of that uncertainty, some plan is necessary. Our past plan of auto-oriented development and exclusionary zoning was arguably not successful. So here’s a first, rough guess of housing demand drivers over the next 10 years, and how many homes we would need to meet that demand:

Vancouver City Council is meeting this Wednesday, May 27th and will vote on a motion intended to reduce the city’s current 10-year housing target of 72,000. If you care about the issues and values we describe below (click "Read More" if hidden), please write to Council using this contact form and tell them your reasons for wanting a more robust housing target (personal stories are usually better than impersonal arguments).

Steady as We Go: Building at the 2011-2016 Rate

One way to estimate the need for new homes over the coming decade is to take the population growth from the past, and read that forward into the future.

Councillor Hardwick and other critics of the Housing Vancouver strategy, for example, have pointed to past population growth and used the current average number of people per household to estimate the demand for dwellings going forward. This is not accurate for several straightforward reasons. Household size has dropped by about 2.6% in the last decade, implying a need to build some 6500 homes over the next decade before accounting for any population growth at all. Also, as is true in every city and town, not all homes are occupied at all times. And this calculation is unnecessary anyway, as the Census data provides a direct count of changes in private housing stock and private households (private dwellings occupied by usual residents) from which trends can be derived. The changes over the last 5 and 10 year Census periods are as per Table 1.

If we simply extend the trend in dwelling growth from the last 5 years to make a 10 year target, we arrive at an “expected demand” of 45,352 homes, still well short of the 72,000 target in the housing strategy, but already 50% more than the target of only 30,000 arrived at by erroneously extrapolating population growth alone. This also deals only with private households.

Vancouver Values

Extrapolating from the last 5, 10 or 20 year period inherently assumes both that the circumstances going forward are the same as the past and that everyone is happy with how the housing situation turned out up to 2016. On the contrary, the circumstances going forward are not the same as the past, and, just in case you’ve been living under a rock for the past 4 years, many many people are not happy at all about housing costs and availability since 2016! And that’s why any discussion of housing targets for the future cannot simply ignore our values. Here are some values we believe Vancouverites aspire to, most of which have been supported by city councillors, either during the last election or in motions since:

1. Affordability: The rent is too high. Too many people are struggling to stay in the city. More social housing is needed with deep affordability. A de facto requirement for people to own a car is a tremendous burden on those with low incomes.
2. Diversity: People of all backgrounds and circumstances should have access to the city and all its neighbourhoods.
3. Access to Opportunity: Vancouver is a welcoming city. People from all over Canada and new immigrants should have access to the jobs and other opportunities that Canada’s large cities offer.
4. Health: People shouldn’t be forced to live on polluted arterial streets, to live in overcrowded or unsafe homes, or to be homeless. Walking, rolling, and active transport should be prioritized and residents should be able to access daily services within a 5-10 minute walk/roll.
5. Environment - Climate Action: The city has resolved to reduce its emissions to align with a goal of limiting global temperature rise to 1.5°C. This would not be meaningful if it were “achieved” by pushing people out into carbon-intensive suburbs.
6. Efficient Government: Dense development is much more efficient for cities to service than sprawl and generates higher tax revenues. It also enables public transit to be both good (high-frequency) and cost-effective. Sprawl doesn’t pay!
7. Economy: Cities are economic drivers because of the agglomeration benefits of bringing people and jobs close together; restrictions on housing starve cities of the workers they need to help our economy grow. Ideas about “distributed cities” often ignore why cities exist, are unrealistic about the facility of transportation links and ignore environmental impacts.

We will use these values as a guide to determining appropriate housing targets.

Increased International Immigration

Canada’s international immigration targets have increased approximately 20%. Immigration to the Lower Mainland averaged about 72% of total net population growth from 2010 to 2016. For the sake of simplicity, we will apportion Vancouver’s share of this increased immigration as a 14.4% increase in housing needed, to roughly reflect the increase in immigration targets, an increase of 6531 to our 45,352 historical baseline, for a new target of 51,883 homes.

Crowding, Independent Living, and Homelessness

The 2019 Homeless Count identified 2223 residents as homeless. Let’s add 2223 studio and 1 bedroom suites to our target for a total of 54,106.

Factors involving inadequate housing are more difficult to derive into estimates of additional “housing unit demand” for the purposes of this exercise, but are real and important nonetheless. About 17.6% of households in the Vancouver CMA are in Core Housing Need, meaning their housing is not affordable (more than 30% of income), does not have enough bedrooms for household size and composition, and/or is in need of repairs. In the City of Vancouver specifically, and with regard only to unsuitable housing, 22,670 households, about 8% of total private households, had too few bedrooms (Census 2016).

Furthermore, Metro Vancouver has, compared to the Canadian average, a high and growing rate of adult children living with their parents. This is driven partly by cultural preferences and it’s difficult to say to what extent this is a result of the housing shortage. For a more detailed discussion of crowding, bedrooms, and adults living with their parents, you can read more at MountainMath Doodles.

( 2011-2016, chart from doodles.mountainmath.ca )

Now, we are counting required homes, not required bedrooms in those homes, we can’t say exactly how many adult children would really rather be living on their own, and we also don’t know the overlap between these two situations. What we do know is that suitably accommodating larger families requires the creation of larger 3+ bedroom suites (like the Vancouver Native Housing Society is currently working to build), many of them requiring subsidy from government and market-rate development, and some studios or 1 bedrooms. To err on the conservative side, we will consider less than half of crowded households to require additional units, and increase our target by only 10,000 homes, for a total of 64,106. For comparison, note that the Vancouver Housing Strategy calls for creation of an additional 12,000 social and supportive homes over the decade.

Office Construction and Job Vacancies

As reported by Kenneth Chan of DailyHive, “As of the fourth quarter of 2019, the downtown office vacancy rate fell to just 2.3% — the lowest since the third quarter of 2008.” Big US tech companies, among others, have discovered Vancouver’s talented workforce and are moving in like never before. “Currently, 5.5 million sq. ft. of new office space — mainly within the downtown peninsula — is currently under construction, and significant pre-leasing activity has already been experienced in most of the office developments.” As for industrial space, “The year also saw new supply completions of 4.8 million sq. ft., which was also a 10-year record.” At an assumed rate of roughly 1 worker per 200 sq. ft. of office, just the office space under construction right now will require 27,500 more workers. Since we are developing a 10 year target and have already accounted for some increased immigration, we will assume that construction of employment space will eventually recede to more normal levels over the decade and will not account for this building boom increasing housing demand above trend.

The backdrop for this building boom is Vancouver’s already unusually high rate of job vacancies, that is, there are an unusually large number of jobs in Vancouver going unfilled. If we account for only full-time, full-year workers in 2015, to go from 5% job vacancies to near the Candian average of about 3.25% would require 1.75% of 170,880 FT workers, or 2990 more workers. Some of these workers may live alone, others may have partners or roommates, and those roommates may or may not work full-time year-round themselves. Again, for the sake of simplicity, we will add 2990 homes to our target, for a new total of 67,096.

( Source: MountainMath Doodles )

Low Apartment Vacancy Rate and Rising Rents

In Vancouver, the lower the apartment vacancy rate is below 3% (in recent decades), the faster rents go up. This makes some intuitive sense, as a low vacancy rate implies it is difficult for a prospective renter to find an apartment, and thus easier for landlords to raise the rent. As you may have noticed, rents in Vancouver have exploded in recent years as the vacancy rate has been stuck around 1%. While there is some indication that rents are falling amid the Covid-19 pandemic, they have a lot of room to fall to reach even the levels of 2016, and many economists expect a fairly quick economic recovery once a vaccine or other mitigation is widely available. Ideally, we think it would be fair to have the vacancy rate maintained at a rate that stabilizes nominal rents, i.e. gradually decreasing inflation-adjusted rents for the same apartments as buildings age. Achieving a vacancy rate of just 3% within city boundaries would require the instantaneous supply of new apartments of approximately 1.9% of the City of Vancouver’s 150,750 private rentals. However, this relief would be fleeting, as more renter households would undoubtedly move in, especially from elsewhere in the metro region (we will partly deal with this problem later). To once again err on the conservative side, we will add 2864 apartments to our target so as to temporarily increase the vacancy rate, for an updated target of 69,960 homes.

(Source: MountainMath Doodles again, it’s a good blog!)

Displacement from Vancouver

In the last Census period, Vancouver experienced uneven growth in households by income compared to the rest of Canada, with large growth in the top income decile but a loss of population in the second (from bottom) decile and uneven growth elsewhere. To roughly correct for this, we will add enough homes to bring up the second income decile to the typical 3000ish gain of the other deciles. With a gap of ~6200ish earners, 2ish earners/household, and a 10 year instead of a 5 year time period, we arrive at 6200 additional homes needed, for an updated target of 76,160 homes over 10 years.

( source: MountainMath Doodles )

How Should Metro Vancouver Grow

Up to now, we have addressed growing demand on our housing stock and partly addressed, albeit too conservatively, some key concerns such as homelessness, crowding, job vacancies, and cost-of-living. However, we haven’t done a lot to address many of our values (i.e. Affordability, Diversity, Environment/Climate Action, Efficient Government, Health, Access to Opportunity, and Economy). A lot of these tie into how the Metro is growing as a whole: Vancouver’s population grew less than the metro average, but the city is much better setup for public and active transit than most of the metro, more of the jobs and thus the economic benefits and opportunities of urban agglomeration are here, and compact communities are cheaper to build and maintain than suburban sprawl. Rents and home prices are higher in Vancouver than in the faster-growing parts of the metro, which demonstrates that people would rather live here but are being pushed out by the shortage of housing.

As many others have described, to enhance affordability and avoid displacement, we should put new housing near public transit and where it does not displace existing renter households, but our zoning often does exactly the opposite, pushing people into car-oriented suburbs and demolishing multi-family buildings to build new ones, exacerbating inequality, damaging economic growth, limiting access to opportunity, and lengthening commutes for everyone.

Vancouver’s Climate Emergency Action Plan envisions building more efficient buildings with low embodied emissions, and a shift to electric cars via charging infrastructure and parking incentives. But carbon reductions in the city limits will not be meaningful if they are achieved by pushing people into higher-emitting suburbs and a higher-emitting lifestyle. Furthermore, Vancouver does not have the practical ability nor desire to drastically expand road capacity, regardless of whether the cars congesting these roadways are gas or electric.

Sprawling communities also require more infrastructure and higher taxes than compact communities. This makes intuitive sense, as, for example, bringing a large, short sewer pipe to one apartment building costs much less per resident than bringing longer, narrower sewer pipes to a bunch of detached houses.

The truth is that while growth in Vancouver city-limits generally supports car-light or car-free living, the vast majority of growth in the metro overall is in auto-oriented suburbs and exurbs. To partly correct for these several related problems, we will reallocate approximately 50% of metro growth in “Auto-suburbs” and exurbs to the “Active Core” and transit-oriented suburbs. Half of the 247,885 auto-oriented population growth would be a 120% increase to the 102,801 transit-oriented population growth Metro Vancouver has experienced so, because we are sincere about our values, we increase our housing target by 120%, to 167,552 homes over 10 years.

Summary and Conclusion

We calculate that to avoid the mistakes and calamity of the last 10 and 20 year periods, the City of Vancouver should look to build roughly 168,000 homes, or 16,800 homes per year, net of demolitions. The actual number might be higher, or lower, but we encourage you to think about tradeoffs in removing homes from any category. We could reduce international immigration (as many anti-housing voices call for), but that’s a federal decision, and a very different direction for us to take as a country. We could decline to relieve crowding or address homelessness, but is that who want to be as a city? And we could build auto-dependent housing far from the core, as we have been doing, but that might not be the wisest course of action.

Most of the floor space built in Vancouver in recent years has been in single-family homes that few can afford, and that add little to nothing to our overall housing stock.

Regionally, most development has been forced far from the regional core, leading to longer commutes, expensive car payments, pollution, and demands from the population to build more bridges, highways, and SkyTrains to serve an increasingly dispersed population.

Meanwhile, public discussion of “new development” has inaccurately focused on downtown condos in Vancouver, or on a very few “Rental 100” or similar buildings on major streets. While attention and controversy has been focused on the few relatively dense, central developments that our region does permit, widespread lower density development, including redevelopment of detached homes into newer detached homes, has had relatively little attention from nominally “anti-development” voices.

To correct the auto-dependent mistakes of the past, save billions of dollars on infrastructure, and provide abundant housing for ourselves and our neighbours, current and future, we therefore offer the following estimate of housing demand for the City of Vancouver over the next decade:

Vancouver City Council is meeting this Wednesday, May 27th and will vote on a motion intended to reduce the city’s current 10-year housing target of 72,000. If you care about the values we have described above, please write to Council using this contact form and tell them your reasons for wanting a more robust housing target (personal stories are usually better than impersonal arguments).

Post-Script: Quick Responses to Likely Criticisms

But Covid changes everything!: In making a 10-year projection, we are expecting that there may be a recession or two along the way. Nobody knows how the current pandemic will affect cities like Vancouver in the coming years, and nobody knows what other surprises the future holds. What we do know is that since 1911, just before World War 1 and the ensuing Spanish Flu pandemic, Metro Vancouver’s population has increased by some 1500%! For the purposes of planning, it would be best to plan for the high-range of possible growth scenarios and accept that private developers will not build if the demand does not exist to do so. In the short run, the city could look to more near term targets like restoring affordability and maintaining a rental vacancy rate above 3%.

16,800 homes/year is too much, the target is impossible!: The Vancouver CMA has, in the recent past, achieved about 21,000 home completions, net of demolitions, in a single year, and a large slice of the target is just re-allocating growth from elsewhere. What’s more, Vancouver’s development regulations are incredibly wasteful, generally replacing single-family detached homes with new, bigger single-family detached homes (see chart below). Meeting the target will require a large shift toward the construction of multi-family housing, which will enable much more efficient delivery of housing completions along with reducing the drag caused by demolitions. Other factors like reduced parking requirements and mass timber construction could also potentially help.

We can’t afford all this!: As described earlier, compact growth near the metro’s biggest job centres supports public transit, health, economic growth, and is cheaper to service than sprawl. We can’t afford not to! Also, a large portion of fees charged on market rate development, DCLs and CACs being the most common, go not towards direct costs of infrastructure for growth but to general civic responsibilities, notably affordable housing and infrastructure renewal. These costs would have to come from higher property taxes if these fees, and new taxpayers, never arrived.

There are loads of empty homes!: Empty homes are a problem for Vancouver. However, the number of empty homes in Vancouver is not quite as unusual as it’s often made out to be and will never be zero. More to the point, the City has already introduced an empty homes tax and mildly-effective AirBnB regulations, and the Province has introduced speculation taxes, an additional school tax, AirBnB regulations, and a foreign buyer tax, all of which have added up to very little or no change in the rental vacancy rate. The reality is that the total stock of truly empty homes is just not large enough to greatly impact these targets, the number of empty homes will never go to zero, and policies introduced so far have not had a large effect on housing availability. Under-used homes are wasteful but there is no easy replacement for the relatively massive demand for more housing in our growing city.