I looked into the new interface for CMHC’s Housing Market Information Portal today (new to me, anyway!) My review so far: it’s pretty handy.
Here’s a chart I put together illustrating what I think is an important (but sometimes overlooked) aspect of urban housing markets: they are often highly detachable.
Urban real estate is heavily regulated. Zoning is hugely important across North America, setting up distinct land markets. Single-Family Residential takes up the most urban land. But there are further regulatory protections of interest, including residential rental contracts and rent control. Together with less formal market segmentations and protections, regulation creates an environment where there is little certainty how what’s going on in one little sub-market will translate into another little sub-market. In other words, there’s no such thing as one big market (take it from Polanyi, if not from me). Instead there are many little markets with often arcane connections between one another.
For much the same reason, there’s no such thing as one Vancouver real estate market. Market rents for rental units already need to be subdivided into primary markets (rental only buildings) and secondary markets (here condo rentals, but theoretically also including secondary suites). Even with the shaky secondary market data we have available from CMHC surveys (see the blue line from 2007 onward) we can already detect how the more closely observed and regulated primary market differs from the condo market. BC’s rent control (restored by the NDP in 1992) probably has something to do with the slow and gradual rise in market rental rates (I’m setting aside, for the moment, broader arguments that it might also have diminished investment in new rental stock). With the data we have on it, the condo rental market looks much more volatile.
But an even larger gap can be observed between what’s going on between apartment rental markets and single-family detached sales markets. Where rents have risen gradually across the entire time period observed, the sale prices of single family detached houses went boom and bust in the 1990s, and (as everyone knows) have since boomed without stop. Fortunately (I think), there isn’t much of a relationship between the crazy things single-family sales prices are doing and what renters are feeling. At least not yet.
That’s not to say there aren’t real problems with what’s going on in the single-family detached market. And it’s not to say there aren’t other real problems with the rental market (we still have nearly a third of renters living in Core Housing Need). But the complex regulatory environment, that both constrains and enables urban real estate markets, keeps these problems somewhat distinct. It may also explain why those outrageous single-family house prices aren’t (yet) leading to a loss of “Vancouver’s life blood.”
Still, we could, and should, work on making our regulatory environment better. But we should focus on making things better for those most in need. As it pertains to the relationship between different markets, in my ideal world we’d be looking to bring the apartment rental and detached sales markets closer together by further relaxing the regulations fencing off single-family detached houses from internal subdivision, gentle densification, and redevelopment. It wouldn’t do much to bring the price of single-family houses down, but it could bring in a lot of new rental supply.
Of course, my ideal world would also contain a lot more non-market housing options, especially cooperatives! But that’s perhaps a different story.