Vancouver's rental prices reaching new highs, UBC prof warns
The dizzying heights of Vancouver's sky-high glass towers might make a good metaphor for the city's rental prices: ever higher.
According to Tom Davidoff, an associate professor with the University of British Columbia's Sauder School of Business, Vancouver's rental prices are on track to increase by a whopping 20 per cent this year.
Davidoff spoke with Stephen Quinn on The Early Edition.
"It's a lot, [especially] if you think about consumer price, inflation being in the two to three per cent range."
Davidoff analyzed rental listings from Craigslist from March to August, controlling for location, square feet, and type and then annualized the data.
He says his results are significantly higher than the data on rental increases released by the Canada Housing and Mortgage Corporation last year, which found prices went up 4.6 per cent.
Davidoff says that's because his study excludes renters who live in rent-controlled units. Instead he says his data applies to first-time renters or those looking for a new lease.
"If I have an ongoing lease, the landlord can't bump my rent by something more than two per cent over the consumer price index every year ... However, when I leave, the landlord can go to whatever the market can support."
It's an important distinction, he says, especially because staying in a rent-controlled unit will be harder than before, as landlords have a greater incentive to rent their units to a new tenant at a much higher price or sell their property on the equally sizzling real estate market.
Low vacancy rate
The main reason for these sky-high prices is the strong demand for rental housing in the city, coupled with limited supply.
The current vacancy rate sits at 0.6 per cent.
Davidoff said there are many factors contributing to this demand for rental housing, including: millennials who cannot afford to buy housing, workers who are coming to B.C. from Alberta and the lack of multi-family housing.
"We've got so much land in Vancouver that is dedicated to housing that is almost completely useless to 100 per cent of the people who work here."
As for the city's recent announcement that it's adding 400 units of rental housing, Davidoff is largely unimpressed.
"There's a lot more than 400 renters in Vancouver. Any bit of new supply is helpful, but we need a lot more."
With files from The Early Edition
To hear the full interview, click on the link labelled UBC professor Tom Davidoff says Vancouver rents are increasing dramatically
