Vancouver Housing Supply Crisis

A Cooling Market Won’t Fix Metro Vancouver’s Housing Crunch

Metro Vancouver Housing Supply Crisis will be something of the future. While Metro Vancouver’s housing market is currently experiencing a period of cooling characterized by slower sales and improved condo affordability, these temporary market forces do not solve the region’s deeper, persistent housing crunch. Absent major policy changes to increase supply and reduce development costs, the current slowdown is merely masking a looming future crisis, likely to result in soaring prices later in the decade.

The Current Market Illusion

Despite price declines in Vancouver, Victoria, and Toronto tracked by the Royal Bank, Metro Vancouver remains Canada’s most expensive housing market. For single-family homes, ownership costs are prohibitively high, consuming an estimated 126 per cent of the median pre-tax household income (assuming a 20 per cent down payment). While condo affordability has seen modest improvement, now absorbing 48 per cent of average household income (down from 60 per cent in early 2024), this figure is still dramatically higher than in cities like Calgary (22 per cent) and Toronto (37 per cent).

This environment has led to subdued sales, abundant listings, and a shift to a buyer’s market, with prospective buyers anticipating further price softening. However, the persistently high costs are driving significant outmigration of residents, draining talent, and eroding British Columbia’s overall competitiveness, a factor of mounting concern for local businesses.

The Looming Supply Crisis

The paradox of current conditions: on one hand, new housing completions have recently surged to around 4,000 per month, nearly double the average since 2010, resulting in 63,000 dwelling units currently under construction in Metro Vancouver. This temporary surge provides buyers with choice and breathing room.

On the other hand, the forward-looking residential construction sector is poised for a major downturn. Due to the high-cost environment, recent market softness, developer layoffs, and an expanding list of cancelled multi-family construction projects, new housing starts are forecast by the authors to drop significantly. This contradicts the provincial government’s own projections of marginal increases in housing starts for 2026 and 2027. The article stresses that a period of depressed construction starts will inevitably set the stage for a return to spiking prices later in the decade, even as demographic forces—specifically a large and growing millennial cohort aged 25-39—suggest demand will revive, especially once immigration levels rebound post-2028. For the next few years, any genuine affordability improvement must come from continued price declines, as strong income growth is unlikely.

Call to Action: Focus on Costs and Processes

Provincial and municipal politicians have to stop trying to verbally influence the market and instead concentrate on fundamental, supply-side solutions. The political discourse on “building more homes” is seen as ineffective rhetoric unless matched by tangible action to reduce the costs and delays developers face.

The primary policy recommendations are clear and direct:

  1. Lower development charges (DCCs, CACs, and other fees).

  2. Streamline approval and permitting processes.

These steps are crucial to making sure that more projects “pencil out” and avoid the impending crash in new supply. Without such reforms, Metro Vancouver’s affordability crisis will continue to undermine its economic and social health.

Related Articles:

This video provides additional context on the prolonged sales slump in the region: Vancouver’s housing ‘slowdown’ now more than 3 years old.

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Always at your side,

George Diaconu

Top 10% Realtor Lower Mainland

Top 5% Realtor Nationally RLP

www.gd-realty.ca