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UBC Theses and Dissertations

British Columbia housing supply : an examination of the record Bynoe, Robert William Bruce 1975

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BRITISH COLUMBIA HOUSING SUPPLY - AN EXAMINATION OF THE RECORD by ROBERT WILLIAM BRUCE BYNOE . Comm., University of B r i t i s h Columbia, 1973 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR.THE DEGREE OF MASTER OF SCIENCE IN BUSINESS ADMINISTRATION i n the Department of COMMERCE AND BUSINESS ADMINISTRATION We accept t h i s thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA September, 1975 In p r e s e n t i n g t h i s t h e s i s in p a r t i a l f u l f i l m e n t o f the r e q u i r e m e n t s f o r an a d v a n c e d d e g r e e at the U n i v e r s i t y o f B r i t i s h C o l u m b i a , I a g r e e tha t the L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r r e f e r e n c e and s t u d y . I f u r t h e r a g r e e t h a t p e r m i s s i o n f o r e x t e n s i v e c o p y i n g o f t h i s , t h e s i s f o r s c h o l a r l y p u r p o s e s may be g r a n t e d by the Head o f my Depar tment o r by h i s r e p r e s e n t a t i v e s . It i s u n d e r s t o o d tha t c o p y i n g o r p u b l i c a t i o n o f t h i s t h e s i s f o r f i n a n c i a l g a i n s h a l l not be a l l o w e d w i t h o u t my w r i t t e n p e r m i s s i o n . Depar tment o f COMMERCE AND BUSINESS ADMINISTRATION The U n i v e r s i t y o f B r i t i s h C o l u m b i a V a n c o u v e r 8, Canada Date k&usx i i<n^> i ABSTRACT New record lev e l s of dwelling unit starts were experienced within B r i t i s h Columbia i n each of the years 1964, 1967, 1968, 1969, 1971, 1972 and 1973. Residential construction s t a r t s were at record lev e l s u n t i l the downturn i n the World and Pr o v i n c i a l economies i n 1974 reduced the l e v e l of r e s i d e n t i a l construction a c t i v i t y . Paradoxically, even though r e s i d e n t i a l construction has been at record l e v e l s , much attention has been given to claims that B r i t i s h Columbia has been experiencing a "housing c r i s i s " - a shortage of housing supply. In l i g h t of the concern over the possible existence of a housing c r i s i s within B r i t i s h Columbia, t h i s thesis examined the housing stock and the record of the housing supply process i n B r i t i s h Columbia i n an attempt to answer the questions -Is there a c r i s i s i n supply? Is there a housing supply shortage? If so, how did i t develop? The problem was attacked through an examination of changes in the housing stock and the housing supply process within the Province over the period 1961 to 1974. The bulk of the data for the study was obtained from the 1971 Census of Canada's s t a t i s t i c s on housing, 1961 to 1971. Information r e l a t i n g to housing construction over the period subsequent to the Census was also obtained from the Regional S t a t i s t i c i a n of the Central and Housing Corporation. Over the period 1961 to 1971 the housing stock of B r i t i s h Columbia grew 4 5.3 percent, far outpacing population growth of 31.1 percent during the same period. During the decade, housing conditions improved tremendously as the average number of rooms per dwelling increased; the average number of bedrooms per dwelling increased; the average number of persons per household declined; and the number of two family households declined. Housing conditions could not have improved i f there had been a breakdown i n the housing supply process. Between 1971 and 1974 new record le v e l s of housing con-struction were experienced i n 1971, 1972 and 1973. In l i g h t of the improving conditions of the P r o v i n c i a l housing stock, i t would appear that, i n aggregate, the housing supply process has been functioning adequately. The construction of single-detached dwelling units more than doubled between 1966 and 1973 and the construction of semi-detached units and row housing units has also been at high levels i n recent years. The only section of the housing market that i s suffering from shortage of supply i s the rental sector. Apartment construction i n B r i t i s h Columbia reached i t s peak i n 1969 and has since f a l l e n . In June 1974 a vacancy rate of only 0.2 percent was experienced i n Metropolitan Vancouver. The shortage of rental accommodation has been caused by a great increase in the demand for rental accommodation, con-current with a downturn i n rental apartment construction due to the reduced attractiveness of investment i n rental apartments. Investment i n apartment construction has become unattractive as a r e s u l t of growing landlord tenant c o n f l i c t s , changes i n Income Tax L e g i s l a t i o n , c i t i z e n opposition to apartment development, and P r o v i n c i a l rent control l e g i s l a t i o n . The shortage of rental apartment units w i l l only be eliminated i f apartment construction again becomes a t t r a c t i v e to investors. What i s needed i s an elimination of a l l Rent Control L e g i s l a t i o n and an acceptance, by a l l levels of Government, of a commitment to encourage, not discourage, housing development of a l l forms. i v TABLE OF CONTENTS Page No. ABSTRACT i TABLE OF CONTENTS i v LIST OF TABLES v i LIST OF FIGURES v i i i ACKNOWLEDGEMENT ix CHAPTER I INTRODUCTION . 1 Purpose 2 Method 3 Scope x 3 CHAPTER II OVERVIEW - B.C. HOUSING MARKET 4 Symptoms 7 (1) Vacancy Rates 7 (2) Apartment Construction 9 (3) Land Costs 15 (4) Construction Costs 17 (5) Cost of Self-Owned Accommodation 2 0 What i s a Housing C r i s i s ? 27 APPENDIX TO CHAPTER II RELIABILITY OF AVERAGE MLS SALES PRICES 31 CHAPTER III DEMAND FOR HOUSING 35 Housing Need and Demand 35 Determinants of Housing Demand 37 (1) Population Growth 37 (2) Income and Employment Patterns 4 7 (3) Prices and Rent 51 (4) Credit Variables 52 (5) Consumer Preferences 56 CHAPTER IV ECONOMIC CHARACTERISTICS OF HOUSING 59 Fixed Location 60 Durability 61 Capital Requirements 66 Heterogenity 69 Housing Markets 69 CHAPTER V HOUSING SUPPLY 73 E l a s t i c i t y of Supply » 73 Lags i n Adjustment 76 Dominance of Exi s t i n g Stock 77 The Level of House Prices 78 Increases i n Supply 79 (1) Conversions 79 (2) Percent of Stock Involved i n Market Transactions 80 (3) New Construction 82 V CHAPTER V HOUSING SUPPLY (cont'd.) Page No. Determinants of Supply 84 (1) A v a i l a b i l i t y of Mortgage Funds 84 (2) Entrepreneurs Reluctance to Change Prices and Rents 85 (3) Builders' Decisions to Build 86 (4) Cost and A v a i l a b i l i t y of Land, Construction Labour and Materials 87 CHAPTER VI BRITISH COLUMBIA HOUSING TRENDS 91 Housing Stock 91 Types of Structures 99 Tenure 107 Values and Rents 114 Housing Characteristics 119 CONCLUSION ' 12 5 Housing Demand 12 5 (1) "Population Growth 12 5 (2) Income Growth 12 6 (3) Governmental Incentives 127 B r i t i s h Columbia Housing Supply 127 Construction A c t i v i t y by Structural Type 12 9 Causes of the Shortage 132 (1) C i t i z e n Opposition 132 (2) Income Tax L e g i s l a t i o n 133 (3) Rent Control 134 (4) Condominium Construction 136 The Future 138 BIBLIOGRAPHY APPENDIX 143 149 v i LIST OF TABLES Page No. 1. Dwelling Starts, 1958-1973, Canada and B r i t i s h . Columbia 6 2. Vacancy Rates i n P r i v a t e l y - I n i t i a t e d Rental Apartments 8 3. Apartment Starts, 1958-1973 10 4. Condominium Developments in Metropolitan Vancouver, 1968-1973 13 5. Comparison of Condominium Registrations to Starts of Individually Owned Housing Units, 1968-1973 14 6. Typical Residential Land Values - Metropolitan Vancouver, 1954-1974 16 7. Residential Construction Cost - Standard Bungalows, Vancouver Area, 1963-1973 18 8. Residential Building Construction Input Price Indexes 19 9. Average MLS Sales Prices for Greater Vancouver, 1960-1974 22 10. Monthly and Quarterly Averages of Residential Sales for Greater Vancouver through Multiple L i s t i n g Service 25 11. Average Dollar Value per Transaction - MLS System for the B r i t i s h Columbia Real Estate Boards, 1963-1974 26 12. Mean MLS and Teela Residential Sales Prices by Area and Period 33 13. Median MLS and Teela Residential Sales Prices by Area and Period 34 14. Population, Households, and Average Number of Persons Per Household for Canada and Provinces 3 8 15. Annual Average Rates of Population Growth 39 16. Net Migration as a Percentage of Total Population Increase i n B r i t i s h Columbia 42 17. Migration to the Greater Vancouver Regional D i s t r i c t 43 18. Age and Sex Distributions of Migrants to the Greater Vancouver Regional D i s t r i c t , 1966-1971 44 19. Forecast Net Migration to B r i t i s h Columbia to the Year 2000 45 20. Population for B r i t i s h Columbia: Actual and Projected 46 21. Income Levels, Canada and B r i t i s h Columbia 50 22. Interest Rates and the Cost of Housing i n B r i t i s h Columbia 54 23. Tax Subsidy to Home Ownership as a Per Cent Reduction i n Imputed Gross Rental Income 5 8 24. Occupied Dwellings, Period of Construction, Age 63 25. Age D i s t r i b u t i o n of Housing Stock, Canada and B.C., 1971 64 v i i Page No. 26. Age Di s t r i b u t i o n of B.C. Housing Stock, 1971 65 27. National Expenditures and Residential Expendi-tures, 1963-1973 68 28. Occupied Dwellings by Tenure, 1961, 1966, 1971 93 29. B.C. Housing Stock, 1971 95 30. Households by Type, B r i t i s h Columbia, 1961, 1966, 1971 97 31. Households by Type, B r i t i s h Columbia, 1966, 1971 98 32. Housing Stock, 1961 100 33. Housing Stock - Occupied Dwellings - 1971, by Tenure and Structural Type 101 34. Housing Stock, 1961, Percentage D i s t r i b u t i o n by Structural Type 105 "5 ^ Housing Stock, 1971, Percentage D i s t r i b u t i o n by Structural Type• 106 36. Occupied Dwellings - Tenure i n Percentage 108 37. Tenure Patterns by Structural Type, 1971, Percentage Owned 110 38. Newly Completed and Unoccupied Dwellings, Quarterly by Urban Area, 1971-1974 113 39. Values and Rents, 1961 and 1971 117 40. Metro Vancouver - Rental Market, 1967-1973 118 41. B r i t i s h Columbia Housing Ch a r a c t e r i s t i c s , 1961, 1971 121 42. Population and Households - B r i t i s h Columbia, 1961, 1966, 1971 122 43. Dawson Creek Housing Construction, 1963-1973 150 44. Kamloops Housing Construction, 1963-1973 151 45. Kelowna Housing Construction, 1963-1973 152 46.. Nanaimo City Housing Construction, 1963-1973 153 47. Penticton Cit y Housing Construction, 1963-1973 154 48. Port Alberni Housing Construction, 1963-1973 155 49. Prince George Housing Construction, 1963-1973 156 50. Prince Rupert Housing Construction, 1963-1973 157 51. T r a i l City Housing Construction, 1963-1973 158 52. Metropolitan Vancouver Housing Construction, 1963-1973 159 53. Vernon City Housing Construction, 1963-1973 160 54. Metropolitan V i c t o r i a Housing Construction, 1963-1973 161 v i i i LIST OF FIGURES Page No. 1. M.L.S. Average Price Range 2 3 2. Median Value for Single Detached Owner-occupied Non-farm Dwellings and Average Monthly Cash Rent for Tenant-occupied Non-farm Dwellings, for Canada and Provinces, 1961 and 1971 116 3. The $40,000 Home 140 ACKNOWLEDGEMENT I would l i k e to acknowledge the assistance given to me by Dr. S. W. Hamilton during the preparation of th i s thesis and throughout my enrolment i n the Urban Land Economics program. His help has been greatly appreciated. I would also l i k e to thank Miss Susan Aizeman and the former Miss Michelle Jefferson for t h e i r help i n the typing of the i n i t i a l drafts of the thesis. I would es p e c i a l l y l i k e to thank Mrs. Leon Heyes for her assistance i n taping the f i n a l draft of t h i s t h e s i s . F i n a l l y , I would l i k e to thank the students of the fourth f l o o r stacks for making the l i b r a r y research and the preparation of thi s thesis enjoyable. 1 CHAPTER I INTRODUCTION 1973 was a record year for r e s i d e n t i a l construction i n Canada as t o t a l housing starts increased for the t h i r d consec-utive year and reached a record l e v e l of 268,529 s t a r t s , 7.5 percent higher than i n 1972. In B r i t i s h Columbia record r e s i d e n t i a l construction was also experienced as 37,627 dwell-ing s t a r t s were recorded, up 6.5 percent from 1972, and 34,604 housing units were completed to add to the stock of housing. Paradoxically, even though the construction of new housing units has been at record le v e l s i n recent years, claims have been made that the housing development process has been pro-gressively strangled and has, as a r e s u l t , hampered the supply of housing units to the market. Much attention has been given i n the press to the rapid escalation of house prices within B r i t i s h Columbia and to the a b i l i t y of the average household to afford to own t h e i r own home. Concern has also been voiced regarding the increasing cost of ren t a l accommodation and the extremely low vacancy rates i n rental accommodation within the major metropolitan areas of the Province. This concern has prompted the enactment of The Interim Rent Control B i l l and the re v i s i o n of The Land-lord and Tenant Act, to allow for continued control over rent increases. It has been argued that, i f enough housing units were 2 provided, increased supply would ha l t r i s i n g house prices . To many, the escalating cost of self-owned and rent a l dwelling units i s viewed as the symptoms of a "housing c r i s i s " - a c r i s i s which i s attributed to a breakdown i n the supply process and a r e s u l t i n g shortage of dwelling units. L i t t l e attention i s paid to the demand for housing within B r i t i s h Columbia, the factors a f f e c t i n g i t s growth i n recent years and i t s influence on the housing market. It i s too. often assumed that everyone i s e n t i t l e d to own t h e i r own home and that t h i s demand, need or desire, should and w i l l be met. It has been assumed, as Smith states, that "supply i s nearly per-f e c t l y e l a s t i c so that someone w i l l finance and b u i l d a dwelling unit for each additional family that w i l l pay the going p r i c e . The volume of house building i s assumed to^be li m i t e d primarily by the number of buyers and renters. Purpose In l i g h t of the concern over the question of the existence-of a "housing c r i s i s " within the Province at the present time, an examination of the supply of housing and the supply process within B r i t i s h Columbia during the periods 1961 to 1971 and 1971 to 1974 would do much to answer questions as to the e x i s t -ence and extent of any "housing c r i s i s " within B r i t i s h Columbia. This thesis w i l l examine the housing stock and the record of the housing supply process i n B r i t i s h Columbia i n an attempt to answer the questions - Is there a c r i s i s i n supply? Is there a housing supply shortage? If so, how did i t develop? 1 Smith, W. F. , HouA-tng: the Social avid. Economic Element*, University of C a l i f o r n i a Press, Berkeley, 1970, pages 116, 3 Method The record of the housing supply process within B r i t i s h Columbia w i l l be examined through a study of changes i n the housing supply and the housing stock over the period 1961 to 1974. The bulk of t h i s data for t h i s study w i l l be from the 1971 Census of Canada's s t a t i s t i c s on housing, 1961 to 1971. Information r e l a t i n g to housing construction from the Central Mortgage and Housing Corporation w i l l also be used to examine the performance of the housing industry throughout the Province from 1961 to 1974. Scope Chapter II of the thesis provides an overview of recent conditions i n the B r i t i s h Columbia housing market and the factors contributing to the concern over the existence of a "housing c r i s i s " . Chapter III provides' an examination of the economics of housing demand and the factors contributing to the growth i n demand for housing within B r i t i s h Columbia i n recent years. Chapter IV examines the economic c h a r a c t e r i s t i c s of housing and how they re l a t e to the housing supply within B r i t i s h Columbia. Chapter V looks at the economics of housing supply and the determinants of supply. Chapter VI examines housing trends and the housing record i n B r i t i s h Columbia over the period 1961 to 1974, analyses the effectiveness of the housing supply process and provides con-clusions on the study. 4 ^ CHAPTER II OVERVIEW - B. C. HOUSING MARKET Statements of requirements for the construction of new dwelling units are a major feature of the rhetoric that surrounds discussions of housing and housing p o l i c y . Once determined, figures s i g n i f y i n g construction requirements are often used as a basis i n surveying each year's annual con-struction s t a t i s t i c s for determining the housing industry's success or f a i l u r e . If construction exceeds requirements, i t i s assumed that housing conditions are improving. I f , however, construction f a l l s short of the stated goals, i t i s assumed that housing conditions are deteriorating and that a "housing c r i s i s " i s developing. In 1969, the Report of theoTask Force on Housing and Urban Development stated that the construction of a minimum average of 200,000 units a year between 1969 and 1973 was needed to allow the housing market to keep pace with new demand, plus making at least some inroad into the backlog of overcrowding, obsolescence, and general shortage of supply. Since 1969, r e s i d e n t i a l construction has averaged well above the 200,000 l e v e l . 1973 was a record year for r e s i d e n t i a l construction i n Canada as t o t a l dwelling starts increased for the t h i r d consecutive year and reached a record of 268,529 starts, 2 Rtpofit o{ tht Ta&k FoA.ee. on. Housing, Queen's Printer, Ottawa 1969, page 23. 5 7.5 percent higher than i n 1972, while the number of starts and completions were higher than i n any previous year i n the history of Canada (see table 1). In B r i t i s h Columbia record lev e l s of construction were also experienced i n 1973, as 37,627 starts were recorded, up 6.5 percent from 1972. A record 34,604 housing units were completed to add to the stock of housing, and 27,112 units were under construction at year end, also a record. In 1974, however, r e s i d e n t i a l construction a c t i v i t y f e l l as a r e s u l t of a slackening in economic growth and a c t i v i t y throughout Canada and the world. In the f i r s t three quarters of 1974 housing starts i n Canada were 176,023, down 10.5 percent from 196,688 during the same period in 1973.. By September 1974 the seasonally adjusted annual rate of starts had f a l l e n to 192,000, down from 209,100 i n August. Housing a c t i v i t y i n B r i t i s h Columbia was subst a n t i a l l y lower i n the t h i r d quarter of 1974 than in the corresponding period of 1973. Starts were down 3 0 percent and completions were down 11 percent. As a re s u l t , the number of units under construction at the end of September 1974 was 14 percent lower than twelve months e a r l i e r . In the f i r s t three quarters of 1974 starts numbered 25,312 and completions 26,3 05, while the number of units under construction was 25,085 at the end of the t h i r d quarter of 1974. In the urban centres of B. C., surveyed by the Central Morgage and Housing Corporation (CMHC), monthly starts in the f i r s t nine months of 1974 t o t a l l e d 19,256 and completions 20,293. But multiple starts in Metropolitan Vancouver are known to have been understated i n 1973. It i s estimated that the true number TABLE 1 DWELLING STARTS 1958 - 1973 C A N A D A SINGLE- SEMI- APARTMENT PERIOD DETACHED DETACHED ROW .AND OTHER TOTAL 1958 104,508 10,713 2, 457 46,954 164,632 1959 92,178 10,468 1, 9 08 36,791 141 ,345 1960 67,171 9,699 '2, 301 29,687 108,858 1961 7 6,430 11,650 1, 864 35,633 125,577 1962 7 4,443 10,975 3, 742 40,935 130,095 1963 77,158 7,891 3, 895 59,680 148,624 1964 77,079 8,706 4, 755 75,118 165,658 1965 75,441 7 ,924 5, 306 77,894 166,565 1966 70,642 7,281 5, 000 51,551 134 , 474 1967 72,534 9,939 7, 392 74,2 58 164,123 1968 , 75,339 10,114 ' 8, 042 10 3,383 ' 196,878 1969 78,404 10,373 10,721 110,917 210,415 1970 70,749 10,826 17, 055 91,898 190,528 • 1971 9 8,056 13,751 15, 659 106,187 2 3 3,653 1972 115,570 13 ,649 16, 980 103,715 249 , 914 1973 131,552 13,235 17,291 106,451 268,529 BRITISH COLUMBIA . 1958 14,674 910 231 3,484 19,299 1959 13,246 637 87 2,721 16 ,691 1960 9,710 206 579 1,509 12,004 . 1961 7,799 240 195 2,936 1 1 , 1 7 0 . 1962 8,399 280 363 4 ,850 13,892 1963 9,533 374 200 7,222 17 , 329 1964 9 , 388 563 227 11,4 87 21,665 1965 9 ,830 689 740 10,139 21,398 1966 9,664 537 175 7,377 17,753 1967 13,201 826 689 9,384 24,100 1968 12 ,487 1,126 562 12,02 0 26,195 1969 13,035 1,376 1, 325 16,084 31,820 1970 1 3 , 6 9 1 1,16 9 1,566 1 0 , 8 9 0 27,316 1971 17,707 1,220 1, 803 14,035 • 34,765 19 7 2 18,890 818 2, 362 13,247 35,317 1973 21,313 901 1, 501 13,912 3 7,627 S o u r c e : Canadian Housing Statictlci> 1 9 7 3, CMHC, t a b l e s 9, 10. 7 of starts i n the f i r s t nine months of 1973 was, approximately 13,300 i n Metropolitan Vancouver. On t h i s revised basis, 1974 starts were down 12 percent i n Metropolitan Vancouver and 14 3 percent i n the nineteen urban centres surveyed by CMHC. In l i g h t of the.requirements set out by the Task Force on Housing and Urban Development, i t would appear that, as a nation, we have been, u n t i l recent downturns i n construction, s a t i s f y i n g our housing requirements. Paradoxically, even though construction of new housing units has, u n t i l recently, been at record l e v e l s , claims have been made that the housing develop-ment process i n B r i t i s h Columbia has been progressively strangled. Much attention has been given i n the press to what i s considered to be a "housing c r i s i s " . Concern has been voiced regarding the low l e v e l of vacancy rates for rent a l accommoda-ti o n , the lack of construction of new rental accommodation, the high costs of land and r e s i d e n t i a l construction, and the high cost of self-owned accommodation within the Province. To many, these factors are viewed as symptoms of a "housing c r i s i s " - a c r i s i s which they a t t r i b u t e to'a shortage of supply. Symptoms (1) Vacancy Rates Vacancy rates.for privately-owned r e n t a l apartments i n Metropolitan Vancouver have been declining since June 1971 3 Housing Statictlci, - B. C. Region Central Mortgage, and  Housing Co ftp o nation', Vancouver, September 1974, page 1. 4 Beveridge, I. L. , The Land development PfioceAA ai> It abject*,  the Supply o I Honking within the GfieateK Vancouver. Regional  Vlhtfilet, ICO. Real Estate Management Ltd., Vancouver 1974, page 1. TABLE 2 VACANCY RATES IN PRIVATELY-INITIATED RENTAL APARTMENTS (percent vacancy) METRO TORONTO2 METRO VANCOUVER1 VANCOUVER CITY1 METRO VICTORIA2 June Dec. June Dec. June Dec. June Dec. 1963 4.0 — 4.0 — 3.7 — 1964 2.6 — 4.4 — • 4.3 • — — 1965 1.5 — 4.0 — 4.1 — — — 1966 0.9 1.5 — 1.6 — — 1967 1.1 — • 1.1 — 1.1 — -- — 1968 1.4 . — 1.3 — 1.1 — — 1969 2.4 2.1 1.2 0.8 0.8 0.7 3.2 — 1970 2.5 2.4 2.7 2.1 2.1 1.7 5.2 — 1971 2.7 3.2 4.1 2.8 3.7 2.1 . 4.1 1972 2.9 2.3 2.4 0.6 1.9 0.4 3.0 0.8 1973 1.8 . 1.4 1.0 0.4 0.6 0.2 1.4 0.3 1974 0.9 — 0.3 — 0.2 — 0.5 — Source: Apartment Vacancy Survey, Metro Vancouver, CMHC Vancouver, June 1974, Table 1. 2 . . Apartment Vacancy Survey, Metro Vxctorva, CMHC Vancouver, June 1974, Table 3. . 9 when they were at a l e v e l of 4.1 percent. In June 1974, the ov e r a l l vacancy rate for privately-owned re n t a l apartments i n Metropolitan Vancouver f e l l to 0.3 percent of the 100,000 units surveyed; the lowest rate since Central Mortgage and Housing Corporation began i t s surveys for Vancouver i n 1963. At the same time, the a v a i l a b i l i t y of rent a l accommodation within the City of Vancouver was even lower as a vacancy rate of only 0.2 percent was recorded (see Table 2). In Metropolitan V i c t o r i a the si t u a t i o n was only marginally better as.the o v e r a l l vacancy rate for privately-owned r e n t a l apartments was 0.5 percent in.June 1974. This rate was only f r a c t i o n a l l y higher than the 0.3 percent vacancy rate i n Decem-ber 1973, which was the lowest vacancy rate experienced i n V i c -t o r i a since the CMHC surveys for the area coinmenced in-19 69. The vacancy rates experienced by Vancouver and V i c t o r i a were both well below the national weighted average rate of 2.4 percent for June 1974. Vancouver recorded the lowest vacancy rate nationally, 0.3 percent; while St. John's recorded 0.4 5 percent; V i c t o r i a 0.5 percent; and Toronto 0.9 percent. (2) Apartment Construction Apartment construction i n Canada reached i t s peak i n . 1969 as 110,917 units were started, representing almost 53 percent of the nation's housing s t a r t s . Apartment construction i n B r i t i s h Columbia also reached i t s peak i n 1969 as 16,084 apartment units were started, representing almost 53 percent 5 Apan.tme.nt Vacancy Survey• Metropolitan Vancouver, CMHC, June 1974, Table 3. TABLE 3 APARTMENT STARTS 1958 - 1973 PERIOD (# OF UNITS) B.C. CANADA APT. TOTAL B.C. % OF HOUSING CANADA 1958 3,484 46,959 18.0 28.5 1959 2,721 36,791 16.3 26.0 . 1960 1,509 29,687 12.6 27.2 1961 2,936 35,633 26.3 28.3 1962 - 4,830 40,935 34.9 31.5 1963 7,222 59,680 41.7 40.2 1964 11,487 75,118 52.0 45.3 1965 • 10,139 77,894 47.4 46.8 1966 7,377 51,551 41.6 38.3 1967 9,384 74,258 38.9 45.2 1968 12,020 103,383 45.9 52.5 1969 16,084 110,917 50.5 52.7 1970 10,890 91,898 39.9 . 48.2 1971 14,035 106,157 40.4 45.4 1972 13,247 103,715 37.5 41.5 1973 13,912 106,451 36.9 39.6 Source: Canadian Housing Statistics 1973, CMHC', Tables 9, 10. 11 of the nation's housing s t a r t s . Apartment construction i n B r i t i s h Columbia also reached i t s peak i n 1969 as 16,084 apartment units were started, 50 percent of a l l housing starts i n the Province during the year (see Table 3). Since 1969, however, the construction of apartments and multi-unit dwell-ings has f a l l e n , with the exception of condominiums, whose construction has increased. In 1973, apartment starts for Canada t o t a l l e d 106,451, 39.6 percent of a l l dwelling s t a r t s . In B r i t i s h Columbia, apartment s t a r t s were down 13.5 percent from the 1969 l e v e l to only 13,912, 36.9 percent of a l l 7 dwelling starts during 1973. The drop i n apartment starts was more pronounced i n Van-couver as starts f e l l 37 percent from 11,945 i n 1969, 67.5 percent of a l l s t a r t s , to only 7,281 i n 1973, 40 percent of 8 t o t a l s tarts for the year. The drop i n apartment construction, both i n terms of number of units and as a proportion of a l l housing s t a r t s , i s evident from the above figures. The reduction i n the a v a i l a b i l i t y of new rental accommodation i s , however, even more pronounced than the figures would indicate, as a large proportion of a l l apart-6 Condominium strata plan r e g i s t r a t i o n s have r i s e n from 632 units i n 1969 to 2,221 units i n 1973 i n Greater Vancouver, R e a l Estate Trends in Metropolitan Vancouver, Real Estate Board of Greater Vancouver, November 1974, B-6. 7 Canadian Housing S t a t i s t i c s 1973, CMHC, Ottawa 1974, Tables 4, 9, 10. 8 Canadian Housing S t a t i s t i c s 197 3, CMHC, Ottawa 1974, Table 12. 12 ment and multiple-dwelling units now being constructed are producted for condominium ownership. A more complete discussion of the factors contributing to the drop i n rental apartment construction w i l l be given i n a l a t e r chapter. The growth i n significance of condominium development can be seen through an examination of condominium r e g i s t r a t i o n s i n Metropolitan Vancouver. Since a s t r a t a plan cannot be registered u n t i l a b u ilding i s substantially constructed, a lag of several months occurs between the date a project i s started and the date of r e g i s t r a t i o n . Therefore, housing starts and s t r a t a plan r e g i s t r a t i o n s are not s t r i c t l y comparable, but a rough guide of the significance of condominiums in the housing market can be Nobtained by comparing re g i s t r a t i o n s i n each year, from 1968 to 1973, with housing starts i n the same years. Condomin-ium unit r e g i s t r a t i o n s rose dramatically between 1968 and 1973 to become a large segment of the market. Condominiums rep-resented 13.1, 13.7, and 21.5 percent of a l l housing starts i n Metropolitan Vancouver i n the years 1971, 1972, and 1973 respectively (see Table 4). Condominium dwelling starts have been increasing while the number of row and apartment st a r t s have been decreasing. V i r t u a l l y a l l single-family, semi-detached, duplex and condominium units are b u i l t for i n d i v i d u a l ownership, but condominium units are included with rental units i n row housing and apartment starts i n construction s t a t i s t i c s . Therefore, to separate individually-owned units from ren t a l units, condo-minium starts (registrations) should be subtracted from the row and apartment starts and added to the single-family semi-TABLE 4 CONDOMINIUM DEVELOPMENTS IN METROPOLITAN VANCOUVER 1 9 6 8 - 1 9 7 3 ROW St ROW & CONDOMINIUM TOTAL STARTS , „ „ m APART. ^ « ' ^ ^ ^ " i u n CONDOMINIUMS -YEAR „„„ i APART. REGISTRATIONS ' METRO VAN. 1 AS % OF „ ^ n o AS % OF STARTS STARTS NO.OF UNITS 2 STARTS 19 6 8 15,690 10,0 32 64.0 102 0.7 1969 17,690 12,525 71.0 632 3.6 1970 13,437 8,605 64.0 • 954 7.1 1971 15,553 9,879 63.5 2,031 13.1 1972 16,210 8,531 52.5 2,221 13.7 1973 17,334 8,235 47.5 3,732 21.5 Source: 1Canadlan Housing Statistics 1973, CMHC, pp. 6, 13. 2 Real Estate Trends In Metropolitan Vancouver, 1974-75, . Real E s t a t e Board of Greater Vancouver, pp. B-6, and s. w. Hamilton, R. Roberts, Condominium development and Ownership, Real E s t a t e Board of Greater Vancouver', October 1 9 7 3 , p . 1 3 . TABLE 5 COMPARISON OF CONDOMINIUM REGISTRATIONS TO STARTS OF INDIVIDUALLY OWNED HOUSING UNITS 1968 - 1973 YEAR SINGLE FAMILY SEMI-DETACHED & DUPLEX STARTS METRO VANC.1 CONDOMINIUM REGISTRATIONS NO. OF UNITS2 TOTAL UNITS FOR SALE CONDOMINIUMS AS % OF NEW UNITS FOR SALE 1968 5,658 102 5,760 1.8 1969 5,165 632 5,797 10.9 1970 4,832 954 5,786 •16.'. 5 1971 5,674 2,031 7,705 26.4 1972 7,679 2,221 10,000 22.1 1973 9,049 3,732 12,831 29.1 Source: Canadian Housing S t a t i s t i c s , CMHC, 1972, p. 6; 1973, p. 12. Real Estate Trends in Metropolitan Vancouver, 1974-75, Real Estate Board of Greater Vancouver, p. B-6 and S. W. Hamilton, R. Roberts, Condominium Development and Ownership, Real Estate Board of Greater Vancouver, od 73, p. 13. 15 detached, and duplex starts.. Doing t h i s for the years 1968 to 1973 produces the res u l t s summarized i n Table 5. Condominium units have increased from 1.8 percent of a l l s t a r t s of new self-owned units i n Metropolitan Vancouver i n 1968 to 29.1 percent in 1973. Condominium units have gained a s i g n i f i c a n t share of the market for i n d i v i d u a l l y owned units i n the Van-couver area, averaging almost -26 percent of the market i n 1971, 9 1972, and 1973. Some condominiums have been offered for rent by t h e i r owners, but not enough to a f f e c t the supply of rent a l units. The reduced rate of multiple-unit apartment type construction, the trend towards the development of self-owned condominium units, and extremely low vacancy rates have reduced the flow of new rental units into the B r i t i s h Columbia housing market i n recent years and hence the a v a i l a b i l i t y of rental accommodation within the Province. (3) Land Costs Residential building l o t s have been subject to extreme: demand and i n f l a t i o n a r y pressure during the past few years as l o t prices have climbed steeply.'- This trend has been p a r t i c u -l a r l y evident i n the Greater Vancouver area. Lot prices have > more than quadrupled i n many areas during the l a s t eight years, as indicated by the prices of t y p i c a l lots, reported by the Real Estate Board of Greater Vancouver (see Table 6). Price 9 Hamilton, S. W.; Roberts, R., Condominium Devzlopmznt and  Owmn&hlp, Real Estate Board of Greater Vancouver, October 1973, page 12. TABLE 6 TYPICAL RESIDENTIAL LAND VALUES ~ METROPOLITAN VANCOUVER 1954 - 1974 TYPICAL FRONTAGE 1954 1958 1961 1963-64 1967 1968 . 1969 • 1970 1971 1972 1 9 7 3 „ „ VANCOUVER 33-50 2200/3350 4800/7300 9500/12500 12000/17500 15000/20000 15000/20000 15000/22500 16500/25000 25000/35000 3600(5/35000 PT. GREY 33 1150/1750 3500/5300 4300/4700 5700 6000/7500 7500/10000 10000/14000 11000/13000 11000/14000 13000/15000 20000/25000 30000/35000 GRASDV1EU • COqulTVAM 60 - 75 360/450 780/975 2500/3800 3000/3800 5500/7000 7500/10000 8500/11500 9860/13000 10500/14500 11000/16500 20000/25000 26000/35000 N.VAN, D.H. , UPPER DEL8R00K 66 1600 4000 6800/7500 8000/8500 8500/10000 9500/12500 10000/13000 10000/14000 12500/18000 2 3 000 / 300 00 ' 36000/40000 RICIC:O;:D KEU HOME AREAS 66 600/700 2000/2100 3500/4000 3500/4000 5500/6500 6500/7000 7500/9000 8500/9500 10000/11000 12500/13500 17500/18500 25000/28500 SURREY H. 65-66 950 1000 1250/1750 3000/4600 4000/500O 5500/6500 5500/6500 7000/8000 9500/11500 14500/16000 20000/28000 Sources: Real Estate Trends in Metropolitan Vancouver, Real Estate Board of Greater Vancouver, Various Years: 1959, 1964, 1968, 1969, 1970, 1971, 1972-73, 1973-74, 1974-75. en 17 i n f l a t i o n , however, was even more pronounced during 1973 and 1974 as prices i n many areas doubled due to the high demand for housing i n Greater Vancouver. (4) Construction Costs-As building material prices and union wage rates are f a i r l y uniform throughout the Province, increases i n r e s i d e n t i a l con-struction costs can be seen through an examination of r e s i d e n t i a l construction cost index and cost figures compiled by the Real Estate Board of Greater Vancouver. The index represents a weighting of labour and materials and thereby shows cost trends rather than p a r t i c u l a r changes i n prices of materials or wage rates.(see Table 7). Residential construction costs over the period 1963-1972 rose steadily and moderately at an average of 4.9 percent a year, as construction costs rose from $10.45 to $16.02 per square foot for a standard 120 0 square foot bungalow. How-ever, i n more recent years construction costs have r i s e n at a much more rapid rate, over 10 percent per annum. During the period from the Summer of 1972 to the F a l l of 1973, the resident-i a l construction cost index jumped dramatically by 19.4 percent, as costs rose to $19.22 per square foot, s i g n i f i c a n t l y increasing the costs of home construction. The rapid escalation i n construction costs continued during 1974, as construction costs rose to an average of $23.24 per square foot. As a r e s u l t of these increases, the t o t a l construction cost for a standard 1200 square foot bungalow has ri s e n from $12,540 i n 1963 to $27,888 in June 1974, a 122 percent increase over that period. TABLE 7 RESIDENTIAL CONSTRUCTION COSTS - STANDARD BUNGALOWS VANCOUVER AREA 1963 - 1973 COST INDEX COST PER SQUARE FOOT CONSTRUCTION COST Index (1963=100) Annual Change 1,200 sq. f t . 1,400 sq. f t . 1,200 sq. : % $ $ $ 1963' 100.0 -0.2 10.45 10.16 12,540 1964 104.3 +4.3 10.70 10.25 12,720 1965 107.3 +3.9 10.90 10.60 13,080 1966 113.2 +5.5 11.67 11.45 14,004 1967 116.8 +3.2 12.49 12.25 14,988 1968 128.1 +9.7 13.55 13.28 16,260 1969 Spring 141.0 +8.0 14.64 14.35 17,568 F a l l 135.7 1970 137.5 -0.6 14.37 14.03 17,244 1971 138.2 +0.5 14.45 14.12 17,340 1972 Summer 153.3 +10.9 16.02^ 15.56 19,224 1973 F a l l 183.0 +19.4 19.22** 19.05** 23,064 1974 Fa l l 224.3 +22.6 23.24 22.80 27,888 A weighted index for residential construction which allows for both materials and labour. Additional features such as washers and dryers add from $1.50 to $2.00 per square foot to the costs shown above. The standard double carport w i l l add a further $1.00 to $1.20. Source: Real Estate Trends in Metropolitan Vancouver>t 1974-1975, Real Estate Board of Greater Vancouver, Vancouver, November, 1974, p. A-7. TABLE 8 RESIDENTIAL BUILDING CONSTRUCTION INPUT PRICE INDEXES (1971 = 100) C A N A D A PERIOD TOTAL MATERIALS LABOUR B.C. 1971 100.0 100.0 100.0 100.0 J/F/M .96.4 97.1 95.2 95.9 A/M/J 98.8 98.8 98.9 99.1 J/A/S 101.7 101.9 101.4 101.5 O/N/D 103.0 102.2 104.4 103.6 1972 110.1 109.8 110.6 109.2 J/F/M 105.4 105.2 105.8 . 105.0 A/M/J 108.5 107.8 109.9 108.0 J/A/S 111.6 111.3 112.2 110.0 O/N/D 114.7 114.6 . 114.9 114.2 1973 123.3 124.0 121.8 121.3 J/F/M 118.0 118.7 116.7 117.9 A/M/J 122.8 124.1 120.5 121.2 J/A/S 124.7 125.3 123.6 121.5 O/N/D 127.5 128.1 126.4 124.5 . Source: Canadian Housing Statistics 1973, CMHC, Ottawa, March 1973, Table 114, p. 90. 20 The rapid increase i n r e s i d e n t i a l construction costs i n recent years can also be seen from Central Mortgage and Housing Corporation's Residential Building Construction Input Price Indexes, as the B r i t i s h Columbia index rose over 24 percent between 1971 and 1973 (see Table 8). (5) Cost of Self-Owned Accommodation The cost of self-owned r e s i d e n t i a l accommodation throughout B r i t i s h Columbia has increased dramatically over the l a s t decade, but at no time have increases been as rapid as within the l a s t few years. The increasing values of r e s i d e n t i a l property can be seen through an examination of the average sales prices for multiple l i s t i n g service (MLS) sales within the Greater Vancouver area. MLS i s the only source of s t a t i s t i c a l information available on e x i s t i n g house prices i n a l l areas of Greater Vancouver. How-ever, t h i s source, due to i t s compostion and other r e s t r i c t -ions, does not give a completely true description of average' house prices. The average multiple l i s t i n g sales value re-lates to a l l transactions which take place on MLS, (vacant land, r e s i d e n t i a l units, and commercial and i n d u s t r i a l proper-ties) . It tends to be a l i t t l e higher than the "average house price" due to the higher value of commercial and i n d u s t r i a l properties and because r e s i d e n t i a l sales represent between 80 and 85 percent of a l l MLS sales within the Greater Vancouver area. MLS sales are also only a segment of a l l r e a l estate sales i n the market. However, with these reservations i n mind, average MLS sales prices can be used as an indicator of the general trend i n house prices . According to t h i s source, the average home price under MLS experienced a rather slow growth 21 between 1960 and 1965. In 1965 the average house price was about $14,000. Between 1966 and 1969 there was a rather rapid increase and the average home value under MLS shot up to about $24,000. Then there was a f a i r l y stable period l a s t i n g to the beginning of 1971 when prices started to shoot up. By June 1974 the average price for a l l MLS sales was just over $57,000 (see Table 9). The average MLS sales price i n the Greater Vancouver area more than quadrupled between 1960 and June 1974, r i s i n g from $13,105 to $57,242 and increasing at an average rate of 11.68 percent per annum over the period. However, i n more recent years, MLS sales prices have r i s e n at a much more rapid rate-, increasing at an average of 18.5 percent per annum between 1967 and 1974, 31.9 percent i n 1973, and 37.9 percent i n 1974. Again, i t should be remembered that, as MLS sales contain i n d u s t r i a l and commercial property sales, as well as r e s i d e n t i a l sales, the MLS sales average can only be used as an indicator of the general trend i n house prices, not actual changes i n house prices . Since A p r i l 1973, separate figures i s o l a t i n g r e s i d e n t i a l sales i n Greater Vancouver under MLS have been calculated, giving a more accurate i n d i c a t i o n of the r i s i n g cost of s e l f -owned r e s i d e n t i a l accommodation. Even though there have been some months i n which the average sales price under MLS has decreased, the average sales price under MLS has increased dramatically on a quarterly basis. From the.second quarter of 1973 to the second quarter of 1974 the average MLS r e s i d e n t i a l sales price rose from $34,100 to $52,536, a 54 percent increase in just one year, (see Table 10). MLS r e s i d e n t i a l average sales TABLE 9 AVERAGE MLS SALES PRICES FOR GREATER VANCOUVER 1960 - 1974 YEAR AVERAGE • MLS SALES PRICE YEARLY % INCREASE 1960 $13,105 1961 $12,348 - 5 . 7 1962 $12,518 + 1.3 1963 $12,636 + 1.0 1964 $13,202 + 4.5 1965 ; $13,964 + 5.7 1966 $15,200 + 8.9 1967 $17,836 + 17 . 2 1968 $20,595 + 15.5 1969 $23 ,939 + 16 . 2 1970 $24,239 + 1.3 1971 $26,471 + 9.2 1972 $31,465 + 18.9 1973 $41,505 + 31.9 June 1974 $57,242 + 37.9 Source: Real E s t a t e Board of Greater Vancouver. Average Sale P r i c e s i n the Greater Vancouver area f o r the years 1960-1974 c a l c u l a t e d by d i v i d i n g d o l l a r volume by number of s a l e s T h i s w i l l show the t r e n d o n l y , because the d o l l a r volume i s based on a l l the m u l t i p l e l i s t i n g s s o l d through the Real E s t a t e Board of Greater Vancouver i n t h a t p e r i o d , which does i n c l u d e b u s i n e s s and commercial s a l e s . FIGURE 1 M . L . S . A V E R A G E P R I C E R A N G E A V E R A G E M . L . S . T R A N S A C T I O N P R I C E S IN T H E G R E A T E R V A N C O U V E R A R E A , 1961 - 7 4 , C A L C U L A T E D B Y D I V I D I N G T H E D O L L A R V O L U M E O F A L L R E S I D E N T I A L , B U S I N E S S A N D C O M M E R C I A L S A L E S T H R O U G H T H E M U L T I P L E L I S T I N G S E R V I C E O F T H E R E A L E S T A T E B O A R D O F G R E A T E R V A N C O U V E R B Y T H E N U M B E R O F S A L E S . 6 0 -5 5 -5 0 -4 5 -4 0 -3 5 -W Q 2 CO 3 b — D 0 I h 2 5 -2 to < J 2 0 -J 0 Q 1.5 -' IO -i i -j i r T 1 ••—i 1 1 • — i — : 1 — i 1961 6 2 6 3 6 4 6 5 6 6 67 6 3 6 9 TO 71 7 2 7 3 7 4 J U N E Y E A R S LOGARITHMIC S C A L E Source: Real Estate. Tie.nd6 In Me.t/iopoli£a.n Vancouver, 7 974- 75, November 1974, page 29. ' ' 24 prices have been generally lower than the average MLS sales price for the same period. In June 1974, the average MLS r e s i d e n t i a l sales price was $3,000 lower than the average MLS sales p r i c e , which included a l l types of property. The trend of rapidly increasing r e a l estate prices has not been confined s o l e l y to the Greater Vancouver area. The average MLS sales price for a l l MLS sales within B r i t i s h Columbia increased 258 percent between 1963 and July 1974; increasing at an average rate of 12.6 percent annually. As was the ease i n Vancouver, average MLS sales prices through-out the Province have increased more rapidly i n recent years. In 1974 alone, the average MLS sales prices for the Okanagan, Westminster and V i c t o r i a Real Estate Boards increased 48, 36 and 4 3 percent respectively; compared with increases of 15, 37 and 26 percent respectively i n . 1973 (see Table 11). Over the l a s t ten years those with an equity position i n the r e a l estate market i n Greater Vancouver have seen t h e i r assets double or even t r i p l e , however, these large increases i n wealth are to a certain extent i l l u s i o n a r y — the house that has increased i n value from $20,000 to $50,000 has l i t t l e meaning to a family or household unless, upon s e l l i n g , they do not re-enter the same housing market. Those who are at a disadvantage during these current i n f l a t i o n a r y times are those who are entering the market and who must pay large down payments and monthly carrying costs i n order to buy t h e i r own home. Although industry spokesmen f e e l that r e s i d e n t i a l property values have reached t h e i r peak, or at least/remained r e l a t i v e l y TABLE 10 MONTHLY AND QUARTERLY AVERAGES OF RESIDENTIAL SALES FOR GREATER VANCOUVER THROUGH MULTIPLE LISTING SERVICE 'l' AVERAGE RESIDENTIAL MLS SALE $ QUARTERLY % INCREASE 1973 APRIL MAY JUNE $ 33,638 3 A, 059 34,603 2nd QUARTER 34,100 JULY • AUGUST SEPTEMBER 39:, 015 40,549 43,827 3rd QUARTER 39,908 +17.0 OCTOBER NOVEMBER DECEMBER 47,636 42,417 44,129 4th QUARTER 1974 44,694 +11.99 JANUARY FEBRUARY MARCH 1st QUARTER APRIL MAY JUNE 2nd QUARTER JULY AUGUST 47,316 46,144 51,615 48,374 53,617 49,921 54,254 52,536 54,380 52,850 + 8.2 + 8.6 Source: Real E s t a t e Board o f Greater Vancouver. TABLE 11 AVERAGE DOLLAR VALUE PER TRANSACTION — M.L.S. SYSTEM FOR THE BRITISH COLUMBIA REAL ESTATE BOARDS 1963 1964 1965 1966 1967 1968 1969 1970 . 1971 1972 1973 1974* BRITISH COLUMBIA 11,796 12,424 12,905 13,950 16,133 18,425 20,852 21,100 22,813 25,741 31,665 42,22] % INCREASE - B.C. +5.3 +3.8 +8.1 +15.6 +14.2 +13.2 +1.2 +8.11 +12.8 -23 +33 VANCOUVER 12,637 13,203 13,965 15,200 17,836 20,596 23,939 24,239 26,472 31,465 41,505 57,24: OKANAGAN 11,016 13,330 12,531 14,100 16,138 16,329 16,544 16,534 17,994 19,124 22,017 32,596 WESTMINSTER . 9,420 9,324 9,879 10,783 12,205 14,936 17,425 18,939 20,722 25,412 34,939 47,36! VICTORIA 11,547 11,661 12,386 13,144 15,250 17,624 22,606 22,187 23,620 25,610 32,374 46,502 VANCOUVER ISLAND — — — 11,738 13,108 13,519 14,301 14,760 15,681 16,031 18,268 23,67: CARIBOO — 15,857 17,803 15,657 14,128 16,129 15,947 14,238 15,868 20,016 23,164 29,60f CHILLIWACK — — — — — : — — • — — 18,477 25,224 — KAMLOOPS — — — — . — . — — — — 28,446 34.30C KOOTENAY —— 11,635 11,538 12,637 16,774 15,368 13,422 16,117 17,415 23,049 24,602 NORTHWESTERN • —— —— — — — • • ——• 15,114 16,718 18,898 25,59^ July 1974 Source: The Canadian Real Estate Association. to 27 stable during the second and t h i r d quarters of 1974; the price increases of recent years have raised questions as to the a b i l i t y of low and middle income families to afford to buy the i r own homes. Even though house prices are at h i s t o r i c a l l y high rates, houses continue to be sold, and many to low and middle income families. None the les s , to some, the high price of housing challenges the Canadian i d e a l of the owner-occupier home, and t h i s challenge i s viewed as a c r i s i s . What i s a Housing C r i s i s ? Housing and the adequate provision of housing units i s an important emotional and p o l i t i c a l issue within our society. It i s generally considered that "every Canadian should be e n t i t l e d to clean warm shelter as a matter of basic human right".^® When we f a i l to provide s u f f i c i e n t quantities of housing, when demand exceeds supply, and when household form-ation, both family and non-family, exceeds construction of dwelling units, i t i s generally considered to be a time of "Housing C r i s i s " . To some, the low vacancy rates, the low levels of apartment construction, the high cost of land and construction, and the high prices of r e s i d e n t i a l accommodation, described above, that have been experienced within the B r i t i s h Columbia housing market i n recent years, are considered to be the symptoms of a housing c r i s i s . To them, market conditions point to a shortage i n the supply:of r e s i d e n t i a l accommodation. The term "Housing 10 Report oI the Federal Task Force on Housing and Urban  Veve.lopmQ.nt, Central Mortgage and Housing Corporation, Ottawa 1969, page 22. C r i s i s " has become synonmyous with a shortage i n housing supply. A l l shortages are r e l a t i v e to some standard; housing shortages are often related to household formation. I t i s assumed that each family, group of people, or i n d i v i d u a l person should occupy a separate dwelling unit i f they so desire. The sharing of dwellings by two or more families, commonly known as "doubling up", i s considered to be character-i s t i c of periods of extreme housing shortages. If supply does not grow as fast as household formation, supply shortages are said to develop. This, however, ignores the a b i l i t y of.the exis t i n g stock to s a t i s f y the needs of new households for accommodation. There i s always a need for more housing to replace the old and substandard houses and thereby improve the qu a l i t y and increase the quantity of the housing stock. Housing i s also needed to keep pace with household formation. But i t can only be obtained at a price. Unless households'demand can be made ef f e c t i v e , a housing shortage has no economic si g n i f i c a n c e . Economic shortages, as defined by Pennance and Gray"*"1, are r e l a t i v e to some l e v e l of costs and prices and re f e r to s i t u -ations of market imbalance where e f f e c t i v e demand exceeds supplies forthcoming at the p r e v a i l i n g p r i c e , as would occur with the demand for rental accommodation under rent control. A l t e r n a t i v e l y , an economic shortage could occur i n a market i n 11 Pennance, F., Gray, H., "Housing Shortage: Fact or F i c t i o n " Building, The Builders Limited, London, March 17, 1967, page 104. 29 which, although price has increased to achieve a temporary balance between demand and supply, i t i s considered high i n r e l a t i o n to a "normal" price that would p r e v a i l when supplies had been able to increase over a longer period. In t h i s case shortages exist when normal price i s used as a benchmark. It has been said that the "adequacy of the housing market i s judged by i t s a b i l i t y to respond to the demands made on i t , that i s , by the degree to which i t i s able to provide i n d i v i d -uals and families with the type of housing that they seek at a 12 cost they can afford" - the assumption being that a l l people, regardless of income, should have housing that conforms to p r e v a i l i n g standards. Housing shortages of t h i s type w i l l e x i s t as long as there are people with i n s u f f i c i e n t income to afford standard housing. This, however, should not be considered to be a housing c r i s i s nor a matter of market inadequacy, but a problem of income d i s t r i b u t i o n to be-" solved through s o c i a l assistance programmes; not market intervention. In a non-stable housing market, with rapidly escalating house prices and rent l e v e l s , people look to supply factors as the cause of the problem. It i s argued that i f enough housing units were produced, increased supplies would prevent r i s i n g prices. Such attention to supply, however, ignores such factors as population and income growth, governmental incentives, and numerous other factors promoting high lev e l s of housing 12 Wonklng Vape.A.6: Volume. 1, (b) "Housing Supply" , Ontario Task Force on Housing, Province of Ontario, June 1973, page 1. demand. It also ignores the a b i l i t y or capacity of the housing industry to increase the production of housing units. Through an examination of housing market conditions, both demand and supply, throughout the Province over the periods 1961 to 1971 and 1971 to 1974, t h i s thesis w i l l investigate the housing supply process i n an attempt to tes t the hypothesis: Is there a shortage of housing supply within the B r i t i s h Columbi market at the present time? If so, by what d e f i n i t i o n ? 31 APPENDIX TO CHAPTER II RELIABILITY OF AVERAGE MLS SALES PRICES MLS sales data i s often used as a general i n d i c a t i o n of the trends i n r e s i d e n t i a l property values, even though MLS 13 represents only a portion of a l l sales. In a study of the r e l i a b i l i t y of MLS sales of r e s i d e n t i a l property i n Vancouver, i t was shown that MLS data was not consistently representative of a l l r e s i d e n t i a l sales. In the study, a 100 percent sample of sales of single-family r e s i d e n t i a l property under MLS was compared to a 100 percent sample of a l l arm's length s i n g l e -family r e s i d e n t i a l sales. Data was obtained from the Multiple L i s t i n g Service of Greater Vancouver and from Teela Reports. Data was c o l l e c t e d for four areas: Vancouver West, Vancouver East, West Vancouver, and North Vancouver; and covered four periods: the t h i r d quarter of 1970, the f i r s t quarter of 1971, the t h i r d quarter of 1971, and the second quarter of 1973. In the analysis the means and medians of MLS and Teela sales (the market) of r e a l estate were compared within each area and period. A detailed discussion of the method and s t a t i s t i c a l analysis of the study i s beyond the scope of t h i s paper, but Tables 12 and 13 present a comparison of the mean and median 13 Hamilton, S. W., "Multiple L i s t i n g Data as an Indicator of Real Estate Market Behavior", an unpublished paper, Univer-s i t y of B r i t i s h Columbia, 1974. Teela Reports report a l l r e a l estate sales recorded by the B r i t i s h Columbia Land Registry Office for selected areas of Metropolitan Vancouver. r e s i d e n t i a l sales prices for MLS and Teela (the market) for each area by period. The results of the study indicated that multiple l i s t i n g service data i s not consistently representative of the general l e v e l of single-family r e s i d e n t i a l sales p r i c e s . From an examination of the means and medians by area and by period i t i s r e a d i l y apparent that neither the mean nor the median of the MLS data i s consistently above or below the market data. The maximum deviation of the MLS median from the market median was 22.2 percent, while the minimum was zero. The maximum deviation of the MLS mean from the market was 14.8 percent, while the minimum was zero. However, i t must be noted that deviations i n both cases were both p o s i t i v e and negative, so the maximum range of the deviation was 2 8.7 per-cent i n the case of the median and 34.4 percent i n the case of the mean; a sizeable range of error. Two s t a t i s t i c a l approaches were used, the Chi-Squared test and the Kolmogorov-Smirnov t e s t . Both tests showed that the MLS data was not consistently representative of the market. This does not mean that the MLS data i s not useful as a con-venient and readi l y available indicator of market trends over the long run; however, i t does indicate that over the short run MLS data may d i f f e r from market price l e v e l s . 33 TABLE 12 MEAN MLS AND TEELA RESIDENTIAL SALES PRICES BY AREA AND PERIOD _ „, MLS X/TEELA X BY AREA BY PERIOD SALES PRICES IN DOLLARS PERIOD AREA W 29,954/ 32,048 93.5% 30,250/ 30,786 98.3% 32,319/ 34,330 94.1% 45,016/ 43,509 103.5% VE 19,560/ 20,256 96.6% 20,156/ 20,796 96.9% 21,769/ 21,390 101.8% 30,378/ 30,320 122.0% WV 43,551/ 42,346 102.8% 43,871/ 39,535 111.0% 41,909/ 41,335 101.4% 60,036/ 52,302 114.8% NV 25,835/ 37,084 104.7% 26,888/ 27,482 97.8% 28,658/. 29,634 96.7% 30,818/ 38,326 80.4% VW = Vancouver West VE = Vancouver East WV = West Vancouver NV = North Vancouver Period 1: 3rd Quarter 1970 Period 2: 1st Quarter 1971 Period 3: 3rd Quarter 1971 Period 4: 2nd Quarter 1973 TABLE 13 MEDIAN MLS AND TEELA RESIDENTIAL SALES PRICES BY AREA AND PERIOD MLS MEDIAN/TEELA MEDIAN PERIOD AREA SALES PRICES IN DOLLAP.S VW 28,500/ 28,500 100.0% 26,900/ 27,500 97.8% 29,000/ 31,000 93.5% 43,000/ 40,000 107.5% VE . 18,500/ 18,500 100.0% 19,500/ 19,000 102.6% 21,000/ 20,000 105.0% 29,250/ 28,500 102.6% WV 40,000/ 40,000 100.0% 40,000/ 36,000 111.1% 41,350/ 40,000 103.4% 61,000/ 49,900 122.2% NV 26,500/ 26,600 99.6% 26,650/ 28,000 95.2% 27,500/ 29,000 94.8% 41,500/ 38,000 109.2% VW-VE WV NV Vancouver West Vancouver East West Vancouver North Vancouver Period 1 Period 2 Period 3 Period 4 3rd Quarter 1970 1st Quarter 1971 3rd Quarter 1971 2nd Quarter 1973 35 CHAPTER III DEMAND FOR HOUSING Housing i s most c h a r a c t e r i s t i c a l l y a necessity, as i t can be assumed, quite reasonably, that each family or i n d i v i d u a l wishes to have a separate housing unit. T r a d i t i o n a l l y , i t has been the desire of Canadians to own t h e i r own home, a single-family dwelling on i t s own l o t i n the suburbs. The home owner-ship i d e a l i s strong, but the high cost of housing i s challeng-ing the continuance of t h i s i d e a l . Housing Need and Demand There i s an important d i s t i n c t i o n to be made between the terms "need" and "market or e f f e c t i v e demand". Needleman has defined housing need as "the extent to which the quantity and quality of e x i s t i n g accommodation f a l l s short of that required to provide each household or person i n the population, irrespec-t i v e of a b i l i t y to pay or of p a r t i c u l a r personal preferences, 14 with accommodation of a s p e c i f i e d minimum standard and above". Need implies a subjective judgement, independent of the market place, as to the quantity and q u a l i t y of housing that should be consumed by an i n d i v i d u a l or household and, as such, i s independ-ent of e f f e c t i v e demand and actual consumption. Housing demand i s the number of units that w i l l be absorbed by the market at a s p e c i f i c p r i c e . Housing demand i s 14 Needleman, L., The. Economic* oj Homing, Staples Press, London, 1965, page 18. 36 the number of housing units that w i l l be absorbed by the market at- a: .specific price. Demand, by d e f i n i t i o n , must be e f f e c t i v e . E f f e c t i v e demand i s market place demand, purchases which con-sumers have both the desire and the economic means to make. Demand i s what i s experienced i n the market place, what actually happens; while need represents a judgement independent 15 of the market place, what observers f e e l should happen. As such, demand and need are not often considered to be equal. In times of economic depression there i s no reduction i n need but a marked reduction i n the l e v e l of e f f e c t i v e demand, as people cannot afford to make large expenditures on housing. In times of economic boom, though the l e v e l of need may not r i s e , there may be a great increase i n market a c t i v i t y as households have the money to make demand e f f e c t i v e . " ^ Housing demand relates to both demand for the e x i s t i n g stock and incremental construction. The d i s t i n c t i o n between "stock demand" and "incremental demand" deals with demand for housing i n t o t a l , which i s met from e x i s t i n g stock plus new construction, as opposed to demand simply for new housing. Since housing i s a durable commodity, demand for housing at any one time i s met from the ex i s t i n g stock and not by the construction of new dwellings. If the volume of existing 15 R a t c l i f f , R. U. , Uftban land Economics, McGraw-Hill, New York 1949, page 89. 16 Smith, W. F., Aspects oj Housing demand, University of C a l i f o r n i a P r i n t i n g Department, Berkeley 1966, page 1. 37 housing offered at a given price i s i n s u f f i c i e n t to s a t i s f y the, aggregate demand, the difference i s the e f f e c t i v e demand for new construction. Determinants of Housing Demand The major determinants of housing demand are: (1) popu-l a t i o n growth, (2) income and employment patterns, (3) prices and rents, (4) c r e d i t variables, and, (5) consumer preferences. (1) Population Growth B r i t i s h Columbia has experienced rapid population growth. Between 1961 and 1971 population grew 34.1 percent from 1,629,082 to 2,184,621 (see Table 14). For the l a s t four decades B r i t i s h Columbia has experienced a higher annual average rate of population growth than Canada, North America and the world (see Table 15). This high rate of growth has contributed to the high demand for accommodation within the Province i Much of B r i t i s h Columbia's high rate of population growth can be attributed to the large number of migrants from other provinces and countries. From 1950 to 1970, migration account-ed for almost 59 percent of the population growth i n the Province, while natural increase (births - deaths i n resident population) accounted for only 41 percent of the population 17 growth. In more recent years net migration has increased .17 ¥oh.ecai>t o & Population Gnowth in B. C. to the yzaft 2.0 00 , Government of B r i t i s h Columbia, Department of I n d u s t r i a l Development, Trade and Commerce, V i c t o r i a 1971, page 7. TABLE 14; POPULATION, HOUSEHOLDS, AND AVERAGE NUMBER OF PERSONS PER HOUSEHOLD FOR CANADA AND PROVINCES PROVINCE AND MUNICIPALITY P 0 P U L A T I 0 N H 0 U S E H 0 L D s AVERAGE NUMBER OF PERSONS PER HOUSEHOLD 1961 1966 1971 1961 1966 1971 % CHANGE 1961-71 , 1961 1966 1971 % CHANGE 1961-71 CANADA 18 ,238,247 20,014,880 21,568,311 18.3 4,554,736 5, 180,473 6,041,302 32.6 3.9 3.7 3.5 PROVINCE NEWFOUNDLAND 45 7,853 493,396 522,104 1.4.0 : 87,940 96,632 110,476 25.6 5.0 5.0 4.6 P.E.I. 104,629 108,535 111,641 6.7 23,942 25,360 27,898 16.5 4.2 4.2 3.9 NOVA SCOTIA 737,007 756,039 788,960 7.0 175,341 185,245 208,422 18.9 4.0 4.0 3.7 NEW BRUNSWICK 597,936 616,788 634,557 6.1 : 132,715 141,761 158,100 19.1 4.4 4.2 3.9 QUEBEC 5 ,259,211 5,780,845 6,027,764 14.6 1,191,469 1, 389,115 1,605,747 34.8 4.2 4.0 3.7 ONTARIO 6 ,236,092 6,960,870 7,703,106 23.5 1,640,881 876,545 2,228,160 35.8 3.7 3.6 3.4 MANITOBA 921,686 963,066 988,247 7.2 239,754 259,280 288,722 20.4 3.7 3.6 3.3 SASKATCHEWAN 925,181 955,344 926,242 0.1 245,424 260,822 267,844 9.1 3.6 3i6 3.4 ALBERTA 1 ,331,944 1,463,203 1,627,874 22.2 349,816 393,707 464,943 32.9 3,7 3.6 3.4 B.C. 1 ,629,082 1,873,674 2,184,621 34.1 459,534 543,075 668,303 45.4 3.4 3.3 3.2 YUKON, N.W.T. 37,626 43,120 53,195 41.4 7,920 8,931 12,687 60.2 4.2 4.3 4.0 LO 00 Source: Households by Size, Census 1971, Statistics Canada, 93-702, May 1973, Table 1, p. 1-1. TABLE 15 ANNUAL AVERAGE RATES OF POPULATION GROWTH PERIOD B.C. CANADA NORTH AMERICA WORLD 1930 - 1940 1.8% 1.1% 0.7% 1.1% 1940 - 1950 3.5 1.9 1.4 1.0 1950 - 1960 3.5 2.7 1.9 1.8 1960 - 1970 3.0 1.8 1.3 1.9 Source: Forecast of Population Growth in B.C. to the Year 2000. Government of British Columbia, Department of Industrial Development, Trade and Commerce, Victoria, 1971, p. 5. 40 and between 1965 and 1970 estimated net migration represented 18 74.6 percent of population increase for the Province. Net migration i s also the most s i g n i f i c a n t factor i n the population growth of the Greater Vancouver Regional D i s t r i c t . During the 1966-1971 period i t accounted for 76.5 percent of the population increase for the d i s t r i c t . It i s also increasing as a percentage of population growth. Migration has a dramatic e f f e c t upon housing demand within the Province of B r i t i s h Columbia; not just because of i t s large numbers but also because the age d i s t r i b u t i o n of migrants i s markedly d i f f e r e n t from the resident population. Migration has a dramatic e f f e c t upon the demand for housing within the Province as migrants increase the number of households, both family and non-family, and require accommodation immediately upon a r r i v a l . On average, 75 percent of the migrants to B r i t i s h Columbia were 39 years of age or younger, and 40 percent were between 19 the ages of 20 and 39 years. Between 1966 and 1971 similar patterns were observed in the migrants to the Greater Vancouver Regional D i s t r i c t as 79 and 7 6 percent of a l l male and female 20 migrants were between the ages of 20 and 30. The age d i s t r i b -ution of migrants contributes s i g n i f i c a n t l y to the growth of the Province. Because of t h e i r young age and t h e i r higher f e r t i l i t y rates, they w i l l also contribute greatly to the region's 18 I bid, page 7. 19 I bid, page 7. 2 0 Gfizater Vdncouvcn. Regional d i s t r i c t Population Forecast, Greater Vancouver Regional D i s t r i c t , Vancouver, January 1973, page 5. 41 natural increase. Population increases r e s u l t i n g from migrat-ion thereby create a greater demand for housing accommodation than would an equal natural increase in population (births -deaths). The average net migration into B r i t i s h Columbia between 1960 and 1970 was 33,700 persons annually. Between 1965 and 1970 migration increased and net gain in population through migration averaged 51,000 persons per year (see Table 16). P r o v i n c i a l population forecasts project continued high net migration to B r i t i s h Columbia (see Table 19). There i s a d i r e c t c o r r e l a t i o n between net migrations and economic condit-ions within the Province of B r i t i s h Columbia. During periods of economic growth, r i s i n g employment and incomes, migration tends to be high, while periods of slow growth, indicated by . . 21 r i s i n g employment, tend to c u r t a i l migration. Migration to B r i t i s h Columbia has been high in recent years and i t i s forecast to continue at high l e v e l s . If net migration continues as projected, household formation w i l l remain high and continued high demand pressure for r e s i d e n t i a l accommodation can be expected. A number of the factors have contributed to the growth in the number of households and the r e s u l t i n g demand for housing, p a r t i c u l a r l y non-family households. The long run trend of 21 X-oneeaht oj Population Gnowtk In Zn.ltlt>k Columbia to the  yean. 2 000, Government of B r i t i s h Columbia, Department of Ind u s t r i a l Development, Trade and Commerce, V i c t o r i a 1971, page 7. TABLE 16 NET MIGRATION AS A PERCENTAGE OF TOTAL POPULATION INCREASE IN BRITISH COLUMBIA PERIOD ESTIMATED NET MIGRATION TOTAL POPULATION INCREASE NET MIGRATION AS % OF TOTAL POPULATION INCREASE 1950 - 1970 586,000 1,000,000 58.6 1960 - 1970 337,000 535,000 63.0 1965 - 19 70 253,000 340,000 74.6 Source: Forecast for Population Growth in B.C. to the Year 2000, Government of British Columbia, Department of Industrial Trade and Commerce, Victoria, 1971, p. 7. TABLE 17 MIGRATION TO THE GREATER VANCOUVER REGIONAL DISTRICT YEAR NET MIGRATION % OF POPULATION INCREASE 1951 - 1956 57,608 55.8 1956 - 1961 72,052 57.6 1961 - 1966 63,054 61.6 1966 - 1971 103,592 76.5 Source: GVRD Population Forecast, Greater Vancouver Regional D i s t r i c t , January, 1973, p. 5. TABLE 18 AGE AND SEX DISTRIBUTIONS OF MIGRANTS TO THE GREATER VANCOUVER REGIONAL DISTRICT 1966 - 1971 AGE % MALE % FEMALE 0 - 9 16 16 1 0 - 1 9 14 15 2 0 - 2 9 33 33 3 0 - 3 9 16 12 40 - 49 9 . 6 5 0 - 5 9 5 5 6 0 - 6 9 4 7 7 0 - 7 9 1 3 80 + 2 3 Source: GVRD Population Forecast, Greater Vancouver Regional D i s t r i c t , Vancouver, January 1973, Table IV, p. 5. TABLE 19 FORECAST NET MIGRATION TO BRITISH COLUMBIA TO THE YEAR 2000 FIRST PROJECTION SECOND PROJECTION YEAR AVERAGE ANNUAL NUMBER SHARE OF POPULATION INCREASE AVERAGE ANNUAL NUMBER SHARE OF POPULATION INCREASE 1970 - 1974 45,000 65.8% 45,000 65.8% 1965 - 1979 ' 55,000 ; 66.1 55,000 66.1 1980 - 1984 60,000 63.9 60,000 63.4 1985 - 1989 60,000 63.5 70,000 74.1 ... 1990 - 2000 60,000 61.7 80,000 67.2 Source: Forecast of Population Growth in B. C. to the Year 2000, Government of British Columbia, Department of Industrial Development, Trade and Commerce, Victoria, 1971, p. 8. TABLE -2 0 POPULATION FOR BRITISH COLUMBIA: ACTUAL AND PROJECTED YEAR ACTUAL POPULATION F O R E C A S T 1951 1,165,210 1961 1,629,082 1966 1,873,674 1970 2,137,000 1971 2,184,621 1980 2,895,000 1990 3,837,000 - 3,893,000 2000 4,810,000 -'5,084,000 Source: Forecast of Population Growth in B.C. to the Year 2000, Government of British Columbia, Department of Industrial Development, Trade and Commerce, Victoria, 1971, p. 5; 1971 Canada Census, 93-702, Table 1. 47 movement of population to urban areas from r u r a l areas has meant that the younger migrants to the c i t i e s have to f i n d accommodation of t h e i r own at an e a r l i e r age than i f they had remained at home i n r u r a l areas. Other factors increasing the number of households and the demand for housing are the declining of the average age for marrying, and a greater i n c i -dence of the young and e l d e r l y desiring and being able to afford separate accommodation. Net family formation, net migration, and net non-family household formation (primarily young single persons who move out of t h e i r parents' homes to l i v e i n separate dwellings, and middle-aged and e l d e r l y widows, widowers, bachelors, spinsters and divorcees) tend to generate demand for ren t a l accommodations, while families experiencing f i r s t and second c h i l d births and families whose head i s moving into the 25-35 age range often s h i f t t h e i r demand from rental to owner-occupancy accommodation.^ (2) Income and Employment Patterns Income and employment patterns influence demand through t h e i r e f f e c t upon the rate of growth i n the number of house-holds and households' consumption of housing accommodation. In times of high incomes, e x i s t i n g households w i l l tend to seek higher quality dwelling units. In times of recession and lower r e l a t i v e incomes the trend would be reversed. There would be 22 Smith, L. B., Housing In Canada: Mafiket Sth.uctu.fie and  Policy Vefijofimance, Research Monograph Number 2, CMHC, Ottawa 1971, page 30. 48 doubling-up as individuals and families group together to form larger households; thereby reducing t h e i r expenditure on housing and the number of households within the population. Variation in incomes has considerable impact upon the demand for housing accommodation by influencing the qual i t y of accommodation desired ands the number of families or individuals who f e e l they can afford t h e i r own accommodation. Rising i n -comes allow families to accumulate savings for down payments and to afford monthly payments, thereby stimulating the demand for self-owned dwelling units. Rising incomes also allow for undoubling of households and the creation of non-family house-holds, thereby stimulating the demand for rental accommodation. Income levels have ris e n dramatically i n B r i t i s h Columbia in recent years as i l l u s t r a t e d by the r i s e i n average weekly wages and sa l a r i e s for B r i t i s h Columbia from $85.20 per week i n 1961 to $178.22 in 1973. Rising income and economic s t a b i l i t y have contributed to the demand for housing accommodation. Scwabe c l a s s i f i e d families by income and observed that the higher the income, the lower the proportion of income going to 23 housing. This tendency came to be referred to as the Scwabe law of rent. Reid, in her studies, found that housing-income r a t i o s were higher for the r i c h than the poor. In other words, the r a t i o of housing to income tends to r i s e with normal income. Reid estimated a stock demand e l a s t i c i t y with respect to normal 23 Reid, Margaret G., Housing and Income, University of Chicago Press, Chicago 1962, page 1. income of around 2.0. But there i s great debate as to the magnitude of the stock e l a s t i c i t i e s for dwelling accommodation. 25 26 Estimates vary from highs of 2.0 by Reid , and 1.0 by Muth , 27 2 8 2 9 to lows of between 0.5 and 0.8 by Lee , Morton , and Obsaner 30 31 Estimates for Canada by Obsaner , and by Lee , using Obsaner's data with a d i f f e r e n t d e f i n i t i o n of permanent income, yielded estimates with respect to permanent income of 0.50 and 0.696 respectively; while L. B. Smith i n other studies obtained e s t i -32 mates i n the v i c i n i t y of 0.50. These s t a t i s t i c a l r e s u l t s indicate permanent income e l a s t i c i t i e s i n the range of 0.5 and 0.8, meaning that the proportion of income (both permanent and current) spent on housing f a l l s as income r i s e s . Expenditures on housing increase with r i s i n g incomes, but not as fast as income increases. 24 Ibid, page 3 88. 25 I bid, page 388. 26 Muth, R. F. , "The Demand for Non-Farm Housing", Demand joh.. durable Goods, A. Harberger, Editor, University of Chicago Press, Chicago, 1960, pages 29-96. 27 Lee, T. H. ,- "The Stock Demand E l a s t i c i t i e s of Non-Farm Housing", The Review o& Economics and S t a t i s t i c s , Volume XLVI, February 1964, pages 82-89. 28 Morton, W. A., Housing Taxation, University of Wisconsin Press, Madison, 1965. 29 Obsaner, E., "Housing Demand i n Canada, 1947-1962; Some Preliminary Experimentation", Canadian Journal oI Economics  and P o l i t i c a l Science, Volume XXXII, August 1966, pages 302--318. 30 Obsaner, E., op c i t . 31 Lee, T. H., "Housing and Permanent Income: Test Based on a Three Year Reinterview Study", Review oI Economics and  S t a l l s t i c s , Volume L, November 1968, page 487. 32 Smith, L. B., Housing In Canada: Market Structure and  Volley Performance, CMHC, Ottawa 1971, page 32. TABLE 21 INCOME LEVELS CANADA - BRITISH COLUMBIA V CANADA: YEAR ANNUAL PERSONAL DISPOSABLE INCOME PER CAPITA INDEX 1961=100 ANNUAL CHANGE B.C.: AVERAGE WEEKLY2 WAGES & SALARIES INDEX 1961=100 ' B.C.: AVERAGE ANNUAL WAGES & SALARIES ANNUAL CHANGE 1961 $1,475.2 100 == $85.20 100 $4,430 +2.6 1962 1,578.9 107 +7.0 87.44 103 4,547 +3.0 1963 1,646.4 111 +4.3 90.10 106 4,685 +4.4 1964 1,713.2 116 +4.1 94.11 110 4,894 +7.0 1965 1,846.0 125 +7.8 100.71 118 5,237 +7.0 1966 1,993.0 135 +8.0 107.42 126 5,586 +6.7 1967 2,113.4 143^ . +6.0 114.50 134 5,954 +6.6 1968 2,257.0 153 +6.8 120.76 142 6,280 +5.5 1969 2,417.1 164 +7.1 129.35 152 6,726 +7.1 1970 2,525.4 172 +4.5 • 137.97 162 7.174 +6.7 1971 2,754.1 187 +9.1 152.50 179 7,930 +10.5 1972 3,036.4 206 +10.3 165.08 194 8,584 +8.2 1973 3,424.6 232 +12.8 178.22 209 9,267 +8.0 Source: ^Canadian Housing Statistics, 1973, CMHC, March 1974, Table 23, p. 21. Canadian Statistical Review, Statistics Canada, Ottawa, 11-003, various editions, p. 19, Dec. 63, p. 58; Historical Summary 1970, p. 53, Oct. 74. 51 (3) P r i c e s a n d R e n t s P r i c e s and r e n t s a f f e c t t h e demand f o r h o u s i n g i n t h e same manner a s t h e y a f f e c t demand f o r o t h e r g o o d s a n d s e r v i c e s . R i s i n g p r i c e s o f s e l f - o w n e d a c c o m m o d a t i o n r e d u c e s demand i n f a v o r o f r e n t a l a c c o m m o d a t i o n a n d n o n - s h e l t e r c o m m o d i t i e s ; w h i l e r i s i n g r e n t r e d u c e s demand i n f a v o r o f s e l f - o w n e d a c c o m m o d a t i o n and n o n - s h e l t e r i t e m s . R e l a t i v e c h a n g e s i n h o u s e p r i c e s , r e n t s a n d n o n - s h e l t e r i t e m s b r i n g a b o u t s u b s t i t u t i o n e f f e c t s . T h e r e i s w i d e v a r i a t i o n i n t h e e s t i m a t e s o f t h e p r i c e e l a s t i c i t y o f h o u s i n g . R e i d o b t a i n e d p r i c e e l a s t i c i t i e s 33 > . r a n g i n g f r o m -0.96 t o -2.45 , s u g g e s t i n g t h a t an i n c r e a s e i n p r i c e o f h o u s i n g r e l a t i v e t o o t h e r c o n s u m e r p r o d u c t s , t e n d s t o d e c r e a s e h o u s i n g c o n s u m p t i o n a s r e p r e s e n t e d by number o f r o o m s , 34 t h e i r f a c i l i t i e s a n d q u a l i t y . M u t h ' s e s t i m a t e s r a n g e d f r o m 35 -1.0 t o - 1 . 5 . L e e e s t i m a t e d a p r i c e e l a s t i c i t y o f t h e 3 6 d e s i r e d demand f o r h o u s i n g a t - 1 . 4 8 , a n d Chung - 1.0. B e c a u s e o f t h e w i d e r a n g e o f e s t i m a t e s a n d t h e s p e c i f i c a t i o n p r o b l e m s 37 i n e a c h i t i s h a r d t o r e a c h a c o n s e n s u s ; i n L. B. S m i t h ' s 33 R e i d , M., " C a p i t a l F o r m a t i o n i n R e s i d e n t i a l R e a l E s t a t e " , Joufinal oj Political Economy, V o l u m e 66, A p r i l 1 9 5 8 , p a g e s 1 3 1 - 1 5 3 . 34 M u t h , R. F., "The Demand f o r Non-Farm H o u s i n g " , op cit, p a g e s 29-96. 35 L e e , Y. H., "The S t o c k Demand E l a s t i c i t i e s o f Non-Farm H o u s i n g " , op cit, p a g e 88. 36 Chung, J . , " L ' A n a l y s e de l a demande de l o g e m e n t s p r o p r i e t -a r i e s 1 ' e x p e r i e n c e C a n a d i e n n e " , Actualltc Economlque., J u n e 1 9 6 7 , p a g e 79. 37 S m i t h , L. B. , Housing In Canada: Mafikzt Stfiuctufie. and Policy PHitjofimancn s r, MHC r n t - t - a w a , r * g g I A . " 52 o p i n i o n p r i c e e l a s t i c i t y i s about -1.0. What i s c o n s i d e r e d t o be most r e l e v a n t t o most home pur-chasers who purchase accommodation wi t h mortgage c r e d i t i s not the nominal p r i c e of the home but the down payment requirement (loan t o v a l u e r a t i o ) , and the monthly c a r r y i n g c o s t s , ( p r i n c i f p a l p l u s i n t e r e s t payments). R i s i n g nominal housing p r i c e s and r i s i n g housing demand may c o - e x i s t i f f i n a n c i n g terms are being l i b e r a l i z e d but, as c r e d i t t i g h t e n s , demand f o r home ownership w i l l s h i f t towards r e n t a l accommodation. (4) C r e d i t V a r i a b l e s The demand f o r self-owned accommodation, and hence, r e n t a l accommodation, through s u b s t i t u t i o n , i s very s e n s i t i v e to changes i n c r e d i t v a r i a b l e s , r e q u i r e d down payments and monthly payments. Changes i n c r e d i t v a r i a b l e s s h i f t housing demand between the self-owned and r e n t a l s e c t o r s of the housing market. When c r e d i t terms are too onerous, demand w i l l s h i f t t o the r e n t a l s e c t o r . When c r e d i t eases, demand w i l l s h i f t t o self-owned accommodation as more households are able t o make the r e q u i r e d payments. Large down payment requirements i n c r e a s e the minimum l i q u i d savings t h a t f a m i l i e s must have to enter the housing market and reduce the housing expenditure t h a t a given down payment w i l l support; w h i l e l a r g e r monthly payments s e v e r e l y l i m i t the number of households a b l e t o support these payments out of c u r r e n t income. The down payment r e q u i r e d f o r the purchase of self-owned accommodation depends upon the p r i c e of the u n i t and the pro-p o r t i o n of t h a t v a l u e (loan t o v a l u e r a t i o ) t h a t the mortgage covers . The monthly payments r e q u i r e d i n the purchase of a 53 home, depend on the down payment, the morgage i n t e r e s t rate, and the amortization period. 38 Lee found that the in t e r a c t i o n between mortgage rates and contract length showed a negative e f f e c t upon the demand for housing, implying that households consider both the mortgage rates and t h e i r contract lengths j o i n t l y as the burden of the mortgage costs. Loan.to value r a t i o s appeared to have a strong p o s i t i v e e f f e c t upon demand for housing and, since the down payment i s inversely related to the loan to value r a t i o s , t h i s was i n t e r -preted as a negative r e l a t i o n between the down payment require-ment and the demand for housing. Increases in i n t e r e s t rates and house prices have combined to greatly increase the cost of purchasing self-owned accommo-dation. An i n d i c a t i o n of the effects of these factors can be seen from the s i m p l i f i e d analysis of average house pr i c e s , down payments, required mortgage loans, monthly payments, and average annual wages and s a l a r i e s outlined i n Table 22. As outlined, conventional mortgage in t e r e s t rates have r i s e n from 7.0 percent per annum i n 1963 to a high of 12.25 percent i n September 1974. House prices, as indicated by the average MLS sales price i n Metropolitan Vancouver, have r i s e n from $12,636 to $57,242 over the same period. Assuming one was to purchase a house at the average MLS sales p r i c e , with a 25 percent down payment, the r i s e i n house prices over the period 1963 to 1974 has increased the amount of l i q u i d savings required for down payments from 38 Lee, T. H., "The Stock Demand E l a s t i c i t i e s of Non-Farm Housing", op ci.t, page 88. TABLE 2 2 INTEREST RATES AND THE COST OF HOUSING IN BRITISH COLUMBIA YEAR MAX. NHA INTEREST RATES 1 CONVENTIONAL PRIME2 AVERAGE MLS SALES PRICEL METRO VANC. DOWN PAYMENT • 25% REQUIRED LOAN MONTHLY PAYMENTS 25 YEAR TERM AT CONVENTIONAL PRIME REQUIRED ANNUAL INCOME 25% DEBT SERVICE RATIO B.C. AVERAGE ANNUAL WAGES & c SALARIES" 1963 6.25 7.00 $12,636 $3,159 $9,477 $67.34 $3,232 $4,685 1964 6.25 7.00 13,202 3,300 9,902 70.36 3,377 4,894 1965 6.25 7.40 13,964 3,491 10,473 77.12 3,702 5,237 1966 '. 7.25 7.95 15,200 ,3,800 11,400 77.27 4,227 5,586 1967 7.91 8.52 17,836 4,459 13,371 88.07 5,205 5,954 1968 ' 8.69 9.10 20,595 5,149 15,446 131.33 6,304 6,280 1969 9.97 10.50 23,939 5,985 17,954 170.28 8,174 6,726 1970 9.79 10.16 24,239 6,060 18,179 168.02 8,065 7,174 1971 .8.91 9.10 26,471 6,618 19,853 168.80 8,102 7,930 1972 9.00 9,22 31,463 7,866 23,599 202.60 9,725 8,584 1973 9.88 10.22 41,505 10,376 31,129 289.03 .13,874 9,267 1974 (Sept.) 11.25-12.30 11.75-12.25 57,242 14,310 42,932 461.90 22,171 — Q r\\\T*r> p q » • 1 . Canada Housing, A Summary 1963-1972, CMHC, Ottawa, 1973. Canadian Housing Stattstics, 1973, CMHC, Ottawa, March 1974, Table 79, p. 68. 3 Vancouver Mortgage Market as of September 10, 1974, Real Estate Board of ; Greater Vancouver, September 10, 1974. 4 Real Estate Board of Greater Vancouver. ''Canadian Statistical Review, Statistics Canada, Ottawa, 11-003, various editions, December 1963, p. 19; Historical Summary, p. 58; October 1974, p. 53. m 55 $3,159 i n 1963 to $14,310 i n September 1974. In 1963 a gross annual income of $3,232 was required to service a mortgage on 75 percent of the average value of a house i n Metropolitan Vancouver. The increases i n in t e r e s t rates, house prices and required down payments have outpaced increases i n the average annual wages and sa l a r i e s for workers i n B r i t i s h Columbia. As a r e s u l t , average families have been f a l l i n g behind since 1968. Their income levels have not been s u f f i c i e n t to support mortgage loans to purchase average accommodation i n Metropolitan Vancouver, even i f they had been able to save enough to be able to make the larger down payments. This b r i e f analysis lends support to the argument that self-ownership i s beyond the reach of many low and middle income households. In recent years r i s i n g house prices, i n t e r e s t rates and increased down payment requirements have made home ownership more expensive, thereby reducing the number of families and individuals who f e e l they are able to afford self-owned accommodation. Federal and P r o v i n c i a l Governments have always promoted the demand for home ownership and, through a number of programs have attempted to reduce the cost of home owner-ship. The Federal Government, through the Central Mortgage and Housing Corporation, provides high r a t i o loans at intere s t rates below conventional mortgage in t e r e s t rates. CMHC's Assisted Home Ownership programs allow for the use of cost reducing techniques such as variable i n t e r e s t rates, i n t e r e s t rate subsidies and extended loan terms. The F a l l 1974 Federal Budget provided for grants of $500 toward the purchase i of one's f i r s t home and created a Registered Home 56 Ownership Savings program to allow an annual tax deduction of $1,000, for a saving of $1,000 per annum, up to a t o t a l of $10,000, towards the down payment for the purchase of one's f i r s t house. Within B r i t i s h Columbia the P r o v i n c i a l Government has helped to stimulate the demand for self-owned accommodation through the provision of $1,000 grants towards the purchase of a new home or, a l t e r n a t i v e l y , a $5,000 low i n t e r e s t second mortgage that can be applied towards the purchase of a new house. Through these programs the Federal and P r o v i n c i a l Governments have attempted to stimulate the demand for s e l f -owned accommodation by softening the effects of c r e d i t variables upon housing demand. (5) Consumer Preferences T r a d i t i o n a l l y i t has been the desire of people to secure self-owned accommodation to provide what i s considered to be the r i g h t kind of environment for a growing family. Consumer preferences place important influences upon housing demand. Consumer preferences have been influenced by government programs and tax provisions that favor home ownership. The Royal Commission on Taxation noted that the,exclusion of net imputed rental income from the income tax base resulted i n a 39 substantial tax preference for home ownership. As a con-sequence of th i s tax preference, the number of owner-occupied dwellings i s considered to be higher than i f imputed net ren t a l 40 income had been taxed. Demand for housing has also been 39 Rupofit oj the. Royal Commission, on Taxation^ Volume 3, Queen's Printer, Ottawa 1966, pages 48-49. 40 Kitchen, H., "Imputed Rent on Owner-Occupied Dwellings", Canadian Tax loufinal, Volume XV, Number 3, 1967, page 484. 57 s h i f t e d towards home ownership because of provisions of the Income Tax Act that allow the investment i n one's p r i n c i p a l residence to be free of c a p i t a l gains taxation. Provisions of the Income Tax Act and expectations of continued i n f l a t i o n have caused s h i f t s i n the demand for housing. Renters w i l l be more l i k e l y to s h i f t to owner-occupied units and ex i s t i n g home owners w i l l s h i f t to higher value homes i f they become confident that the rate of increase i n house prices, r e l a t i v e to other pr i c e s , i s going to p e r s i s t . Demand for i n d i v i d u a l l y owned housing i s accelerated by the fact that the investment i s one of the very few which i s free of c a p i t a l gains and income taxes and has proven to be a good hedge against i n f l a t i o n . I n f l a t i o n , and provisions of the Income Tax Act, have brought about s h i f t s i n housing demand. From an economic point of view, owning rather than renting housing accommodation has had clear advantages as shelter from i n f l a t i o n and as a vehicle to r e a l i z e both present and"potential tax advantages. TABLE 2 3 TAX SUBSIDY TO HOME OWNERSHIP AS A PER CENT REDUCTION IN IMPUTED GROSS RENTAL INCOME MARGINAL TAX RATE (%) PER CENT REDUCTION 0 N i l 14. 8 8.6 20.0 11.7 30.9 18.0 41. 2 24. 0. 51. 5 30.0 61. 8 36.0 72.1 42.0 Source: T. A. Clayton, "Income Taxes and Subsidies to Homeowners and Renters: A Comparison of U.S. and Canadian Experiences," Canadian Tax Journal, Vol. XXII, No. 3 (May - June, 1974) , p. 304. 59 CHAPTER IV ECONOMIC CHARACTERISTICS OF HOUSING Housing i s more t h a n . p h y s i c a l s h e l t e r , a r o o f and p r o t e c t i o n from the wind and the r a i n . Housing i s the c e n t r e of f a m i l y l i f e , a p l a c e t o pursue l e i s u r e time a c t i v i t i e s , a s o c i a l s t a t u s symbol, a determinant of c i v i c c i t i z e n s h i p , a p e r s o n a l r e f u g e , a f i n a n c i a l investment and an access p o i n t t o community f a c i l i -t i e s and s e r v i c e s . Muth has d e f i n e d housing as "a bundle of s e r v i c e s y i e l d e d both by s t r u c t u r e s and a l s o by the land or s i t e s on which they 41 are b u i l t " . Smith has d e f i n e d housing from the consumer's viewpoint as a group of s e r v i c e s - s h e l t e r , a m e n i t i e s , a c c e s s i b i l i t y , e t c . , 42 to be used d a i l y , and o f t e n , to be p a i d f o r p e r i o d i c a l l y . From the st a n d p o i n t of the ge n e r a l economist housing i s j u s t 43 a lump of resources which might as w e l l be c a l l e d " s h e l t e r " . Housing i s t r a d i t i o n a l l y d i s c u s s e d i n terms of d w e l l i n g u n i t s - the t y p i c a l p h y s i c a l c o n t a i n e r f o r a s i n g l e household. R a t c l i f f has d e f i n e d " d w e l l i n g u n i t s " as the housing space t h a t s u p p l i e s the f u l l complement of l i v i n g f a c i l i t i e s - f o r cooking, 41 Muth, R. L.,- C i t i e s and Housing: The-Spatial Pattern of • Urban Residential Land Use] U n i v e r s i t y o f Chicago P r e s s , Chicago 1969, page 18. 42 Smith, W. F., Housing: The Social and Economic Elements, page 96. 43 Smith, W. F., Housing: The Social and Economic Elements, pages 9, 10. 60 eating, sleeping, and relaxation ... the space designed to accommodate one family group regardless of the structure i n 44 which i t i s enclosed". Housing.is a commodity i n the physical sense; i t i s i d e n t i -f i e d and measured i n terms of a dwelling unit or housing unit and i t trades i n a market l i k e other commodities; yet i t i s not an ordinary commodity. Housing has cert a i n c h a r a c t e r i s t i c features which d i s t i n g u i s h i t from the majority of other com-modities. Housing i s fixed i n location, and i t i s an extremely durable, expensive, and heterogeneous commodity. Fixed Location Due to the nature of housing as an improvement to land, a l l housing, with the exception of mobile homes, i s fixed i n location. This immobility means that the services provided by the housing unit must be consumed on the s i t e ; they can not be moved to s a t i s f y demand. The services of a dwelling unit can only be u t i l i z e d on the spot by the movement of people. Since housing i s fixed i n location, consumers buy not only the physical structure that i s the housing unit, but also a package of environmental services which often have l i t t l e to do with shelter. The immobility of housing supply influences the operation of the housing market as i t necessitates a search by demand for that supply. As a r e s u l t of the immobility of housing, the housing market i s l o c a l i n nature. A vacant unit i n Prince George can not s a t i s f y the demand for accommodation i n Vancouver. 44 R a t c l i f f , R. U., Urban Land Economics, McGraw-Hill Book Co. Inc., New York.1949, page 87. 61 Durability Housing i s an extremely durable commodity. Because of i t s long physical and economic l i f e a house provides a flow of service long beyond the period i n which i t i s i n i t i a l l y con-structed. The forces of deterioration require many years to take t h e i r t o l l , as proper repairs and maintenance w i l l help preserve a house's physical soundness while obsolescence may be checked by improvements and st r u c t u r a l a l t e r a t i o n s . Because of i t s long l i f e , a dwelling unit may s a t i s f y the housing needs of a number of generations of households. The d u r a b i l i t y of housing means that present housing needs must always be met out of supply designed for past housing needs, thereby most market demand for housing at any given time i s met by the ex i s t i n g standing stock and not by the construction of new-dwellings. Additions to the supply of housing each year 45 account for a very small portion of the t o t a l housing stock. 45 Over the decade 1955-1965 the r a t i o of net annual gain to end-year stock of housing i n Great B r i t a i n averaged 1.5 per-cent, (Housing S t a t i s t i c s , Number 1, H.M.S.O., 1966, page 38). Within Canada additions to the housing stock i n 1971 were higher than i n Great B r i t a i n , representing 3.3 percent or 201,320 completed units added to the stock of 6,034,505 as compared with 1966 when additions to the housing stock repre-sented 3.1 percent or 162,192 completions to the stock of 5,180,473 units. Within B. C. -additions to the housing stock were s l i g h t l y higher. In 1971 additions represented 4.5 percent of the exis t i n g stock as 30,478 units were completed to add to the stock of 667,545 occupied units. In 1966, additions repre-sented a 4.4 percent increase i n the stock, as 21,944 units were completed to add to the stock.of 543,075 units. Source: Canadian Housing S t a t i s t i c s 7 973, C.M.H.C., page 4; and Census Canada 1971, Housing Dwellings by Tenure and Structural Type, 93-727, table 1, page 1. 62 Canada i s f o r t u n a t e as i t has a r e l a t i v e l y young housing stock; n e a r l y 70 per c e n t of a l l occupied d w e l l i n g s i n 1971 had been b u i l t s i n c e 1945 (see t a b l e 24). The stock of housing has the p o t e n t i a l to h e l p s e r v i c e the housing needs f o r many more yea r s . At the-end of May, 1971, th e r e were 6,030,805 occupied 46 d w e l l i n g u n i t s i n Canada. 430,305 were l e s s than 3 years o l d , 501,945 were between 3 and 5 y e a r s , and 1,383,445 were between 10 and 19 ye a r s . Almost 52 per c e n t of the housing stock was l e s s than 20 years o l d , r e p r e s e n t i n g housing c o n s t r u c t i o n of the f i f t i e s and the s i x t i e s and e a r l y s e v e n t i e s . An a d d i t i o n a l 616,195 u n i t s were between 20 and 25 years o l d . Almost 61 per-cent of the Canadian housing stock has been b u i l t s i n c e the second world war. The remaining 2,291,705 u n i t s were over 25 years o l d (see t a b l e s 24 and 25). The B r i t i s h Columbia housing stock i s younger than the n a t i o n a l stock due to the r a p i d growth i n the Pr o v i n c e s i n c e the second world war. At the end of May 1971, 66,365 d w e l l i n g u n i t s were l e s s than 3 years o l d , 73,580 were between 3 and 5, 95,840 were between 6 and 9, and 156,045 were between 10 and 19 years o l d . Almost 59 percent o f the housing stock was l e s s than 20 years o l d . An a d d i t i o n a l 78,200 u n i t s were between 20 and 25, as 70.4 percent of the stock has been b u i l t s i n c e the second world war. Only 197,300 u n i t s , 29.6 per c e n t of the s t a n d i n g stock i n 1971 was o l d e r than 25; and only 9.6 was over 50 as compared t o 20 per c e n t of the t o t a l n a t i o n a l housing stock. The P r o v i n c i a l housing stock i s r e l a t i v e l y young because of the h i g h 46 7 9 7 7 Cen-aius o I Canada, S t a t i s t i c s Canada, 93-731, t a b l e 24. TABLE 24 OCCUPIED DWELLINGS - PERIOD OF CONSTRUCTION - AGE AREA TOTAL 1920 OR BEFORE 1921-1945 PERIOD 1946-1950 OF CONSTRUCTION 1951-1960 1961-1965 1966-1968 1969-1970 1971(1) CANADA 6,030,805 1,202,350 1,089,355 616,195 1,383,445 807,215 501,945 388,060 42,245 OWNED 3,634,595 729,875 651,925 402,095 926,785 465,175 248,400 187,070 23,275 RENTED 2,396,210 472,480 437,435 214,100 456,655 342,045 253,545 200,985 18,970 PERCENTAGE OF TOTAL STOCK 20.0 18.1 10.2 22.9 13.4 8.3 6.4 0.7 (1) Includes f i r s t f i v e months only of 1971. Source: 1971 Canada Census, 93-731, Table 24. (JO TABLE 2 5 AGE DISTRIBUTION OF HOUSING STOCK CANADA AND B.C. 1971 AGE IN YEARS CANADA NUMBER : % B.C. NUMBER %' LESS THAN 3 430,305 7.1 66,365 10.0 3 - 5 501,945 8.3 73,580 11.0. 6 - 9 807,215 13.4 95,840 14.3 10 - 19 1,383,445 22.9 156,045 23.4 20 - 25 616,195 10.2 78,200 11.7 2 6 - 5 0 1,089,355 18.1 133,115 20.0 OVER 50 1,202,350 20.0 64,185 9.6 TOTAL 6,030,805 100.0 667,330 . 100.0 Source: 1971 Canada Census, 93-731, Vol. II, Part 3, Table 24-1. TABLE 2 6 AGE DISTRIBUTION OF B.C. HOUSING STOCK 1971 " AGE IN YEARS - AS % OF STOCK A R E A HOUSING STOCK LESS THAN 3 3-5 6-9 10-19 20-25 26-50 OVER 50 B.C. TOTAL 667,330 10.0 11.0 14.3 23.4 11.7 20.0 9.6 URBAN 521,165 9.1 10.8 14.2 23.5 11.6 20.6 10.2 RURAL 146,160 12.9 11.8 15.0 22.9 12.1 17.7 7.6 B.C. OWNED 422,510 8.7 9.4 12.8 26.3 13.1 21.0 8.7 RENTED 244,820 12.0 13.9 17.2 18.3 9.4 18.1 11.1 Source: 1971 Census of Canada, Tables 24, 26, 27. 93-731, November 1973, 66 le v e l s of population and household growth within the Province and the high l e v e l of r e s i d e n t i a l construction that has been experienced i n recent years. Rural housing units are generally newer' than t h e i r urban counterparts. In 1971, 24.7 percent of a l l r u r a l housing i n B r i t i s h Columbia was 5 years or less i n age, compared to only 2 0 percent of urban housing. Almost 75 percent of the r u r a l housing had been b u i l t since 194 5, compared to 6 9.2 percent of urban housing (see table 2 6). Renter-occupied accommodation i s also newer than s e l f -owned housing units as a r e s u l t of the growth i n construction of apartment and rental accommodation i n B r i t i s h Columbia during recent years. In 1971, almost 24 percent of a l l rental accommo-dation was 5 years of age or less, compared to 18.1 percent of a l l self-owned accommodation within the Province. However, a larger proportion of rental units was older than 50 years old, 11.1 percent of the re n t a l stock as compared to only 8.7 of the owner-occupied dwellings (see table 26). In general, the age of the P r o v i n c i a l housing stock i s lower than the national average, due to the rapid growth of the Province since the second world war. Capital Requirements Housing i s extremely expensive in comparison with other com-modities. It i s usually the largest single expenditure to be made by a household. Shelter and household operation corresponded to 27.7 percent of the average Canadian's expenditures i n 1967; the next largest item, food, corresponded to 21.4 percent of 6 7 personal expenditures on major classes of goods and services. The average price of a house i n Greater Vancouver, sold under 48 the Multiple L i s t i n g Service, was $52,850. The c a p i t a l invested i n houses i s the most important compo-nent of t o t a l asset holdings for families and unattached i n d i v i d -uals i n Canada as i t represented approximately 57 percent of the aggregate value of t o t a l assets of a l l families and unattached 49 individuals i n 1969. The estimated average market value of homes i n 1969 was $18,636 and the average equity investment for a l l families and unattached individuals i n t h e i r own home was 50 $14,556. The significance of the,high c a p i t a l investment i n housing in Canada i s r e a l i z e d when i t i s considered that even though new construction of housing units within any one year represents only approximately 3 percent of the e x i s t i n g stock, c a p i t a l expenditures on housing i n Canada each year represents a large proportion of a l l c a p i t a l expenditures, both business and s o c i a l . In 1973 c a p i t a l expenditure on new housing t o t a l l e d $5,939 m i l l i o n , 22.7 percent of a l l c a p i t a l expenditure i n 51 Canada for the year. In the same year repair expenditures 4 7 S t a t i s t i c s Canada, Market Research Handbook, Ottawa, Queen's Printer, 1969, Chart 16, page 213, (63-514). 48 Real Estate Board of Greater Vancouver, (see table 10). 49 S t a t i s t i c s Canada, Incomes, Assets and Indebtedness of Families  In Canada 19 69, Ottawa, A p r i l 1973, 13-547, page 37. 50 Ibid, table 39, page 108. Estimates of aggregate values of t o t a l assets, average market values of houses, and average equity investments for a l l families and unattached individuals i n t h e i r own homes, were determined from a sample of 14,034 households throughout Canada i n 19 70. 51 Capital Expenditures 197 3, S t a t i s t i c s Canada, 61-205, A p r i l i y / 4 , page 6. ~~~ 68 TABLE 2 7 NATIONAL EXPENDITURES AND RESIDENTIAL EXPENDITURES 1963 - 1973 PERIOD E X P E N D I T U R E S ( M i l l i o n s of D o l l a r s ) PERSONAL EXPENDITURES GOVERNMENT EXPENDITURES RESIDENTIAL EXPENDITURES RESIDENTIAL EXPENDITURE AS % OF GROSS NATIONAL EXPENDITURES PERSONAL DISPOSABLE INCOME PER. CAPITA 1963 29,225 6,982 1,966 4.27 $ 1,646.4 1964 31,389 7,593 2,389 4.75 1,713.2 1965 33,947 8,358 2,642 4.77 1,846.0 1966 36,890 9,748 2,618 4.23 1,993.0 1967 39,972 11,153 2,822 4.24 2,113.4 1968 43,704 12,684 3,268 4.50 2,257.0 1969 47,492 14,162 3,859 4.83 2,417.1 1970 50,040 16,396 3,623 4.24 2,525.4 1971 53,963 18,361 4,462 4.79 2,754.1 1972 60,277 20,530 5,376 5.20 3,036.4 19731 69,070 23,012 6,491 5.47 3,424.6 1 P r e l i m i n a r y Data Source: Canadian Bousing Statt-stxos, 1973, CMHC, March 1973, Table 23. 69 on housing t o t a l l e d $1,194 m i l l i o n . (See also table 2 7 ) . Heterogenity Although a dwelling unit i s the standard unit of housing stock, they are.non-homogeneous as they can range from a slum unit to a mansion - while each counts as one dwelling unit. There i s v i r t u a l l y an i n f i n i t e v a r i a t i o n among r e s i d e n t i a l structures. Every parcel of land i s separate and d i s t i n c t from a l l other land; unique in location. Thus each house, as an improvement to the land, i s not exactly s i m i l a r to any other, regardless of.duplication of improvements. Housing i s hetero-geneous as to location, s i z e , density, tenure, age, q u a l i t y , s t r u c t u r a l type, and market value. Because of i t s d i v e r s i t y , not every housing unit can be substituted for every other unit. Housing i s a nonhomogeneous commodity and the supply of accom-modation i s , as a r e s u l t , made up of many d i f f e r e n t sizes and types of dwelling units. Housing Markets In simple terms, a housing market i s a composite of negotia-tions between buyers and s e l l e r s , lessees and lessors, i n free communication for the a c q u i s i t i o n or d i s p o s i t i o n of i n d i v i d u a l units which are i n some degree of competition with each other. Due to the economic c h a r a c t e r i s t i c s of housing, the d i v e r s i t y of housing units and the immobility of housing units, there i s not one market, but many. Housing markets are e s s e n t i a l l y l o c a l i n nature, rather than national or p r o v i n c i a l . As housing units are fixed i n location the services of a dwelling unit can only be 52 ConAtA.ucti.on In Canada 7 9 72 -7 974 , S t a t i s t i c s Canada, 64-201, July 1974, page 14. 70 u t i l i z e d on the spot by the movement of people. The l o c a t i o n of employment was once c o n s i d e r e d to be the o v e r r i d i n g f a c t o r i n the d e t e r m i n a t i o n of the l o c a t i o n p r e f e r -ences of most i n d i v i d u a l s . To-day however, wi t h growing a f f l u e n c e and i n c r e a s i n g l e i s u r e time, the importance of l o c a t i o n i s d i m i n i s h i n g . People are becoming more concerned w i t h the neighbourhood c h a r a c t e r i s t i c s t h a t s u i t t h e i r p a r t i c u l a r l i f e s t y l e and w i t h the l e i s u r e time a c t i v i t i e s a v a i l a b l e w i t h i n an area. These f a c t o r s are shaping the l o c a t i o n p r e f e r e n c e s of housing consumers. With improved t r a n s p o r t a t i o n systems i n d i v i d u a l s are f r e e d from l o c a t i n g c l o s e to work. They are a b l e to choose from a wide v a r i e t y of r e s i d e n t i a l l o c a t i o n s w i t h i n , or c l o s e t o , an urban area. The o u t e r l i m i t s of a market area, w i t h i n which houses d i r e c t l y compete with each o t h e r , i s determined by the upper l i m i t of accepted commuting time and d i s t a n c e i t takes to reach the.dominant centr e of employment f o r an area. The area covered by a housing market and the s u b s t i t u t a b i l i t y of d w e l l i n g u n i t s w i t h i n t h a t area can o n l y be i n c r e a s e d i f people are w i l l i n g to accept longer t r a v e l times or i f t r a n s p o r t a t i o n systems are improved to reduce t r a v e l times. W i t h i n any g i v e n housing market a l l d w e l l i n g u n i t s may be c o n s i d e r e d to be l i n k e d t o one another, becoming c l o s e but not p e r f e c t s u b s t i t u t e s f o r one another. D w e l l i n g u n i t s tend to arrange themselves i n t o submarkets w i t h i n the l o c a l market by v i r t u e of s h a r i n g some important c h a r a c t e r i s t i c or c h a r a c t e r i s -t i c s . Submarkets have been c l a s s i f i e d a c c o r d i n g to one or more of the f o l l o w i n g c h a r a c t e r i s t i c s : type of s t r u c t u r e , type 71 of rights or tenure, price or re n t a l c l a s s , location, age, q u a l i t y , 53 condition or si z e . The greater the number of c h a r a c t e r i s t i c s examined and the range of categories for each c h a r a c t e r i s t i c , the more submarkets that can be i d e n t i f i e d and the closer the s u b s t i t u t a b i l i t y and s i m i l a r i t y between units within that sub-market. In examining the "housing market" Maisel i d e n t i f i e d four i n t e r - r e l a t e d submarkets by c l a s s i f y i n g housing units by age and tenure. His "submarkets" were: (1) newly constructed houses not yet sold or occupied; (2) new rental units; (3) previously occupied units being offered for resale; and (4) 54 previously occupied units offered for rent. In analysing housing markets, Needleman found i t conven-ient to c l a s s i f y submarkets. within l o c a l housing markets accordr-ing to tenure; he-also i d e n t i f i e d four submarkets: (1) l o c a l authority; (2) p r i v a t e l y rented furnished; (3) p r i v a t e l y rented 55 unfurnished; and (4) owner occupied. The significance of t h i s discussion of housing markets and submarkets to the analysis of the B r i t i s h Columbia housing market i s that i t points out the B r i t i s h Columbia housing market i s not one market, but many l o c a l geographic markets within which are submarkets for re n t a l and self-owned accommo-dation, s i m i l a r to those discussed by Maisel and Needleman. Not 53 Grigsby, W. G. , Housing Markets and Public Pol-icy, University of Pennsylvania Press, Philadelphia, 1963, Page 40. 54 Maisel, S. J., "A Theory of Fluctuations i n Residential Construction Starts", American Economic Review, Volume 53, 1963, page 367. ' 55 Needleman, L., The Economics of Housing, page 143. a l l units within B r i t i s h Columbia are substitutes for each other as they do not trade i n s t r i c t l y the same market. Due to the l o c a l nature of the housing market a vacant unit i n Prince George w i l l not s a t i s f y the need of someone working i n Vancouver who i s looking for accommodation. Because of the l o c a l nature of housing markets, p a r t i c u l a r attention must be given to the housing s i t u a t i o n i n i n d i v i d u a l markets throughou the Province; aggregate figures for housing stock and housing production for the Province do not t e l l the whole story. 73 CHAPTER V HOUSING SUPPLY In aggregate, r e s i d e n t i a l property i s referred to as the housing stock or inventory. Housing supply, at any point i n time, i s that proportion of the t o t a l - inventory or e x i s t i n g stock of housing plus those units newly completed or under construction that are offered for sale or rent at a s p e c i f i c price i n the housing market. The supply of dwelling units entering the market at any one time does not u s a l l y correspond to the t o t a l housing stock of the market. Only a f r a c t i o n of the stock w i l l be involved i n market transactions. However, any unit of the e x i s t i n g stock i s a p o t e n t i a l unit of supply as i t can e a s i l y be offered for sale or rent i f the owner feels the price i s r i g h t . As prices increase, a greater pro-portion of the e x i s t i n g stock may be offered for sale or rent and new .construction i s encouraged. As prices f a l l , e x i s t i n g housing units may be withdrawn from the market and new con-struction c u r t a i l e d , thereby reducing supply. Increases i n the supply of housing available at any one time can be brought about i n three ways: by new construction; by the net conversion (conversions minus mergers) of e x i s t i n g properties; and by increasing the proportion of the e x i s t i n g stock involved i n market transactions. E l a s t i c i t y of Supply It i s often assumed that the supply- of housing i s p e r f e c t l y 74 e l a s t i c , so that someone w i l l finance and b u i l d a dwelling unit for each family which can pay the going p r i c e . It i s assumed that housing construction i s l i m i t e d primarily by the number of buyers or r e n t e r s . ^ In the short run, both the stock and the supply of housing units are r e l a t i v e l y fixed, highly i n e l a s t i c , with annual new construction rarely representing more than 3 percent of the 57 standing stock. Because of the length of time required for house construction, i t takes a tremendous e f f o r t and involves high costs to add s i g n i f i c a n t l y to the supply of housing i n any short period of time. Supply can only be increased over short periods i f more occupiers are w i l l i n g to s e l l t h e i r accommodation and move elsewhere or double up, thereby freeing units to the market. Demand, on the other hand, can fluctuate greatly i n the short run. Because the supply of housing i n the short run i s i n f l e x i b l e and cannot e a s i l y be adjusted to movements i n demand, overcrowding and under occupancy occur with the booms and slumps in housing completions, house pr i c e s , and rents. As the supply of housing changes so slowly, r e l a t i v e l y small increases i n the t o t a l housing demand can be met only by large fluctuations i n the' 5 8 marginal supply, that i s , new construction and conversions. 56 Smith, W. F., Hou*lng: The Social and Economic. Element*, pages 116-117. 57 See footnote 45; new construction represented 3.3 percent of housing stock i n Canada i n 19.71. 58 Needleman, L. , The Economic* oj Hou*lng, pages 145-147. 75 The short run new housing supply schedule can be expected to be price i n e l a s t i c since a r e l a t i v e l y fixed number of s k i l l e d construction workers provides an upper l i m i t on the aggregate l e v e l of r e s i d e n t i a l construction i n the short run. Residential construction i s also limited as the l e v e l of non-r e s i d e n t i a l construction a f f e c t s the a v a i l a b i l i t y of building 59 resources that might otherwise be used i n home construction. The "short run" i s conventionally defined as the period of time required for e x i s t i n g cpacity to produce a new unit of output. The short run i n the housing market may be as long i n calendar time as two or three years. For, even i f capacity i s available, time i s required between i n i t i a t i o n and completion of an apartment or subdivision project to allow for a developer to put together a complete package of land, financing, plans, contractor, and municipal approval. In the short.run the supply of housing i s highly i n e l a s t i c . Only i n the long run can a new equilibrium between supply and demand be achieved as new houses are constructed or homes are placed on the market. The speed of response to market changes depends - upon-the size and structure of the market supply. In the long run the•aggregate supply schedule for r e s i d e n t i a l 6 0 accommodation appears to be highly price e l a s t i c . Research by 59 Pollock, R., "Supply of Residential Construction: A Cross Section Examination of Recent Housing Market Behavior", Land Economics, Vol. 49, No. 1, Feb. 1973, page 58. 60 Hirsch, W. Z., Urban Economic.. Analysis, McGraw-Hill, New York, 1973, page 48. 76 Muth indicates that the home-building industry i s highly 61 responsive to changes i n price or income. Either^ a 1.0 percent f a l l i n price or a 1.0 percent increase i n income level s leads to an increase i n gross construction of about 5.5 percent. Lags i n Adjustment In the housing market, adjustments i n supply to changing demand conditions take place slowly. Due to the many imper-fect and p a r t i a l l y insulated housing markets, i t w i l l take time for the price of accommodation to r i s e i n response to increased housing demand. At the f i r s t r i s e i n p r i c e , con-sumers may make more intesive use of e x i s t i n g accommodation, thus slowing down price increases for a while. It then may take a considerable time before prices have r i s e n high enough and for long enough to persuade house-builders that the increase i n demand i s permanent and that i t would be p r o f i t a b l e to increase the construction of dwelling units. There w i l l be further lags between the decision to bu i l d and the completion of additional dwelling units because of the time required to obtain land, labour, plans, financing and approval and to complete construction. Because of these time-lags and changes i n expectations, supply w i l l take a long time to respond to changes i n demand. Muth has found that the dynamic lag of adjustment of housing stock to changing demand conditions i s substantial. 61 Muth, R. F., "The Demand for Non-Farm Housing", Unban  knatyhi* : Reading* in Housing and Unban Vev2.Zopme.nt, Page, A. N., Segfried, W. R., Editors: Scott, Foreman & Co., G l e n v i l l e , I l l i n o i s , 1970, 77 His estimates indicate that individuals seek to add about one t h i r d the difference between desired and actual stock during a year, which implies that, for the adjustment of the actual housing stock to be 90 percent completed, six years are required. Dominance of E x i s t i n g Stock Because of i t s long l i f e , housing, once created, becomes a supply factor, repeatedly entering the market and influencing both price and the production of new units. Construction of new housing, at any one time, i s only a minute f r a c t i o n of the e x i s t i n g stock or inventory of housing. As a r e s u l t , the housing market tends to be dominated by the standing stock of dwelling u n i t s . ^ Any unit of the e x i s t i n g stock of housing i s available at a p r i c e . A portion of the e x i s t i n g stock of housing units w i l l always be offered for sale or rent i n the market. Ex i s t i n g housing i s highly competitive i n the housing market. If large numbers of e x i s t i n g dwelling units are offered for sale or rent the marketability of newly constructed units, of comparable qua l i t y , w i l l be r e s t r i c t e d and price l e v e l s w i l l be depressed. A shortage of offerings of e x i s t i n g accommodation, r e l a t i v e to demand, w i l l increase prices and stimulate new construction a c t i v i t y . The p r i n c i p a l b a r r i e r to the construction of large volumes fi 3 of new dwelling units i s the dominance of the e x i s t i n g stock. If net additions to-the housing stock exceed household formation 62 Pennance, F. G. , Housing Market Analysis and Policy, I n s t i t -ute of Economic A f f a i r s , Hobart Papers, No. 48, London, page 15. 63 Grigsby, W. G. , Housing Markets and Public Policy, University of Pennsylvania Press, Philadelphia, 1963, page 179. and thereby cause increased vacancy-, prices and rents i n the ex i s t i n g stock w i l l f a l l . As a r e s u l t , builders drop t h e i r prices and reduce t h e i r construction of new homes. The Level of House Prices Because of the d u r a b i l i t y of dwelling units and the large numbers of the standing stock of houses, r e l a t i v e to the construction of additional units i n any one year, the l e v e l of house prices at any one time w i l l be dermined by the quantity and q u a l i t y of the standing stock of housing and the extent of demand for the standing stock. It i s the average price of the standing stock that determines the sales prices of newly con-64 structed housing units and not the other way around. A builder contemplating development w i l l look to the exi s t i n g l e v e l of house prices for guidance on the possible value of new housing units i n a given location. In the l i g h t of current house prices and his l e v e l of development costs (material, labour and financing) the builder w i l l determine the maximum bid he can afford to make for land, allowing for a developer's p r o f i t . Although some developers may c u r t a i l building because they f i n d land prices too high to support p r o f i t a b l e building, given the e x i s t i n g l e v e l of house prices, i t i s the competition between developers that ensures that s i t e s go to the top bidder.- Land prices are thus determined by house prices rather than the other way around.^ Hence, 64 Pennance, F. G. , Hoaxing Man.kct knalykik and Policy, page 33. 65 Hamilton, S. W. , Public Land Banking - Real on. llluAionatty  Zcncjith ?, Faculty of Commerce and Business Administration, University of B r i t i s h Columbia, January, 1974, page 5. land costs are a function of new house values, which, i n turn, are determined by the price of e x i s t i n g houses. Increases i n Supply Muth has stated that the supply of urban housing depends upon both production p o s s i b i l i t i e s and the supply of productive factors, including land, to the housing i n d u s t r y . A s mention-ed e a r l i e r , increases i n the supply of housing at any one time can be brought about i n three ways: (1) by net conversions (conversions minus mergers) of e x i s t i n g properties; (2) by increasing the percent of the t o t a l stock involved i n market transactions; and (3) by new construction. (1) Conversions Conversion involves the creation of two or more new units from fewer units through s t r u c t u r a l a l t e r a t i o n s or change i n use. Mergers, on the other hand, r e s u l t i n a reduction i n housing supply as units are l o s t by combining two or more units into fewer units through s t r u c t u r a l alterations or change i n use Conversions or redevelopment to a greater i n t e n s i t y of r e s i d e n t i a l use usually takes place i n the older segments of the housing stock. The older the housing stock the greater w i l l be the opportunity to add to the housing supply through conversions The conversion or merger of e x i s t i n g properties i s a f a i r l y rapid response of housing supply to changing demand conditions. Canadian housing s t a t i s t i c s do not d i f f e r e n t i a t e between new units produced by net conversion and those produced by new construction; i t i s , therefore, d i f f i c u l t to estimate the 66 Muth, R. F., "Urban Residential Land and Housing Markets", I-6.6a.e-6 in Ufi.ba.ri Economics, P e r l o f f & Wingo, editors, Johns Hopkins Press, Baltimore, 1968, page 286. volume of such changes. Hoover and Vernon, u / and K r i s t o f 0 0 have estimated that conversions corresponded to about a tenth of the aggregate increase i n dwelling units i n New York. These new units would thus amount to a very small portion of the market supply of dwelling units. Because of the r e l a t i v e newness and d i f f e r e n t s t r u c t u r a l types of the housing stock of Canada and B r i t i s h Columbia, conversions would be expected to play an even smaller role i n the market supply of housing than indicated for New York. Demolition of dwelling units reduces the stock of dwelling units and thus the market supply of dwelling units. Due to the r e l a t i v e newness of housing stock within B r i t i s h Columbia demolitions can be expected to have only a minor e f f e c t on the 69 housing supply i n B r i t i s h Columbia. (2) Percent of Stock Involved i n Market Transactions The market supply of housing can also be augmented by increasing the number of units of the e x i s t i n g stock involved i n market transactions. Some units may be held o f f the market; increases i n the l e v e l of prices would bring these units back 67 Hoover, E. H.; Vernon, R. , Anatomy of a Metropo l i s , Anchor Press, New York, 1962, page 189. 68 K r i s t o f , F. S., "Housing Policy Goals and the Turnover of Housing", Journal of the American I n s t i t u t e of Planners, Volume 31, Number 2, August 1965, pages 232-245. 69 In 1972 building permits were issued i n Vancouver allowing for the demolition of 560 dwelling units while permits were used for the construction of 2,644 dwelling units. City of Vancouver, Construction, Demolition and Maintenance  A c t i v i t y , Information and S t a t i s t i c s Report Number 8. Department of Planning and C i v i c Development, June 197 3, page 5. 81 to the market. More units may be brought into the market when, as prices r i s e , other things remaining constant, owners of f e r t h e i r units to the market to c a p i t a l i z e on the higher prices. Additional units may be added to the market supply through doubling up and more intensive use of dwelling units, thus freeing units to the market. The a f f e c t of increasing the percent of stock involved i n market transactions may, however, have only limited a f f e c t on increasing the supply of dwelling units as the renter or s e l l e r of a dwelling unit i s usually simultaneously a purchaser or renter, unless he i s moving to another housing market. The turnover rate of the housing stock i s the r a t i o of the number of single family homes (new and existing) traded during a given time period and the t o t a l housing stock at the end of that period. A value of 0.1 for turnover, means that on the average, houses change t i t l e once every ten years. In a study of single family homes in Metropolitan Vancouver between 194 9-71 1963 i t was found that the aggregate turnover rate exhibited a d i s t i n c t downward trend as well as c y c l i c a l patterns which generally conformed to changes i n aggregate economic a c t i v i t y . The o v e r a l l turnover rate was equal to 0.135 in 1949; that i s , on the average, houses changed t i t l e once every 7.5 years. Short run fluctuations aside, the turnover rate d r i f t e d s teadily 7 0 B r i t i s h Columbia, December 1974, Landlords threatened to withhold vacant rental units from the market in protest of Pro v i n c i a l Rent Control L e g i s l a t i o n . 71 White, P., Mao, J. C. T., Ghert, B. I., "Fluctuations in the Turnover of Single Family Houses", an unpublished paper, Faculty of Commerce, University of B r i t i s h Columbia, 1966. 82 downward afte r 1949 u n t i l i t reached a value of about 0.08 i n 1963, with houses changing t i t l e once every 12.5 years on the average. Through regression analysis i t was found that three variables: completions, the percentage of the population within the 35-44 year age group and.rent/price r a t i o s , accounted for approximately 85 percent of the v a r i a t i o n i n the o v e r a l l turnover rate. An increase i n population or an increase i n the cost of renting versus owning would cause the turnover rate of houses to r i s e . Completion r a t i o s , the number of completions expressed as a percentage of housing stock, was the key variable in explaining turnover rates as i t explained 53.4 percent of the 72 t o t a l v a r i a t i o n i n the turnover rate. (3) New Construction In most instances, the housing inventory of an area under-goes i t s greatest change as a r e s u l t of additions made through new r e s i d e n t i a l construction. The construction of new housing i s a lengthy and expensive process and i t i s dependent upon a number of factors which a f f e c t the volume of non-farm r e s i d e n t i a l 73 construction: L i s t of Potential Determinants: 1. Change i n population a. Increases i n population b. Changes i n the age-sex composition c. Changes i n the number, type, and size of households d. Internal migration and immigration 72 Ibid, page 41. 73 Grebler, L.; Maisel, S. J . , "Determinants of Residential Construction: A Review of Present Knowledge", Impacts of Monetary Policy, Commli,i,lon on Monet/ and C/izdlt, Prentice-H a l l Inc., Englewood C l i f f s , J. J., 1963, pages 476-477. 83 L i s t of Potential Determinants cont'd.: 2. Changes i n income and employment a. Total disposable personal income: past, present, expected b. Income d i s t r i b u t i o n c. Employment and unemployment 3. Consumer asset holdings and t h e i r d i s t r i b u t i o n , especi-a l l y ' l i q u i d assets and equities i n e x i s t i n g houses. 4. Changes in prices of houses a. The price e l a s t i c i t y of housing r e l a t i v e to other prices b. The shape of the construction supply and cost curves 5. Relationship between occupancy costs and prices of dwellings a. Credit a v a i l a b i l i t y and the cost of c r e d i t b. Real Estate taxes and operating expenses c. Depreciation d. Imputed costs of equity funds 6. Consumer tastes and preferences 7. Net replacement demand for dwelling units demolished or otherwise removed from the inventory less net conversions and mergers of e x i s t i n g units 8. Conditions of e x i s t i n g housing supply a. U t i l i z a t i o n of housing inventory (1) Vacancies (2) Intensity of occupancy b. Prices and rents of e x i s t i n g dwelling units c. Quality, location 9. Reactions to changes i n demand a. Builders' organization and p r o f i t expectations b. Investors' organization and p r o f i t expectations c. Market structure and market information Analysis of the determinants of r e s i d e n t i a l construction i s complicated not only by the large number of p o t e n t i a l forces impinging on r e s i d e n t i a l construction but also by interdependence of some of these factors. Many of the factors l i s t e d by Grebler 84 and Maisel a f f e c t supply through t h e i r influence upon the demand for housing. These factors were dealt with e a r l i e r and w i l l not be repeated (see Chapter I I I , Demand for Housing, for a more complete discussion of these items). Determinants of Supply Housing supply, by d e f i n i t i o n , i s li m i t e d to a portion of the stock already produced plus that i n production. Increases i n the supply of housing are determined by a number of factors: (1) the a v a i l a b i l i t y of mortgage funds, (2) entrepreneur's reluctance to change price and rents, (3) builders' decisions to b u i l d , and (4) the supply of productive factors, land, construction, labour and material. (1) A v a i l a b i l i t y of Mortgage Funds Mortgage money i s i n competition with other f i n a n c i a l needs and as a r e s u l t fluctuates i n a v a i l a b i l i t y through the competition for funds i n the money markets. A reduction i n the a v a i l a b i l i t y of mortgage funds, other things remaining constant, can reduce the.number of units which otherwise would be offered. A v a i l a -b i l i t y of mortgage funds also affects the l e v e l of housing demand, reducing demand when there i s a reduction i n a v a i l a b i l i t y . Monetary p o l i c i e s of the Federal Government, administered by the Bank of Canada, influence the supply of money i n the economy. P o l i c i e s which tend to increase the supply of money available i n the economy w i l l lead to reductions i n i n t e r e s t rates. Lower int e r e s t rates stimulate investment and w i l l tend to increase the construction of investment properties such as apartments. Higher i n t e r e s t rates w i l l tend to reduce such investment. Lower int e r e s t rates imply lower c r e d i t costs and as such would 85 stimulate the demand for housing and hence construction i n response to t h i s demand, i f the supply of housing i s low. Higher i n t e r e s t rates w i l l reduce such construction. The supply of housing i s also se n s i t i v e to the cost of money. In periods of t i g h t money developers w i l l postpone the construction of housing units, a n t i c i p a t i n g that families w i l l be less able to borrow. Developers w i l l also f i n d that they themselves w i l l not be able to raise money at p r o f i t a b l e or a t t r a c t i v e rates during t i g h t money conditions and hence w i l l reduce or postpone the development of new housing supplies. 74 In his study.of the housing market m Canada, Smith found that housing starts were very sensitive to both the cost and a v a i l a b i l i t y of mortgage c r e d i t . He estimated that a reduction i n bond rates of 1 percent appeared to generate approximately 7 percent additional housing starts annually, that a 1 percent increase i n the N. H. A. rate reduced housing starts by approx-imately 9 percent annually, and that a 1 percent increase i n both the N. H. A. and convential mortgage rate reduced housing starts by approximately 12 percent annually. (2) Entrepreneurs Reluctance to Change Prices and Rents The reluctance,of builders, owners and landlords to lower prices and rents to meet changing market conditions can a f f e c t market supplies, tenure relationships and vacancy rates. A s e l l e r of a new or e x i s t i n g housing unit, who i s unable to dispose of the unit at the price he wants, w i l l rent the unit and wait for the market to r i s e . This would temporarily s h i f t 74 Smith, L. B., Housing In Canada: Market Structure and Policy Performance, page 61. 86 tenure patterns of the housing supply, increase the supply of rental accommodation and reduce the supply of self-owned units. A landlord who i s unable to rent units at a certa i n price l e v e l may accept vacant units for short periods of intended vacancy, rather than lower his rents i n order to rent the vacant units. He has, as a r e s u l t of his actions, withdrawn ren t a l units from the:-.market u n t i l rents r i s e . Even i f prices are r i s i n g , some units may be held o f f the market. A builder a n t i c i p a t i n g a continued r i s e i n house prices, may withhold completed units from the market i f the ex-: pected gains in price are greater than the financing costs for the period the accommodation i s held o f f the market. Changes i n price le v e l s may r e s u l t i n changes i n the tenure patterns of the housing stock. If the price of units for sale i s r i s i n g f aster than the rent for comparable units, owners of rental accommodation may o f f e r t h e i r units for sale i n the 75 self-owned market. (3) Builders' Decisions.to Build Builders' decisions to b u i l d or not b u i l d are dependent upon project expectations. If builders conjecture that the increase i n aggregate demand for housing during that period i s going to exceed the number of completions during that period, then conjectured p r o f i t s from the anticipated lack of supply w i l l appear r e l a t i v e l y high. Builders w i l l increase the number of starts and increase the rate at which houses already under construction are completed. On the other hand, i f builders 75 i . e . Conversion of apartments to condominiums. 87 foresee that completions w i l l exceed the increase i n aggregate demand and vacancies w i l l r e s u l t , conjectured p r o f i t s w i l l decline, i f not disappear, and builders w i l l cut back on housing "7 6 starts and slow down on completions. (4) Cost and A v a i l a b i l i t y of Land, Construction Labour and  Materials The a v a i l a b i l i t y of land, building materials, labour, contractors and entrepreneurs i s often taken for granted, but lack of a v a i l a b i l i t y of these factors often hampers the flow of new units into the housing supply. L. B. Smith, i n his study of Housing i n Canada, found that r i s i n g wages, land costs, and the cost of temporary financing a l l s i g n i f i c a n t l y a f f e c t 77 construction costs and thereby retard housing s t a r t s . Construction labour, although perhaps limited i n quantity due to Union apprenticeship programs, i s generally available for r e s i d e n t i a l construction as labour can e a s i l y s h i f t between commercial and r e s i d e n t i a l construction i n response to changing market conditions. Union and non-Union labour i s r e a d i l y available for r e s i d e n t i a l construction i n s u f f i c i e n t quantities as not to threaten or r e s t r i c t the housing supply process. Building materials may at times be temporarily i n short supply, but shortages are not of s u f f i c i e n t magnitude to seriously disrupt the housing supply process. The a v a i l a b i l i t y of land has a much more dramatic a f f e c t upon the construction of r e s i d e n t i a l accommodation. The 76 Naylor, T. H., "The Impact of F i s c a l and Monetary Policy on The Housing Market" , law and Contemporary Problems, Durham, North Carolina, Volume 32, 1967, page 387. 77 Smith, L. B. , Housing in Canada'- Market Structure and  P o l i c y Performance, page 62. 88 Ontario Task Force on Housing found that of the four components of housing production: land, materials, labour and money, 7 8 only land was i n short supply i n Ontario. This problem, however, does not e x i s t to the same degree within B r i t i s h Columbia at the present time. There does not appear to be a shortage of r e s i d e n t i a l land within the Province at the present time. Record leve l s of housing construction had been experienced i n B r i t i s h Columbia u n t i l the downturn i n the world economy in 1974. Housing starts within the Province rose from 17,329 units i n 1963 to a record l e v e l of 37,627 units i n 1973. The construction of housing units requires land. Without adequate supplies of land the record l e v e l s of construction that have been experienced could not have occurred. The record levels of housing construction have been fueled by unprecedented growth i n the l e v e l of housing demand. This demand increased the value of e x i s t i n g homes and the price of land. Land prices are not high because of land shortages. The supply of land i s often represented as being p e r f e c t l y i n e l a s t i c ; there i s only a c e r t a i n amount of useable land i n any one place and i t can only be increased by land reclamation, f i l l or drainage. The supply of r e s i d e n t i a l space can be increased through higher density construction, the proper en-abling zoning by-laws, and the provision of transportation systems that increase the e f f e c t i v e amount of developable land. 78 Uosiking Pape,su> : Volume. .1, (a), Housing Issues and Housing Programs", Advisory Task Force on Housing Policy, Province of Ontario, June 1973, page 6. 89 The Ontario Task Force on Housing found that the supply of housing i s affected to a large extent by the a v a i l a b i l i t y of serviced land, by the municipal f i n a n c i a l s i t u a t i o n , by muni-c i p a l and p r o v i n c i a l regulations governing subdivision approval, 79 and by the length of time required for production. In a study of the subdivision approval process i n Metropolitan Vancouver, Young found that the supply of new housing units was hampered because the production of serviced l o t s i s retarded by the .c , 80 present system of approval. The price of r e s i d e n t i a l l o t s i s r i s i n g but, as pointed out by e a r l i e r discussions, the price of land i s determined by the price of e x i s t i n g houses. In the l i g h t of the price of e x i s t i n g houses and the l e v e l of development costs, t o t a l developers' demand determines the l e v e l of land prices that each in d i v i d u a l developer takes as given. Although some develop-ers may c u r t a i l building because they f i n d land prices too high to support p r o f i t a b l e building, given the l e v e l of prices of ex i s t i n g houses, i t i s the competition between developers that ensures that s i t e s go to the highest bidder. The price of land i s a residual determined by the price l e v e l of e x i s t i n g resident-i a l dwelling units, the cost of construction (material and labour), and the l e v e l of builders' p r o f i t s . The price of land i s determined by the price of e x i s t i n g houses; the price of houses i s not deter-mined by the price of land. If actions were taken to control the price of land i n attempts to freeze or lower house prices, the 80 Young, G. A. , The Municipal Subdlvlslon Approval Process In  Metropolitan Vancouvcr; an unpublished Master of Science Thesis, University of B r i t i s h Columbia, Vancouver, 1974, page 111. impact would be f e l t not i n lower house prices, but increased developers' p r o f i t s . Only over time, to the extent that additions to the housing stock rose r e l a t i v e to demand as a r e s u l t of the increased p r o f i t a b i l i t y of building, would any 81 tendency emerge for lower house prices . * 81 Pennance, F. G. , Housing Uafikct Knalyhii, and Policy, page 34 91 CHAPTER VI BRITISH COLUMBIA HOUSING TRENDS The housing stock of an area i s not s t a t i c . It i s constantly changing due to new construction and the conversion, merger and demolition of e x i s t i n g dwelling units. Changes i n housing stock greatly a f f e c t the supply of housing and the a b i l i t y of the housing stock to meet the housing demands of a community. When the housing stock f a i l s to meet the housing demands of the com-munity, c r i e s of "housing c r i s i s " a r i s e . Through an examination of the c h a r a c t e r i s t i c s and trends i n the B r i t i s h Columbia housing stock, we w i l l be able to judge the adequacy of the housing supply process and the housing stock within the Province and answer the question: "Is there a supply c r i s i s ? " . Housing Stock The housing stock of B r i t i s h Columbia, as indicated by the 8 2 1971 Census of Canada, t o t a l l e d 667,546 occupied dwelling ' 8 3 units i n 1971, up 45.3 percent from 459,532 units i n 1961. 82 7977 CznAu* oj Canada, Housing, 93-727 , June 1973, page 3-1. 8 3 Vacant or unoccupied dwelling units are also part of the housing stock. The 1971 Census of Canada did not survey vacant dwelling units. A rough i n d i c a t i o n of the number of unoccupied units in Canada, at the time of the 1971 census can be gained from data on the number of newly completed and unoccupied dwelling units and apartment vacancy rates. At the end of the second quarter of 1971 the number of newly completed and unoccupied units i n metropolitanaareas throughout Canada t o t a l l e d 14,379 units; 4,396 single detached and duplex units and 9,98 3 row and apartment units. (SOURCE: Canadian Housing S t a t i s t i c s 1972, CMHC, table 16). In June 1971 vacancy rates i n e x i s t i n g rental apartment units were 3.9 percent i n Vancouver, 4.1 percent i n V i c t o r i a , 10.7 percent i n Calgary, 2.7 percent i n Toronto and 7.0 percent i n Montreal. (SOURCE: Apartment Vacancy Survey, Metropolitan V i c t o r i a , CMHC, June 1974, table 3). 92 The r a t e of growth of B r i t i s h Columbia's housing stock has been f a r above the 32.5 percent i n c r e a s e i n the n a t i o n a l housing stock and second only to the Yukon and Northwest T e r r i t o r i e s 60.0 percent i n c r e a s e i n housing stock between 1961 and 1971. Housing stock f i g u r e s f o r 1961, 1966 and 1971, f o r B r i t i s h Columbia and twelve towns, c i t i e s and m e t r o p o l i t a n areas w i t h i n the P r o v i n c e , are presented i n Table 28,. These towns were chosen on the b a s i s of a v a i l a b l e data to r e f l e c t a c r o s s - s e c t i o n of housing supply and stock throughout the P r o v i n c e . The housing stock throughout the P r o v i n c e i n c r e a s e d g r e a t l y between 1961 and 1971, w i t h the g r e a t e s t growth o c c u r r i n g i n Kamloops, P r i n c e George, Port A l b e r n i and Kelowna. Kamloops experienced a 18 0.8 percent i n c r e a s e i n i t s housing stock d u r i n g the p e r i o d ; P r i n c e George's housing stock i n c r e a s e d 157 p e r c e n t ; P o r t A l b e r n i ' s 76.2 percent; Kelowna's 54.7 percent;>and Metro-p o l i t a n Vancouver's 51.3 percent. H i s t o r i c a l l y , a d d i t i o n s to the housing stock i n any one year are r a r e l y g r e a t e r than 3 p e r c e n t , or approximately 34.4 percent over a ten year p e r i o d . However, many areas i n B r i t i s h Columbia have experienced h i g h e r r a t e s of growth i n housing stock i n response to the r a p i d i n d u s t r i a l development and p o p u l a t i o n growth i n those areas. B r i t i s h Columbia's housing stock i s dominated by Vancouver's housing u n i t s , due to the s i z e of the c i t y and i t s housing stock. Almost 52 percent of a l l d w e l l i n g u n i t s w i t h i n the P r o v i n c e i n 1971 were w i t h i n the M e t r o p o l i t a n Vancouver area. V i c t o r i a , the second l a r g e s t c i t y i n the P r o v i n c e , r e p r e s e n t e d o n l y 10 p e r c e n t of the P r o v i n c i a l housing stock, w h i l e no other s i n g l e c i t y o r town TABLE 28 OCCUPIED DWELLINGS BY TENURE 1961, 1966, 1971 1 9 6 1 1 9 6 6 1 9 7 1 % CHANGE 1961-1971 A R E A TOTAL OWNED RENTED TOTAL , OWNED RENTED TOTAL OWNED RENTED TOTAL OWNED RENTED DAWSON CREEK 2,763 1,748 965 3,079 1,968 1,111 3,161 2,061 1,100 14.4 14.6 14.0 KAMLOOPS 2,665 1,712 953 3,112 1,668 1,444 7,483 4,245 3,238 180.8 148.0 239.8 KELOWNA 4,138 3,001 1,137 5,400 3,501 1,899 6,402 4,100 2,302 54.7 36.6 102.5 NANAIMO 4,212 3,237 975 4,704 3,201 1,503 5,026 3,249 1,777 19.3 0.4 82.3 PENTICTON 4,059 2,881 1,178 4,726 3,380 1,346 5,864 4,191 1,673 44.5 45.5 42.0 PORT ALBERNI 3,225 2,217 1,008 3,821 2,530 1,291 5,682 3,859 1,823 76.2 74.1 80.9 PRINCE GEORGE 3,359 2,292 , 1,067 5,811 3,365 2,446 8,633 4,657 3,976 157.0 103.2 272.6 PRINCE RUPERT 3,099 1,821 1,278 3,684 2,068 1,616 4,293 2,260 2,033 38.5 24.1 59.1 T R A I L 3,353 2,206 1,147 3,522 2,331 1,191 3,557 2,364 1,193 6.1 7.2 4.0 V E R N O N 3,005 2,005 1,000 3,519 2,279 1,240 4,176 2,692 1,484 39.0 34.3 48.4 METRO VANCOUVER 228,596 159,414 69,182 '.71,956 171,395 100,561 345,870 203,525 142,350 51.3 27.7 105.8 METRO VICTORIA 47,485 33,893 13,592 55,098 36,653 18,445 66,365 40,735 25,625 39.8 20.2 88.5 B.C. 459,532 326,090 133,442 543,075 359,272 183,803 667,546 402,781 244,765 45.3 29.7 83.4 Source: Census of Canada, Housing, 93-727, Vol. II, Part 3 (Bulletin 23-2), June 1973, Tables 3,7. i 94 represented more than 2 percent of the P r o v i n c i a l stock (see table 29.), The P r o v i n c i a l housing stock i s predominantly urban. In 1971, 78 percent of a l l dwelling units were located i n urban areas. Housing demand and housing markets are l o c a l i n nature. In B r i t i s h Columbia the majority of housing demand, and there-fore supply, i s concentrated i n a few urban areas.(see table 29). For census purposes, and for t h i s t h e s i s , a household con-s i s t s of a person or group of persons occupying one dwelling. A household usually consists of a family group with or without lodgers, employees, etc. However, i t may consist of two or more families sharing a dwelling, or a group of unrelated persons or of one person l i v i n g alone. As, by d e f i n i t i o n , households comprise those related or unrelated persons occupying a dwelling unit; increases i n the number of households within a housing market can only occur i f there are vacant housing units into which members of e x i s t i n g households can move, thereby forming new households of t h e i r own. If there are no vacant dwelling units within the ex i s t i n g stock, increases i n the number of households can only occur i f additional dwelling units are added to the housing stock through construction of new units or con-version of e x i s t i n g units. As a r e s u l t , the rate of growth i n the number of households i s an indicator of the adequacy of the housing supply process and the growth of the housing stock. Between 1966 and 1971, the number of households i n B r i t i s h Columbia increased 23 percent from 543,075 to 6 68,300 while the population grew only 16.6 percent from 1,873,674 to 2,184,621. TABLE 29 B.C. HOUSING STOCK 1971 •-. ' '.' AREA STOCK HOUSING AS A PER CENT AREA STOCK . OF B.C. HOUSING DAWSON CREEK 3,160 0.47 KAMLOOPS 7,480 1.12 KELOWNA 6,400 0.96 NANAIMO 5,025 0.75 PENTICTON 5,865 0.88 PORT ALBERNI 5,685 0.85 PRINCE GEORGE 8,630 1.44 PRINCE RUPERT 4,290 0.64 T R A I L 3,560 0.05 V E R N O N 4,175 0.06 METRO VANCOUVER 345,870 51.81 METRO VICTORIA 66,365 9.94 B.C. 667,545 100.00 URBAN AREAS 521,010 78.05 RURAL AREAS 146,540 21.95 96 The growth i n the number of households has been more rapid than population growth i n both Canada and B r i t i s h Columbia. In Canada, between 1961 and 1971, population rose 18.3 percent from 18,238,247 to 21,568,311, while the number of households rose 32.6 percent from 4,554,736 to 6,041,302. During the same period, i n B r i t i s h Columbia, population grew 34.1 from 1,629,082 to 2,184,621, while the number of households grew 45.4 percent from 459,534 to 668,303 for the highest p r o v i n c i a l rate of growth, second only to the Yukon and Northwest T e r r i t o r i e s (see table 14). In l i g h t of these figures, i t would appear that the housing supply process within B r i t i s h Columbia has been functioning adequately as the number of households has been increasing at high rates. B r i t i s h Columbia has i n recent years had smaller households, a lower average number of persons per household than any other province i n Canada (see table 14). In 1961 the P r o v i n c i a l average was 3.4 persons per household. It f e l l to 3.3 i n 1966 and 3.2 i n 1971; in d i c a t i n g the growth i n the supply of housing that has occured within the Province of B r i t i s h Columbia. This could not have occurred without an adequate supply of housing. Between 1961 and 1971 the number of households within B r i t i s h Columbia increased approximately.45 percent (see table 30). Family households increased 37 percent; one family house-holds increased 38 percent and the number of two or more family households decreased 2 percent, in d i c a t i n g an improvement i n hous-ing supply over the decade. Non family households however, showed even greater increases. Non family households represented 22 percent of a l l households TABLE 30 HOUSEHOLDS BY TYPE BRITISH COLUMBIA 1961, 1966 and 19 71 1961 Number 1966 Number % 1971 % Change % Change Number % 1966-1971 1961-1971 FAMILY HOUSEHOLDS 379,348 83 434,671 80 520,655 78 + +20 1 Family Households 368,732 80 426,629 78 510,253 76 .+20 2 or more Family Households 10,616 03 8,042 02 10,400 02 +29 + 37 + 38 (02) NON FAMILY HOUSEHOLDS 1 Person Only 2 or More Persons 80,184 17 108,404 20 147,645 22 +36 62,079 14 86,939 16 114,645 17 +32 18,105 '-03 21 ,465 04 33 ,000 05 +54 + 84 + 85 + 82 TOTAL HOUSEHOLDS 459,532 100 543,075 100 668,300 100 + 23 + 45 Sources : 1 . 2 . 3 . 1971 Census of Canada, 93-703, Table 8. 1966 Census of Canada, 93-605, Table 29. 1961 Census of Canada, 93-531, Table 89. TABLE 3 1 HOUSEHOLDS BY TYPE — BRITISH COLUMBIA: 1966, 1971 F A M I L Y H O U S E H O L D S ONE-FAMILY HOUSEHOLDS FAMILY OF HOUSEHOLD HEAD FAMILY OTHER THAN LOCALITY T O T A L HOUSEHOLDS TOTAL TOTAL TOTAL WITHOUT ADDITIONAL ' PERSONS WITH ADDITIONAL PERSONS THAT OF HOUSEHOLD HEAD 1966: B . C . URBAN RURAL 543,075 422,940 120,135 434,671 333,746 100,925 426,629 327,410 99,219 423,697 325,112 98,585 386,707 295,538 91,169 36,990 29,574 7,416 2,932 2,298 634 1971: B . C . : URBAN RURAL 668,300 521,660 146,645 520,655 397,345 1.23,310 510,255 389,225 121,025 506,730 386,505 120,220 460,495 350,075 110,420 46,235 36,430 9,805 3,525 2,720 810 TWO OR MORE FAMILY HOUSEHOLDS NON-FAMILY HOUSEHOLDS TOTAL 8,042 6,336 1,706 8,115 2,285 Jfc-CLUDING FAMILY OF HOUSEHOLD HEAD 7,960 6,273 1,687 10,285 8,030 2,260 WITH NO FAMILY OF HOUSEHOLD HEAD 82 63 19 115 90 20 TOTAL ONE PERSON ONLY 108,404 89,194 19,210 147,645 124,310 23,330 86,939 70,836 16,103 114,645 95,975 18,675 TWO OR MORE PERSONS 21,465 18,353 3,107 33,000 28,345 4,660 Source: 1966 Census of Canada, 93-605, Table 29. 1971 Census of Canada, 93-703, Table 8. o 00 99 i n 1971, up from 17 percent i n 1961. Non family households increased 84 percent over the decade; 1 person households increased 85 percent and two or more person households increased 82 percent. As increases i n the number of households within a housing market, given low vacancy rates, can only occur i f additional dwelling units are added to the housing stock, i t would appear that the housing supply process i n recent years has been functioning well. The number of households, both family and non family, has been increasing. Types of Structures As construction, a l t e r a t i o n or demolition of housing units occurs, the housing stock i s changed. Changes i n type of struc-tures generated by these operations can a l t e r the character of the housing stock and greatly a f f e c t the nature of housing market operation. Such changes occurred i n B r i t i s h Columbia between 1961 and 1971. The t y p i c a l dwelling unit within B r i t i s h Columbia i s a single detached home, a structure with only one dwelling, separated by open space from a l l other structures except i t s own garage or shed. The single detached dwelling dominates the B r i t i s h Columbia housing stock, but i t s dominance i s dimin-ishing. In 1961, 80.0 percent of a l l dwelling units i n the Province were single detached units, while 75.7 percent of a l l urban and 92.4 percent- of a l l r u r a l dwellings were single-detached. In 1971, however, the single-detached unit represented only 68.0 percent of the P r o v i n c i a l housing stock; 63.3 percent TABLE 32 HOUSING STOCK, 1961 SINGLE SINGLE APARTMENT MOBILE A R E A DETACHED ATTACHED OR FLAT HOME TOTAL DAWSON CREEK 2,269 180 238 — 2,763 KAMLOOPS 1,977 202 461 2,665 KELOWNA 3,327 206 605 — 4,138 NANAIMO 3,594 148 470 — 4,212 PENTICTON 3,643 341 — 4,059 PORT ALBERNI 2,410 144 641 3,225 PRINCE GEORGE 2,433 289 581 — 3,359 PRINCE RUPERT 2,082 262 740 — 3,099 T R A I L 2,463 133 752 — 3,353 V E R N O N 2,369 205 426 — 3,005 METRO VANCOUVER 171,620 8,843 47,630 503 228,596 METRO VICTORIA 35,747 2,330 9,295 113 47,485 BRITISH COLUMBIA 367,663 19,577 68,632 3,660 459,532 U R B A N 258,655 15,176 66,584 1,444 341,559 R U R A L 109,008 4,401 2,048 2,516 117,973 Source: 1961 Census o f Canada 93-523, Ta b l e s 5, 7, 8. TABLE 33 HOUSING STOCK OCCUPIED DWELLINGS 1971 BY TENURE AND STRUCTURAL TYPE A R E A TOTAL TYPE OF DWELLING NUMBER OF UNITS MOBILE SINGLE DETACHED SINGLE ATTACHED APARTMENT OR FLAT TOTAL DOUBLE HOUSE OTHER TOTAL DUPLEX OTHER DAWSON CREEK 3,160 2,480 270 110 155 345 75 270 70 Owned 2,060 1,930 25 10 15 35 20 20 65 Rented 1,100 550 240 95 140 305 50 250 — KAMLOOPS 7,480 4,380 660 265 400 2,240 650 1,585 205 Owned 4,245 3,630 115 60 55 305 225 75 200 Rented 3,240 750 550 200 345 1,935 425 1,510 5 . KELOWNA 6,400 4,365 445 300 145 1,565 455 1,115 20 Owne d 4,100 3,760 110 80 30 210 180 35 15 Rented 2,300 605 335 225 115 1,355 275 1,080 — — NANAIMO 5,025 3,635 235 135 95 1,150 235 920 10 Owned 3,250 3,055 50 30 20 140 100 40 . 5 Rented 1,780 580 185 110 75 1,005 135 875 5 PENTICTON 5,865 4,485 215 65 155 905 90 815 260 Owned 4,195 3,795 65 20 40 80 30 50 250 Rented 1,675 685 155 .40 110 825 60 770 . io TABLE 33 (Continued) — A R E A TOTAL TYPE OF DWELLING NUMBER OF UNITS MOBILE SINGLE DETACHED SI NGLE ATTACHED APARTMENT OR FLAT TOTAL DOUBLE HOUSE ' OTHER TOTAL DUPLEX OTHER PORT ALBERNI 5,685 4,190 300 110 190 1,145 275 870 55 Owned 3,860 3,605 50 20 30 150 90 60 50 Rented 1,825 580 250 85 60 990 180 815 5 PRINCE GEORGE 8,630 4,990 1,125 610 515 2,385 735 1,650 135 Owned 4,655 4,145 135 95 40 250 225 25 120 • Rented 3,980 840 985 510 475 2,135 515 1,620 15 PRINCE RUPERT 4,290 2,340 235 75 . 160 1,605 585 1,020 120 Oxmed 2,260 1,845 30 15. 10 280 225 50 110 Rented 2,035 490 205 55. 155 1,320 360 965 15 T R A I L 3,560 2,580 100 30 70 875 295 585 10 Owned 2,365 2,200 15 ' — 10 135 100 40 5 Rented 1,190 375 55 30 60 735 190 540 — V E R N O N 4,175 2,895 280 150: 130 925 220 705 75 Owned 2,690 2,450 55 35 35 120 40 40 65 Rented 1,485 445 230 115 115 805 140 665 10 TABLE 33 (Continued) TYPE OF DWELLING NUMBER OF UNITS SINGLE ATTACHED APARTMENT OR FLAT A R E A TOTAL SINGLE DETACHED TOTAL DOUBLE HOUSE OTHER TOTAL DUPLEX OTHER MOBILE METRO VANCOUVER 345,870 216,455 13,260 5,915 7,350 113,945 12,925 101,015 2,215 Owned Rented 203,525 142,350 189,405 27,050 3,325 9,940 1,365 4,555 1,960 5,385 8,720 105,220 4,905 8,020 3,810 97,200 2,070 140 METRO VICTORIA 66,365 42,875 3,365 2,015 1,350 19,490 2,390 17,105 630 Owned Rented 40,735 25,625 37,855 5,020 630 2,740 400 1,615 230 1,120 1,660 17,830 910 1,480 750 16,350 590 40 BRITISH COLUMBIA 667,545 454,335 31,350 14,500 16,855 162,620 23,655 138,965 19,240 Owned Rented 422,780 244,765 383,545 70,970 : 7,410 23,940 3,135 11,365 4,280 12,575 14,795 147,830 8,925 14,730 5,865 133,100 17,035 2,205 U R B A N 521,010 329,930 26,015 12,160 13,855 158,150 21,905 136,250 6,910 Owned Rented 311,190 209,820 285,460 44,475 5,640 20,375 2,695 9,465 2,945 10,910 13,810 144,345 8,245 13,660 5,560 130,685 6,280 630 RURAL 146,540 124,405 5,330 2,335 3,000 4,470 1,750 2,715 12,330 Owned Rented 111,590 134,945 98,085 26,320 1,770 3,565 435 1,905 1,330 1,660 980 3,485 680 1,075 305 2,415 10,755 1,575 S o u r c e : 1971 Canada C e n s u s , 9 3 - 7 2 7 , T a b l e s 4,5.6 104 of a l l urban and 84.9 percent of a l l r u r a l dwellings. These changes have occurred as a r e s u l t of the growth i n the con-struction and popularity of single attached, apartment and mobile home units throughout the Province (see tables 3 4 and 35). The number of single-attached dwelling units within the Province rose 60 percent from 19,577 to 31,350 units between 1961 and 1971. These units are predominantly urban and t h e i r numbers have increased throughout the Province. In 1971, they represented 4.7 percent of the B r i t i s h Columbia housing stock, up from 4.3 percent in 1961. The significance of apartment dwelling units to the B r i t i s h Columbia housing stock and housing market increased markedly between 1961 and 1971. The number of apartments increased 58 percent, from 68,632 i n 1961 to 162,620 i n 1971. In 1961, apartments represented only 14.9 percent of the P r o v i n c i a l housing stock; but by 1971 they had become 24.4 percent of the housing stock for B r i t i s h Columbia. Apartment units are an urban phenomenon as almost 91 percent of a l l apartments were located in urban areas. Apartments represented 3 0.4 percent of the urban housing stock, but only 3.1 percent of the r u r a l housing stock i n 1971 (see tables 34 and 35). Apartment units share of the housing stock has grown i n most urban areas of the Province. In Prince Rupert, i n 1971, they accounted for 37.4 percent of the housing stock, i n Metropolitan Vancouver they represented 33.0 percent; both up over 10 percent from t h e i r share of the housing stock in 1961. The number of mobile homes has also ri s e n dramatically. 105 TABLE 34 HOUSING STOCK, 1961 PERCENTAGE DISTRIBUTION BY STRUCTURAL TYPE A R E A SINGLE DETACHED % SINGLE ATTACHED % APARTMENT OR FLAT % MOBILE HOMES % HOUSING STOCK 1961 DAWSON CREEK KAMLOOPS KELOWNA NANAIMO PENTICTON PORT ALBERNI PRINCE GEORGE PRINCE RUPERT T R A I L V E R N O N METRO VANCOUVER METRO VICTORIA BRITISH COLUMBIA U R B AN R U R A L 82.1 74.2 80.4 85.3 89.8 74.7 72.4 67.2 73.5 78.8 75.1 75.3 80.0 75.7 92.4 6.5 7.6 5.0 3.5 4.5 8.6 8.5 4.0 6.8 3.9 4.9 4.3 4.4 3.8 8.6 17.3 14.6 11.2 8.4 19.9 17.3 23.9 22.5 14.2 20.8 19.6 14.9 19.5 1.7 2.2 0.2 2,763 2,665 4,138 4,212 4,059 3,225 3,359 3,099 3,355 3,005 228,596 47,485 0.8 459,532 0.4 341,559 2.1 117,973 Source: 1961 Census of Canada 93-523, Tables 5, 7, 8. TABLE 35 HOUSING STOCK 1971 PERCENTAGE DISTRIBUTION BY STRUCTURAL TYPE SINGLE SINGLE APARTMENT MOBILE A R E A DETACHED ATTACHED OR FLAT HOME TOTAL DAWSON CREEK 78.4 8.5 10.9 2.2 100 KAMLOOPS 58.6 8.9 29.9 2.7 100 KELOWNA 68.2 7.0 24.5 0.3 100 NANAIMO 72.3 4.6 22.9 0.2 100 PENTICTON 76.5 3.7 15.4 4.4 100 PORT ALBERNI 73.7 5.3 20.0 1.0 100 PRINCE GEORGE 57.8 13.0 27.6 1.6 100 PRINCE RUPERT 54.5 '5.4 37.4 2.7 100 T R A I L 72.4 2.8 24.5 .3 100 V E R N O N 69.3 6.7 22.2 1.8 100 METRO VANCOUVER 62.6 3.8 33.0 0.6 100 METRO VICTORIA 64.6 5.1 29.4 0.9 100 B.C. URBAN RURAL 68.0 63.3 84.9 4.7 5.0 3.6 24.4 30.4 3.1 2.9 1.3 8.4 100 100 100 Source: 1971 Census of Bulletin 2.3-2, Canada, 93-June 1973, 727, Vol. II, Tables 5, 6. Part 3, 107 Between 1961 and 1971 the number of mobile homes i n B r i t i s h Columbia increased 426 percent from 3,660 to 19,240. In 1971, they represented 2.9 percent of the P r o v i n c i a l housing stock, up from 0.8 percent i n 1961. Unlike apartment units, mobile homes are predominantly r u r a l , 64 percent located within r u r a l areas where they represented 8.4 percent of the housing stock i n 1971.-Generally, there appears to be a trend away from single-detached dwellings towards apartments. This t r a n s i t i o n w i l l be a slow one because of the large number of e x i s t i n g single-detached units, but construction of apartments, condominiums and row housing should reduce the single-detached units domin-ance of the housing market i n urban areas. Tenure Tenure i s an occupancy c h a r a c t e r i s t i c of the housing stock. The occupancy status of the housing industry i s c l a s s i f i e d i n three broad categories: owner-occupied, renter occupied and vacant units. There i s a high c o r r e l a t i o n between the l e v e l of owner-occupancy and the proportion of single-family dwelling units i n the housing stock. Accompanying the trend away from single-detached dwellings i s a s h i f t i n tenure patterns within the housing stock. Between 1961 and 1971 the proportion of owner-occupied units f e l l 8.7 percent from 71.0 percent to 63.3 percent. As a r e s u l t , renter-occupied units represented 36.7 percent of the Pr o v i n c i a l housing stock i n 1971 (see table 36). Of the c i t i e s examined, Prince Rupert had the highest proportion of renter-occupied dwellings TABLE 3 6 OCCUPIED DWELLINGS — TENURE IN PERCENTAGE CHANGE 1961-1971 1961 1966 1971 % A R E A OWNED RENTED OWNED RENTED OWNED RENTED RENTED DAWSON CREEK 65. 1 34.9 63.9 36.1 65.2 34.8 -0.1 KAMLOOPS 64. 2 35.8 53.6 46.4 56.7 43.3 +7.5 KELOWNA 72. 5 27.5 64.8 35.2 64.0 36.0 +8.5 NANAIMO 76. 9 23.1. 68.0 32.0 64.6 35.4 +12.3 PENTICTON 71. 0 29.0 71.5 28.5 71.5 28.5 -0.5 PORT ALBERNI 68. 7 31.3 66.2 33.8 67.9 32.1 +0.8 PRINCE GEORGE 68. 2 31.8 57.9 42.1 53.9 46.1 +14.3 PRINCE RUPERT 58. 7 41.3 56.1 43.9 52.6 47.4 +6.1 T R A I L 65. 8 34.2 66.2 33.8 66.5 33.5 -0.7 V E R N O N 66. 7 33.3 64.8 35.2 64.5 35.5 +2.2 METRO VANCOUVER 69. 7 30.3 63.0 37.0 58.8 41.2 +10.9 METRO VICTORIA 71. 4 28.6 66.5 23.5 61.4 38.6 +10.0 BRITISH COLUMBIA 71. 0 29.0 65.0 35.0 63.3 36.7 +8.7 Source: 1971 Census of Canada, Housing, 93-727, Vol. II, Part 3, Bulletin 2.3-2, June 1973, Tables 2, 3. 109 i n 1 9 7 1 , i . e . 47.4 p e r c e n t . I n 1 9 7 1 , r e n t a l u n i t s r e p r e s e n t e d 46.1 p e r c e n t o f t h e h o u s i n g s t o c k i n P r i n c e G e o r g e , 43.3 p e r c e n t i n K a m l o o p s and 41.2 p e r c e n t i n M e t r o p o l i t a n V a n c o u v e r . I n g e n e r a l , t h e l a r g e r a nd more r a p i d l y g r o w i n g c o m m u n i t i e s w i t h i n t h e P r o v i n c e h a v e a h i g h e r p r o p o r t i o n o f r e n t a l d w e l l i n g u n i t s , due t o t h e h i g h l e v e l s o f a p a r t m e n t c o n s t r u c t i o n i n r e c e n t y e a r s . U r b a n a r e a s h a v e a h i g h e r p r o p o r t i o n o f r e n t a l u n i t s , 41.3 o f t h e u r b a n s t o c k . R u r a l d w e l l i n g u n i t s , on t h e o t h e r h a n d , a r e p r e d o m i n a n t l y s e l f - o w n e d a s 7 6.1 p e r c e n t o f t h e r u r a l h o u s i n g s t o c k was owner o c c u p i e d i n 1 9 7 1 , c o m p a r e d t o o n l y 63.3 p e r c e n t f o r t h e P r o v i n c i a l s t o c k ( s e e t a b l e 3 7 ) . T h e r e i s a l s o a s t r o n g c o r r e l a t i o n b e t w e e n s t r u c t u r a l t y p e and t e n u r e p a t t e r n s i n t h e h o u s i n g s t o c k ( s e e t a b l e 3 7 ) . S i n g l e -d e t a c h e d d w e l l i n g s a r e t h e p r e s e r v e o f t h e o w n e r - o c c u p i e r a s 84.4 p e r c e n t o f a l l s i n g l e - d e t a c h e d d w e l l i n g s i n 1971 w e r e s e l f -owned. S i n g l e - a t t a c h e d d w e l l i n g s a r e p r e d o m i n a n t l y r e n t a l u n i t s a s o n l y 23.6 p e r c e n t w e r e o w n e r - o c c u p i e d . A p a r t m e n t o r f l a t u n i t s a r e p r e d o m i n a n t l y r e n t e d u n i t s a s t h e y e x h i b i t e d t h e l o w e s t r a t e o f o w n e r - o c c u p a n c y o f a l l t y p e s o f s t r u c t u r e s , 90.9 p e r c e n t r e n t e r - o c c u p i e d . M o b i l e h o u s i n g u n i t s , on t h e o t h e r h a n d , a r e p r e d o m i n a n t l y o w n e r - o c c u p i e d , 88.5 p e r c e n t i n 1971 ( s e e t a b l e 3 7 ) . B e t w e e n 1961 and 1 9 7 1 , t h e number o f r e n t e r - o c c u p i e d d w e l l i n g s t h r o u g h o u t t h e P r o v i n c e i n c r e a s e d 83.4 p e r c e n t , w h i l e t h e number o f o w n e r - o c c u p i e d u n i t s i n c r e a s e d o n l y 29.7 p e r c e n t ( s e e t a b l e 2 8 ) . Of t h e c i t i e s e x a m i n e d , P r i n c e G e o r g e , K a m l o o p s , M e t r o p o l i -t a n V a n c o u v e r and K e l o w n a e x p e r i e n c e d t h e h i g h e s t r a t e o f g r o w t h i n r e n t a l a c c o m m o d a t i o n a s r e n t e r - o c c u p i e d d w e l l i n g s i n c r e a s e d 110 TABLE 37 TENURE PATTERNS BY STRUCTURAL TYPE 1971 PERCENTAGE OWNED A R E A TOTAL SINGLE SINGLE APARTMENT STOCK DETACHED ATTACHED OR FLAT MOBILE DAWSON CREEK 65.2 77.8 9.3 10.1 92.8 KAMLOOPS 56.8 82.9 17.4 13.6 97.5 KELOWNA 63.1 86.1 24.7 13.4 75.0 NANAIMO 64.7 84.0 21.3 12.2 50.0 PENTICTON 71.0 84.6 30.2 8.8 96.2 PORT ALBERNI 67.9 86.0 16 .7 13.1 90.9 PRINCE GEORGE 53.9 83.1 12.0 15.6 88.9 PRINCE RUPERT 52.7 78.8 12.8 17.4 91.7 T R A I L 66.4 85.3 15.0 15.4 50.0 VERNON 64.4 84.6 19.6 13.0 86.7 METRO VANCOUVER 58.8 87.5 25.1 7.7 93.5 METRO VICTORIA 61.4 88.3 18.7 8.5 93.7 BRITISH COLUMBIA 63.3 8 4 . 4 23.6 9.1 8 8 . 5 U R B A N 59.7 86.5 21.7 8.7 90.9 R U R A L 76.1 78.8 33.2 21.9' 87.2 Source: 1971 Census of Canada 93-727, Table 4 ,5 ,6 . I l l 272.6 percent, 239.8 percent, 105.8 percent and 102.5 percent respectively between 1961 and 1971. During the same period T r a i l and Dawson Creek experienced the lowest rate of growth in rental stock as rental units increased only 4.0^percent and 14.0 percent respectively because of the low growth of both c i t i e s . ( s e e table 36). Kamloops and Prince George experienced the largest increases i n self-owned units between 1961 and 1971: 148.0 and 103.2 per-cent respectively. But as with most other c i t i e s throughout the Province, the growth i n r e n t a l units far outpaced the growth in self-owned units, (see table 28). If the trend toward apartment and multiple unit construction continues, the proportion of owner-occupied units-: within the Province should continue to f a l l . However, i f rent controls, landlord-tenant c o n f l i c t s and r e s u l t i n g investor uncertainty continue and multiple unit construction i s s h i f t e d towards con-dominium construction, then the trend towards more rental accommodation may be reversed. Vacancy i s also an occupancy c h a r a c t e r i s t i c , but i t i s not as e a s i l y measured. Vacancy rates are only recorded for rental accommodation i n Metropolitan Vancouver and V i c t o r i a by C.M.H.C. (see table 2). Vacancy rates i n June 1974 were at record low levels of only a f r a c t i o n of a percent: 10.3 percent i n Van-couver and 0.5 percent i n V i c t o r i a . Vacant apartment units were almost non-existent. No f r i c t i o n a l vacancy was available to f a c i l i t a t e normal housing market operations and allow households to move ea s i l y between units within the market.-112 The number of newly completed and unoccupied dwellings, as reported by CMHC, i s another indicator of vacancy rates and the l e v e l of market supply of dwelling units within the housing markets of Metropolitan Vancouver and V i c t o r i a (see table 38). Within Metropolitan Vancouver the number of newly completed and unoccupied single-detached and duplex units has been st e a d i l y increasing since 1971. During 1974, the trend i n t e n s i -f i e d as unoccupied units reached a l e v e l of 1,653 units in October 1974. As a r e s u l t , the market supply of single-detached and duplex dwellings has increased. In recent years, the number of newly completed and unoccupied row and apartment units i n Vancouver has also increased. In October 1974, 774 units were unoccupied. These units were mostly unsold condominium units and did not represent vacant re n t a l apartment units. There i s presently an increased market supply of new and unoccupied owner-occupier units i n the Vancouver market. There i s , however, an almost n e g l i g i b l e supply of rental accommodation within Vancouver as vacancy rates for re n t a l apartment units are at record low l e v e l s and most newly constructed multiple-dwelling units are offered for sale i n the self-owned sector of the housing market. In Metropolitan V i c t o r i a , the housing market has shown an increase in the market supply of single-detached and duplex units i n 1974 over 1973, as the number of newly completed and unoccupied houses and duplexes rose from 5 in the t h i r d quarter of 1973 to 90 in October 1974. But the number of newly constructed and unoccupied dwellings i n 1974 was below the number experienced i n TABLE 38 NEWLY COMPLETED AND UNOCCUPIED DWELLINGS QUARTERLY, BY URBAN AREA 1971 - 74 VANCOUVER VICTORIA HOUSES AND DUPLEXES ROW AND APARTMENTS HOUSES ROW AND AND DUPLEXES APARTMENTS 1971 (1) (2) (3) (4) 352 230 269 355 301 662 964 1,074 659 839 93 101 132 167 123 184 103 481 459 306 1972 (1) (2) (3) (4) 317 266 425 551 390 435 611 470 4 % 1 173 256 317 424 292 407 476 360 465 427 1973 (1) (2) (3) (4) 491 396 434 404 431 354 606 491 285 434 44 20 11 5 20 136 215 298 138 196 1974 Oct. 1,653 774 90 19 Source: Canadian Housing S t a t i s t i c s , 1973, CMHC, Table 20, Regional Economist, CMHC. 114 1971 and 1972. The l e v e l of newly constructed and unoccupied apartment and row units f e l l dramatically i n 1974 as a r e s u l t of the 47 percent decrease in the number of multiple-dwelling 84 unit starts i n Metropolitan V i c t o r i a . Apartment vacancy rates, however, are at low l e v e l s , 0.5 percent in June 1974, indicating a lack of supply of re n t a l accommodation. Values and Rents Distributions of housing inventory by rent and value are useful primarily i n providing an understanding of i t s q u a l i t a t i v e composition and character. Information on rents and values was obtained from the 1971 Census of Canada. Between 1961 and 1971 the median value of single-detached owner-occupied non-farm dwellings rose from $11,744 to $23,502, giving B r i t i s h Columbia the dubious honor of having the second highest dwelling unit values i n Canada. Ontario dwellings had the highest median value at $23,768 and the National median average was $19,020. Over the same period average monthly cash 8 5 rents i n B r i t i s h Columbia rose from $65 to $119 for tenant occupied non-farm dwellings; giving B r i t i s h Columbia the second highest p r o v i n c i a l average cash rent l e v e l s (see figure 1). Within B r i t i s h Columbia, the highest dwelling unit values were found within the major metropolitan areas, Vancouver and V i c t o r i a . Prince George was not f a r behind. In general, the 84 Housing Statl&ticA: B. C. Raglon, C.M.H.C., Vancouver, September 1974, page 1. 85 CASH RENT - the d o l l a r amount required to secure occupancy but not the ownership of a dwelling. GROSS RENT - the t o t a l amount paid out by a tenant to secure and maintain a dwelling along with i t s household f a c i l i t i e s . Included are the cash rent and such other payments as water, e l e c t r i c i t y , gas or f u e l , which were not included i n the cash rent. 115 values of urban dwellings were higher than those of t h e i r r u r a l counterparts. Dawson Creek and T r a i l , both slow growing areas, experienced the smallest increases i n values between 1961 and 1971 of a l l the areas examined (see table 39). As with the value of single-detached owner-occupied non-farm dwellings, the l e v e l of average cash rents for tenant-occupied non-farm dwellings varied within the Province (see table 39). Rent l e v e l s were higher i n urban areas than r u r a l areas. Prince George and Metropolitan Vancouver had the highest average monthly cash rents of the c i t i e s examined. Since 1971 there has been a dramatic r i s e i n the value of 8 6 self-owned accommodation. However, between 1961 and 1971, increases i n rent l e v e l s lagged behind the increases i n value of self-owned accommodation. There has t r a d i t i o n a l l y been a strong r e l a t i o n s h i p between rent l e v e l s and the market supply of r e n t a l accommodation as r e f l e c t e d i n vacancy rates. Rents tend to increase during times of low market supply and low vacancy while s t a b i l i z i n g during periods of r e l a t i v e l y higher vacancy. This pattern has been evident throughout the Province. Before rent control, r e n t a l housing i n Vancouver followed an economic cycle. Vacancy rates f e l l , rents rose, builders undertook apartment construction, over-supplies were created, rents s t a b i l i z e d , vacancy rates rose, etc. In Vancouver, a 4.4 percent vacancy rate i n 1964 declined to 0.8 percent i n 1969 as a shortage of r e n t a l units developed. 86 For a complete discussion of the r i s e i n house pr i c e s , see Chapter II of t h i s t h e s i s , an overview of conditions i n the B r i t i s h Columbia housing market. FIGURE 2 116 Median Value for Single Detached Owner-occupied Non-farm Dwellings, for Canada and Provinces.1961 and 1971 $ 2 5 , 0 0 0 2 0 , 0 0 0 1 5 , 0 0 0 1 0 , 0 0 0 5 , 0 0 0 1 9 6 1 1 i P E I C A N A D A j j N.B. If I l b N F L O . N.S. S A S K . j B C j 1 9 7 1 —i 2 5 , 0 0 0 2 0 , 0 0 0 1 5 , 0 0 0 — \ 1 0 . 0 0 0 — \ 5 , 0 0 0 j O N T . Q U E - M A N . A L T A . Yuk.'& N.W.T. C A N A D A j P E I - j N B - j O N T . j S A S K . j »— | N F L O . N.S. QUE. M A N . A ^ A . Yuk. & N .W.T . Average Monthly Cash Rant for Tenant-occupied Non-farm Dwellings, for Canada and Provinces, 1961 and 1971 N F L D , M A N . A L T A . Yuk. & N.W.T . N F L D . M A N . I i A L T A . Yuk. & N .W.T . Source: 1971 Census of Canada 93-732, page 1. TABLE 39 VALUES AND RENTS 1961 and 1971 C I T Y , SINGLE DETACHED OWNER OCCUPIED . NON-FARM DWELLINGS MEDIAN VALUE TENANT OCCUPIED NON-FARM DWELLINGS AVERAGE MONTHLY CASH RENT AVERAGE MONTHLY GROSS RENT 19611 2 1971 19 61 3 L 1971* 19 61 3 4 1971 DAWSON CREEK $10,084 $13,064 $70 $100 $84 $115 KAMLOOPS 12,771 20,748 70 124 85 137 KELOWNA 11,433 21,674 61 120 76 134 NANAIMO ...... 10,357 15,414 57 102 74 116 PENTICTON 10,627 18,591 64 106 80 120 PORT ALBERNI 10,539 18,971 52 100 67 116 PRINCE GEORGE 11,916 23,625 81 134 98 131 PRINCE RUPERT 10,035 18,191 65 120 86 141 T R A I L 10,141 14,664 44 82 57 94 V E R N O N 10,280 20,208 53 102 68 117 METRO VANCOUVER 13,932 26,702 75 130 86 140 METRO VICTORIA 11,656 25,007 65 119 77 130 B.C. 11,744 23,502 65 119 78 132 URBAN 12,651 24,327 70 124 83 135 RURAL '8,344 19,606 40 85 56 95 1961 Census of Canada, 93-528, Tables 60, 62, 63. 1971 Census of Canada, 93-732, Tables 34, 36, 37. 1961 Census of Canada, 93-528, Tables 70, 72, 73. 1971 Census of Canada, 93-732, Tables 44, 46, 47. 118 TABLE 40 METRO VANCOUVER - RENTAL MARKET COMPLETIONS (1) VACANCY RATES (2) NO. OF YEAR NO. OF UNITS CONDOMINIUM (3) APT. ROW JUNE DEC. REGISTRATIONS 1967 5814 137 1.1% - -1968 8189 255 1.3 - 102 1969 8574... 370 1.2 0.8 632 1970 8594 595 2.7 2.1 954 1971 8757 1013 4.1 2.8 2,031 1972 5868 725 2.9 0.6 2,221 1973 5579 1479 1.0 0.4 3,732 Source: (1) Canadian Housing. S t a t i s t i c s , 1973, C.M.H.C, tables 9, 10. (2) hpatitmznt Vacancy Suhvzy, Mztno Vancouver, C.M.H.C, Vancouver, June 1974, table 1. (3) Real Ei>tatz 1 fiends in HztA.opolit.an Vancouver 1974-7 5, Real Estate Board of Greater Vancouver, page B-6. 119 Builders started construction again i n 1968. Completions of rental units jumped from about 6,000 a year to 9,000 a year for Metropolitan Vancouver. After four years of high construction the vacancy rate was back up to 3.9 percent i n June of 1971 (see table 40). Apartment completions reached t h e i r highest l e v e l i n 1971 and have since f a l l e n sharply. Vacancy rates have r i s e n but, since 1973, rent increases have been limited through rent control l e g i s l a t i o n which li m i t e d rents i n 197.4 to only 8 percent increases. As of January 1975 rents may increase at a maximum annual rate of 10.6 percent. With rents controlled by govern-ment l e g i s l a t i o n the market price a l l o c a t i o n mechanism has not been allowed to function. Rents can not increase to a t t r a c t i v e . levels that would encourage new construction. The construction of r e n t a l units has f a l l e n markedly and the extremely low vacancy rates have continued, contributing to a shortage of rent a l accom-' modation. Apartment and row unit dwellings have been constructed 8 7 but mostly for sale i n the self-owned condominium market. Housing Characteristics Housing conditions have been improving within B r i t i s h Columbia. In l i g h t of the c r i e s of "housing c r i s i s " that have been heard from many sectors of the population, such a finding would seem to be a contradiction, i f not an i m p o s s i b i l i t y . 87 The increase i n condominium re g i s t r a t i o n s i s noted i n table 40 and also i n Chapter II of t h i s t h e s i s . Condominiums and apartments are very s i m i l a r i n design - tenure i s the only difference; as a r e s u l t builders can e a s i l y switch t h e i r product from the rental to the self-ownership sector of the market, thereby avoiding rent control. 120 B r i t i s h Columbians were better housed i n 1971 than they were i n 1961. Dwelling units throughout the Province i n 1971 were generally larger, as the average number of rooms per dwelling increased from 4.9 to 5.2 between 1961 and 1971. Rural dwellings showed the greatest improvement i n size as they increased from 4.7 to 5.2 rooms per dwelling over the decade (see table 41). Corresponding to the increased size of dwelling units throughout the Province, as indicated by the increase i n the average number of rooms per dwelling, there has been an increase i n the average number of bedrooms per dwelling. Although a small increase, from 2.4 to 2.5 bedrooms per dwelling, i n l i g h t of declining b i r t h rates and smaller families, i t indicates a degree of improved q u a l i t y i n the housing stock. Again r u r a l housing showed a greater improvement than urban housing. Rural housing had a higher average number of bedrooms. Higher incomes, a number of s o c i a l factors, and high lev e l s of r e s i d e n t i a l construction have contributed to the growth i n the number of households within a given population. House-holds are smaller now than they have been i n the past. B r i t i s h 8 8 Columbia has smaller households than a l l other provinces. In 1971, the average number of persons per household i n the Province stood at 3.2, down from 3.4 i n 1961. In general, urban 88 The average B r i t i s h Columbia household i n 1971 consisted of 3.2 persons, compared to the national average of 3.5 persons per household (see table 19). TABLE 41 BRITISH COLUMBIA HOUSING CHARACTERISTICS 1961, 1971 C I T Y AVERAGE NUMBER OF ROOMS/DWELLING AVERAGE •NUMBER OF BEDROOMS AVG. NO. OF ROOMS/PERSON AVERAGE NUMBER OF PERSONS/HOUSEHOLD TOO OR MORE FAMILY HOUSEHOLDS NUMBER OF HOUSEHOLDS % OF HOUSEHOLDS WITH TWO FAMILIES OR MORE 1961 1 19712 19611 19 71 2 1961 1 1971 2 19613 19 71 3 19615 1971 A 1961" 1971 4 1961 1971 DAWSON CREEK 4.7 5.2 2.3 2.6 . 83 .69 3.9 3.6 10 35 2763 3165 0.4 1.1 KAMLOOPS 5,0 5.3 2.5 2.5 .70 .63 3.4 3.3* 59 120 2665 7495 2.2 1.6 KELOWNA 4.9 5.4 2.4 2.6 .64 .54 3.1 2.9 59 80 4138 6415 1.4 1.2 NANAIMO 5.0 5.1 2.4 2.4 .64 .57 3.2 2.9 70 55 4212 5040 1.7 1.1 PENTICTON . 4.9 5.4 2.4 2.5 .67 .55 3.2 3.0 71 60 4059 5875 1.7 1.0 PORT ALBERNI 4.8 5.4 2.5 2.6 .74 .64 . 3.5 3.4 90 90 3225 5690 2.8 1.6 PRINCE GEORGE 4.8 5.6 2.4 2.8 .82 .67 3.9 3.7 82 50 3359 8630 2.4 0.6 PRINCE RUPERT 4.6 5.0 2.4 2.5 .80 .70 3.6 3.5 85 30 3100 4300 2.'7 0.7 TRAIL 4.6 5.3 2.2 2.5 .72 .57 3.3 3.0 49 45 3353 3565 1.5 1.3 VERNON 4.8 5.2 2.4 2.6 .68 .57 3.2 3.0 48 45 3007 4185 1.6 1.1 METRO VANCOUVER . 5.0 5.2 2.4 2.4 .66 .58 3.3 3.0 6374 5875 228 ; 598 396,215 2.8 1.7 .METRO VICTORIA 5.0 5.2 2.3 2.4 .62 .•54 3.1 2.9 742 745 47,485 66,505 1.6 1.1 BRITISH COLUMBIA 4.9 5.2 2.4 2.5 .70 .61 3.4 3.2 10,617 10,400 459,554 668,300 2.3 1.6 URBAN 5.0 5.2 2.4 2.4 .67 .59 3.3 3.1 8,432 8,115 341,557 521,660 2.5 1.6 RURAL 4.7 5.2 •2.4 2.6 .79 .68 3.6 3.5 2,185 2,285 117,977 146,645 1.9 1.6 Sources: 11961, Census of Canada, 93 -524, Tables 20 , 22, 23, 25, 27 , 28, 30 , 32, 33. 21971, Census of Canada, 93 -729, Tables 9, 11, 12; 93-729, Tables 14, 16, 17; 93-730, Tables 20, 21, 22. 31971, Census of Canada, 93 -702, Table 12; 1961 , Census of Canada, 93-510, Table 2. A1971, Census of Canada, 93 -703, Tables 9, 10, 11. 519 61.; Census of Canada, 93 -511, Tables 8, 10, 11. to I—1 TABLE 42 POPULATION AND HOUSEHOLDS ~ BRITISH COLUMBIA 1961, 1966, 1971 A R E A DAWSON CREEK KAMLOOPS KELOWNA NANAIMO PENTICTON PORT ALBERNI PRINCE GEORGE PRINCE RUPERT T R A I L V E R N O N METRO VANCOUVER METRO VICTORIA B.C. Source: 1971 Census of Canada, 93-702, Vol. II, Part 1, Bulletin 21-2, May 1973, Table 1 ,5; 1966 Census of Canada, 93-603, Table 12, April 1968. 123 households have been smaller than r u r a l households. Of the c i t i e s surveyed, Kelowna, Nanaimo and Metropolitan V i c t o r i a had the smallest households, 2.9 persons (see table 41). As a r e s u l t of increases i n the size of dwelling units and reductions i n average household s i z e , there has been a marked reduction i n crowding (the average number of persons per room) within the housing stock. As a r e s u l t , there has been an improvement i n housing qua l i t y within the Province. Over the decade 19 61 to 1971, the average number of persons per room i n dwelling units f e l l from 0.7 0 to 0.61. Rural housing i s s t i l l more crowded than urban housing. Rural housing in 1971 had a higher average number of persons per room, 0.68, than urban housing had i n 1961, 0.67. Of the c i t i e s surveyed, Kelowna and Metropolitan V i c t o r i a had the lowest average number of persons per room, the least crowded conditions (see table 41). Crowding or overcrowding of housing i s an indicator of the adequacy and quality of the housing stock. In B r i t i s h Columbia, crowding of housing has been reduced. The number of two or more family households within the Province has dropped to 10,400 i n 1971, from 10,617 i n 19 61. Over the decade, P r o v i n c i a l popu-l a t i o n grew 34.1 percent while the number of households grew at an even higher rate, 45.4 percent. In r e l a t i o n to t h i s growth, the drop i n the number of two or more family households indicates a dramatic improvement i n the adequacy of the housing stock. In 1971, 1.6 percent of a l l households within the Province consisted of two or more families, as compared to 2.3 percent i n 1961. Over the decade, urban housing experienced the greatest reduction i n c r o w d i n g a s t h e p e r c e n t a g e o f h o u s e h o l d s w i t h two o r more f a m i l i e s d r o p p e d f r o m 2.5 t o 1.6 p e r c e n t . The q u a l i t y a nd a d e q u a c y o f t h e h o u s i n g s t o c k t h r o u g h o u t B r i t i s h C o l u m b i a h a s b e e n m a r k e d l y i m p r o v e d o v e r t h e d e c a d e , 1961 t o 1971. D w e l l i n g s a r e l a r g e r a n d l e s s c r o w d e d t h a n i n t h e p a s t . The i m p r o v e m e n t i n t h e h o u s i n g s t o c k o v e r t h e d e c a d e w o u l d i n d i c a t e t h a t t h e h o u s i n g i n d u s t r y h a s b e e n m e e t i n g t h e h o u s i n g n e e d s o f t h e P r o v i n c e . 125 CONCLUSION Canada i s amongst the best housed nations i n the world, both i n terms of quality and quantity of housing. By the standards of many countries we are fortunate. However, even though we are well housed, c r i e s of "housing c r i s i s " and "housing shortage" have been heard within Canada and the Province of B r i t i s h Columbia i n recent years. To many, a housing c r i s i s i s a shortage of housing units. 89 Economic shortages, as defined by Pennance and Gray, are r e l a t i v e to some l e v e l of costs and prices and r e f e r to situations of market imbalance where e f f e c t i v e demand exceeds supplies forthcoming at the p r e v a i l i n g p r i c e . It has been th i s economic shortage that has been of concern i n t h i s exami-nation of the housing stock and housing supply process i n B r i t i s h Columbia. If i t e x i s t s , demand i s greater than supply, and we are experiencing a "housing c r i s i s " . Housing Demand Over the period 1961 to 1974 B r i t i s h Columbia experienced high lev e l s of housing demand promoted by high l e v e l s of popu-l a t i o n growth, income growth and a number of governmental incentives. (I) Population Growth B r i t i s h Columbia experienced rapid population growth between 1961 and 1971, as population grew 34.1 percent from 1,629,082 to 89 Pennance, F., Gray, H., "Housing Shortage: Fact or F i c t i o n " , Building, The Builders Limited, London, March 17, 1967, page 104. 2,184,621 (see table 14). By 1973, population had grown to 90 approximately 2,315,000. Much of B r i t i s h Columbia's high rate of population growth can be attributed to the high levels of migration experienced by the Province. Between 1965 and 1970 net migration repre-9 sented 7 4.6 percent of the population growth for the Province. Migration has a dramatic e f f e c t upon the demand for housing within the Province as migrants increase the number of house-holds, both family and non-family, and require accommodation immediately upon a r r i v a l . Coupled with the a r r i v a l of the war babies onto the housing market, these factors have contributed to record high levels of housing demand. (2) Income Growth Income levels have r i s e n dramatically i n B r i t i s h Columbia i n recent years, as i l l u s t r a t e d by the r i s e i n average weekly wages and s a l a r i e s for B r i t i s h Columbia from $85.20 per week in 1961 to $178.22 i n 1973 (see table 21). Rising incomes and economic s t a b i l i t y have also contributed to high lev e l s of demand for housing accommodation. The long run trend of movement of population to urban areas from r u r a l areas, i n search of jobs, has meant that the younger migrants to the c i t i e s have to f i n d accommodation of t h e i r own at an e a r l i e r age than i f they had remained at home in r u r a l areas. Other factors increasing the demand for 90 Canadian Housing S t a t i s t i c s 1 9 7 3, C.M.H.C, Ottawa, March 1974, page 91. 91 Forecast ofi Population Giowth In British Columbia to the  yean 2000, Government of B r i t i s h Columbia, Dept. of Indus-t r i a l Development, Trade and Commerce, V i c t o r i a , 1971, page 127 h o u s i n g h a v e b e e n t h e d e c l i n e i n t h e a v e r a g e age f o r m a r r y i n g a n d a g r e a t e r i n c i d e n c e o f t h e y o u n g a n d t h e e l d e r l y d e s i r i n g a n d b e i n g a b l e t o a f f o r d t h e i r own a c c o m m o d a t i o n . (3) G o v e r n m e n t a l I n c e n t i v e s T r a d i t i o n a l l y i t h a s b e e n t h e d e s i r e o f p e o p l e t o s e c u r e s e l f - o w n e d a c c o m m o d a t i o n . Consumer p r e f e r e n c e s h a v e b e e n f u r t h e r i n f l u e n c e d b y a number o f g o v e r n m e n t a l i n c e n t i v e s . S e l f - o w n e d a c c o m m o d a t i o n has b e e n i n g r e a t demand b e c a u s e i t i s v i e w e d a s a g o o d i n v e s t m e n t , e s p e c i a l l y i n a n i n f l a t i o n a r y economy. A 1971 r e v i s i o n o f t h e Income Tax l a w s , p r o v i d i n g f o r t h e e x e m p t i n g o f o n e ' s p r i n c i p a l r e s i d e n c e f r o m c a p i t a l g a i n s t a x a t i o n , h a s s e r v e d t o f u r t h e r i n c r e a s e t h e demand f o r s e l f - o w n e d a c c o m m o d a t i o n . P o p u l a t i o n g r o w t h , i n c o m e g r o w t h , a n d g o v e r n m e n t a l i n c e n t i v e s h a v e c o m b i n e d t o c r e a t e r e c o r d h i g h l e v e l s o f demand f o r r e s i d e n t -i a l a c c o m m o d a t i o n . The e v a l u a t i o n o f t h e h o u s i n g s u p p l y p r o c e s s and t h e h o u s i n g s t o c k must be made w i t h t h e s e f a c t o r s i n m i n d . B r i t i s h C o l u m b i a H o u s i n g S u p p l y O v e r t h e d e c a d e 1961 t o 1971 t h e h o u s i n g s t o c k o f B r i t i s h C o l u m b i a grew 45.3 p e r c e n t f r o m 459,532 u n i t s i n 1961 t o 667,546 u n i t s i n 1 9 7 1 , f a r o u t p a c i n g P r o v i n c i a l p o p u l a t i o n g r o w t h o f 34.1 p e r c e n t d u r i n g t h e same p e r i o d . H i s t o r i c a l l y , a d d i t i o n s t o t h e h o u s i n g s t o c k i n any one y e a r a r e r a r e l y g r e a t e r t h a n 3 p e r c e n t , o r a p p r o x i m a t e l y 34.4 p e r c e n t o v e r a t e n y e a r p e r i o d . B r i t i s h C o l u m b i a h a s e x p e r i e n c e d much l a r g e r i n c r e a s e s i n h o u s i n g s t o c k i n r e c e n t y e a r s . New r e c o r d l e v e l s o f d w e l l i n g s t a r t s w e r e e x p e r i e n c e d i n B r i t i s h C o l u m b i a i n e a c h o f t h e y e a r s 128 1964, 1967, 1968, 1969, 1971, 1972 and 1973. Residential con-struction starts were at record l e v e l s u n t i l the downturn i n the world and P r o v i n c i a l economies i n 1974 reduced the l e v e l of r e s i d e n t i a l construction a c t i v i t y . -Between 1961 and 1971 the stock of housing i n B r i t i s h Columbia grew 45.3 percent, the number of households increased 45.4 percent, and the average household size declined from 3.4 to 3.2 persons per household. The Province has experienced high lev e l s of population growth, but household formation and housing construction has, u n t i l recent downturns i n the economy, outpaced population growth. The record of the housing industry has been a good one. Housing c h a r a c t e r i s t i c s within the Province improved tremendously over the decade 1961-1971, as recorded by the 1971 Census of Canada. The average dwelling unit i n the Province increased i n size from 4.9 to 5.2 rooms. The number of two family households within rthe Province has also decreased. Over the period 1961-1971 the housing supply process functioned well (see table 41). Housing construction was at record lev e l s for dwelling starts i n 1971, 1972 and 1973 (see table 1). In 1974, the l e v e l of housing construction f e l l i n response to the downturn and tightening of the world and P r o v i n c i a l economies. In l i g h t of the improving conditions of the P r o v i n c i a l housing stock, i t would appear that, i n aggregate, the housing supply process, u n t i l recent economic downturns, has been functioning adequately and has been keeping pace with population growth and housing demand throughout the Province. 129 Construction A c t i v i t y by Structural Type Dwelling u n i t construction starts have been at record lev e l s within B r i t i s h Columbia i n recent years. Contributing to these high levels of house construction have been large increases i n the construction of single-detached dwelling units?„ The construction of single-detached units more than doubled between 1966 and 1973 as the l e v e l of s t a r t s rose from 9,664 i n 1966 to 21,313 units i n 1973 (see table 1). The construction of single-detached units increased i n number i n each successive year from 1968 to 1973. If there i s a shortage of dwelling units i t has not been caused by a shortage of con-struction of single-detached units. In fact, recent increases in the number of newly completed and unoccupied dwelling units and the long time period required to s e l l e x i s t i n g dwelling units, offered i n the market, would indicate that an oversupply of single-detached units exists within the Province (see table 38). The construction of semi-detached dwelling units has also been at r e l a t i v e l y high levels within recent years. The con-struction of semi-detached dwelling units has increased from low lev e l s i n the early 19 60's. Semi-detached unit s t a r t s jumped to 1,126 units i n 1968 from 826 units i n 1967. Semi-detached unit starts remained at or near the 120 0 unit l e v e l u n t i l 1972, when the l e v e l of s t a r t s declined s l i g h t l y to 818 in 1972 and then rose again to 901 i n 1973. With the introduction of the Strata T i t l e s Act, the con-struction of row housing increased from 562 unit starts i n 1968 to 1,325 units i n 1969. The construction of row housing 130 increased i n each year from 1970 to 1972. In 1972 a record 2,362 row housing units were started within the Province. In 1973 the number of row housing unitr.starts declined s l i g h t l y to 1,501 units, but remained far above construction l e v e l s of the early 1960's (see table 1). Apartment construction i n B r i t i s h Columbia reached i t s peak i n 1969 as 16,084 apartment units were started, representing 50.5 percent of a l l construction starts within the Province during the year. Since 19 69, however, the construction of apartment units has f a l l e n . In 1973, apartment s t a r t s were down 13.5 percent from the 1969 l e v e l to only 13,912 units, 36.9 percent of a l l dwelling starts i n 1973, (see table 1). The drop i n apartment starts has been even more pronounced i n Metropolitan Vancouver. Apartment starts f e l l 37 percent from 11,945 i n 1969, 67.5 percent of a l l s t a r t s , to only 7,281 in 1973, 40 percent of t o t a l starts within the Metropolitan area 92 during the year. The drop i n apartment construction, both i n terms of number of units and as a proportion of a l l housing s t a r t s , i s evident from the above figures. The reduction i n the a v a i l a b i l i t y or market supply of new r e n t a l accommodation i s , however, even more pronounced than construction figures would indicate, as a large proportion of the apartment and multiple-dwelling units that have recently been constructed have not been for the rental section of the market but for condominium ownership. 92 Canadian Housing S t a t i s t i c s , C.M.H.C, Ottawa 1974, Table_12. 131 Condominium units are included with rental units i n con-struction s t a t i s t i c s for row housing and apartment s t a r t s . As a r e s u l t , the number of rental unit starts i s overstated. When condominium unit starts are isola t e d through an examination of condominium re g i s t r a t i o n s i n Metropolitan Vancouver, the a f f e c t of condominium starts on the a v a i l a b i l i t y of newly constructed rental accommodation can be seen. Between 196 8 and 1973 con-dominum construction i n Metropolitan Vancouver, as a percentage of t o t a l housing s t a r t s , increased from 0.7 percent i n 19 68 to 21.5 percent in 1973. During the same period the number of row and apartment units, t r a d i t i o n a l l y r e n t a l , as a percentage of a l l s tarts i n Metropolitan Vancouver, f e l l from 64.0 percent i n 1968 and 71.0 percent i n 1970 to 47.5 percent i n 1973 (see table 4). The number of self-owned condominium unit s t a r t s has increased, while the number of row and apartment unit starts has decreased. As a r e s u l t , the a v a i l a b i l i t y of rental units has f a l l e n because the condominiums' share of a l l apartment and row unit s t a r t s , i n each year, has increased., (see table 40). The reductions i n rental apartment starts i n recent years, coupled with the extremely low vacancy rates experienced i n pri v a t e l y i n i t i a t e d rental apartments (0.2 percent i n Metropoli-tan Vancouver i n June 1974) (see table 2) , would indicate that the r e n t a l sector of the B r i t i s h Columbia housing market i s the only sectorr.of the housing market suffering from a shortage of supply. Vacancy represents a market supply of rent a l units that i s immediately available for occupancy. Vacancy represents slack 132 in housing supply which can absorb random s h i f t s in demand. It i s f e l t that some f r i c t i o n a l vacancy i s required in the housing market at a l l times to allow households to change locations or 93 upgrade t h e i r housing without great d i f f i c u l t y . To many, the low vacancy rates experienced within the metropolitan areas of B r i t i s h Columbia are too low and, as a r e s u l t , represent a shortage of rental units. To others, vacant units seem to be s o c i a l l y wasteful as the creation of housing units i s an expensive process. Nonetheless, the construction and vacancy, and hence a v a i l a b i l i t y , of re n t a l apartment units has been reduced within recent years. The re n t a l sector i s the only sector of the B r i t i s h Columbia housing market that appears to be suffering a shortage of supply. Causes of the Shortage The shortage of re n t a l apartment units within the Province can be attributed to a number of causes: (1) C i t i z e n Opposition (2) Changes in Income Tax Leg i s l a t i o n (3) Rent Control (4) Condominium Construction (1) C i t i z e n Opposition The construction of apartments i s opposed by many c i t i z e n ' s groups within the Province. They obg.ect to the higher densities associated with apartment developments and the changes that they 93 Smith, W. F. , Housing: The Social and Economic Elements, University of C a l i f o r n i a Press, Berkeley, 1970, page 175. 133 f e e l apartment projects impose upon the character of a neigh-bourhood . Opposition to apartment construction has resulted i n the down-zoning of many areas within Metropolitan Vancouver. This has r e s t r i c t e d the quantities of land available for apartment construction and the lower densities have reduced the poten t i a l number of apartments that could be b u i l t within properly zoned areas. (2) Income Tax L e g i s l a t i o n P r i o r to the 1969 Federal White Paper on Taxation, tax write-offs against personal income were provided for private investors i n r e s i d e n t i a l property. This provision of the Income Tax Act prompted the construction of many small speculative wood frame apartments by private investors from the ranks of upper middle income professionals and those i n managerial occupations with high income l e v e l s . Their investment i n ren t a l property was often less concerned with the current income generated by the apartment than with the tax shelter than an investment i n an apartment provided. In 1970, L. B. Smith, i n a review of the White Paper's proposals, pointed out that the proposals to tax, i n f u l l , the gains on the sale of ren t a l r e a l estate, to eliminate the o f f -set of r e a l estate losses against other income, and to create a separate depreciation category for each building over $50,000, would i n i t i a l l y depress r e n t a l r e a l estate values and ultimately 94 reduce the stock of rental r e a l estate. 94 Smith, L. B. "Effects of the White Paper on Demand for and Price of Real Estate", RzpoH.t 1970 ConAeJiznce., Canadian Tax Foundation, 1970, pages 376-382. 134 With the elimination of the tax write-off provision, a f t e r the 1969 White Paper on Taxation, the construction of small speculative wood frame apartments was greatly reduced, as was the market supply of rental apartment units. In 1974, as a r e s u l t of the reduced l e v e l of speculative apartment construction and the low vacancy rates throughout the Country, the tax write-off provision was reinstated i n an attempt to again stimulate apartment construction. (3) Rent Control Rent control was imposed within B r i t i s h Columbia i n 1974 under The Residential Premises Interim Rent S t a b i l i z a t i o n Act, which limited rent increases, for a l l r e n t a l dwelling units, to 8 percent i n 1974. The rent control was i n i t i a l l y imposed only as a temporary measure to prevent rapid escalations i n rent lev e l s during a time of low vacancy rates. The objective being, that rent increases would be controlled u n t i l s u f f i c i e n t market supplies of r e n t a l apartment units could be generated, so as to s t a b i l i z e p r i c e s . However, rent control, of whatever form, outright freezes or l i m i t e d escalations, discourages the con-struction of p r i v a t e l y i n i t i a t e d rental units, as investors fear reduced or controlled investment return. Rent control discourages construction, the very thing that i s needed to reduce the pressure for increased rent l e v e l s . Rent control promotes further shortages of p r i v a t e l y i n i t i a t e d r e n t a l accommodation as new investments and construction of apartments i s eliminated. Rent control helps to perpetuate a shortage of rental housing. When demand for r e n t a l accommodation increases and con-135 sumers are w i l l i n g to pay more than before, rent control does not allow the market price (rent) to r i s e to i t s f u l l extent and perform i t s price rationing function. As a r e s u l t of the r e s t r i c t e d rent l e v e l s , conditions of excess demand for ren t a l accommodation and, hence, a housing shortage w i l l be created, as consumers demand more r e n t a l units than suppliers are w i l l i n g to put on the market. This i s occurring within B r i t i s h Columbia at the present time. Renters f a r outnumber landlords. Even though landlords have claimed that rent increases are required to provide a s u f f i c i e n t return on e x i s t i n g investments and to encourage new apartment construction, p o l i t i c i a n s are conscious of the number of votes that tenants represent and are, therefore, prone to l i s t e n to t h e i r protests over increasing rents. To the p o l i t i -cian, the l i m i t i n g of rent increases through rent control i s an a t t r a c t i v e and p o l i t i c a l l y convenient way to quieten the protests of tenants and hold housing costs down to a l e v e l the consumer thinks he can afford. Rent control appears a t t r a c t i v e in the short run but, i n the long run, the f u l l impact of rent control i s f e l t . I t worsens conditions within the ren t a l housing market. I t eliminates the needed construction of p r i v a t e l y i n i t i a t e d r e n t a l units that would, i f b u i l t , a i d i n reducing the market shortage of ren t a l apartment units . The r e v i s i o n of the Landlord and Tenant Act of B r i t i s h Columbia, i n 1974, provided for continued rent control through the l i m i t i n g of rent increases to a maximum annual percentage as determined by the P r o v i n c i a l Cabinet. In 1975 rent increases 136 were limited to a maximum of 10.6 percent. This has further discouraged the construction of p r i v a t e l y i n i t i a t e d r e n t a l accommodation and has furthered the market shortage of re n t a l accommodation. Even i f new construction was exempt from rent control, i n attempts to stimulate new apartment construction, no new con-struction would be i n i t i a t e d , as investors would fear that rent controls could be extended, at any time, to cover t h e i r property and r e s t r i c t t h e i r rent l e v e l s and rent increases. Rent control i s a t t r a c t i v e to those tenants already i n possession of rental units, for they receive the benefit of rents lower than would otherwise e x i s t i n a free market. Those not renting accommodation but searching for r e n t a l units, w i l l f i n d themselves l i t e r a l l y out i n the cold. With r e n t a l con-struction halted by investors' fear of rent c o n t r o l , those searching for rental accommodation w i l l f i n d few vacant apart-ment units i n the market. Rent control has controlled rent levels but at the cost of continued low vacancy l e v e l s . There w i l l be no new construction of p r i v a t e l y - i n i t i a t e d r e n t a l apart-ments and no vacant apartments u n t i l rent control i s removed. How long w i l l i t be u n t i l the Government and the public r e a l i z e that rent control only makes matters worse? (4) Condominium Construction Condominium units are almost i d e n t i c a l to apartment units. As a r e s u l t , construction firms can e a s i l y switch from the con-struction of re n t a l apartments to condominium dwelling units. In many cases, the end products of apartment and condominium 137 construction are i d e n t i c a l i n a l l respects but t h e i r form of tenure. The increased demand for self-owned accommodation prompted by r i s i n g incomes; the tax free c a p i t a l gains potential of self-owned accommodation; the enactment of the Strata T i t l e s Act; and the lowering of returns on investments i n p r i v a t e l y - i n i t i a t e d r e n t a l apartments, due to sluggish rent increases, even before rent control, have a l l combined to promote a dramatic r i s e i n the construction of condominium units. This r i s e has corresponded to a reduction i n the construction of rental apartment units (see tables 4 and 5) and has resulted i n a marked reduction i n the a v a i l a b i l i t y of new r e n t a l units. The conversion of e x i s t i n g rental apartment units to self-owned condominium units, under the Strata T i t l e s Act, has also contributed to a reduction i n the a v a i l a b i l i t y of r e n t a l housing units. Conversions were promoted i n recent years by the bouyant market for self-owned accommodation.and the sluggish returns received from apartment investment. Consumers w i l l pay more per month to buy a unit than they w i l l pay to rent the same unit. This market dichotomy stems from the perception that owning i s better than renting, even though i t may cost more. This preference towards owning has caused consumer resistance to higher rents i n rental apartments. This has contributed to making investment i n rental apartments unattractive, while, at the same time, making investment i n readily marketable condomin-ium units a t t r a c t i v e . C i t i z e n opposition, changes i n income tax l e g i s l a t i o n , landlord-tenant c o n f l i c t s , low rents, and rent control have a l l contributed to making the construction of p r i v a t e l y - i n i t i a t e d rental apartment units an unattractive investment. As a r e s u l t the construction of r e n t a l apartment units, within the Province has f a l l e n within recent years and t h i s has contributed to the shortage of rental accommodation that presently e x i s t s . Aside from the r e n t a l sector of the housing market, the housing supply process appears to have been functioning well over the periods 1961 to 1971 and 1971 to 1973. The aggregate l e v e l of dwelling unit construction s t a r t s , within the Province has been at record l e v e l s within recent years (see table 1). Construction a c t i v i t y declined i n 1974, however, not as a r e s u l t of a breakdown i n the housing supply process but as a r e s u l t of the tightening of the P r o v i n c i a l , National and World economies. Periods of recession and downturns i n economic growth occurred during the years 1957-1958, 1960-1961, and 1969-1970. In each period the l e v e l of construction s t a r t s f e l l only temporarily and, i n each case, housing construction a c t i v i t y recovered. The housing construction industry i s affected by the swings i n the economy. The declines i n housing construction experienced within B r i t i s h Columbia i n 1974 and 1975 are a r e s u l t of the tightening of the P r o v i n c i a l economy. With an upturn i n the P r o v i n c i a l economy, the l e v e l of construc-t i o n a c t i v i t y and the housing supply s i t u a t i o n should improve. The housing industry i s not immune to the economic fluctuations that a f f e c t a l l other sectors of the economy. The Future It has been said that, "The adequacy of the housing market 139 i s judged by i t s a b i l i t y to respond to the demands made on i t , that i s , by the degree to which i t i s able to provide i n d i v i d -uals and families with the type of housing they seek, at a cost 95 they can afford to pay". However, i f the demands being made are u n r e a l i s t i c , i s t h i s a true test of the market's adequacy? Self ownership has always been beyond the reach of many households and in d i v i d u a l s . Low income families and families on fixed incomes cannot, or w i l l not, be able to afford housing, but this i s a problem of income d i s t r i b u t i o n . The housing market should not be judged as inadequate when individuals and families are unable to afford housing. The ownership of a single-detached dwelling unit has h i s t o r i c a l l y been, and continues to be, the aspiration of the majority of Canadians. However, the days of the single-detached dwelling, as the dominant form of housing i n Canadian urban areas, are numbered. With the increasing cost of con-struction, the r e s t r i c t e d supply of land, and the high cost of land, a single-detached unit has become too expensive to be considered the type of house for every Canadian household. In order to provide an adequate supply of housing accommo-dation within B r i t i s h Columbia, we must re-evaluate the standard of housing we desire. We must change our conception of the i d e a l housing structure; the single detached dwelling i s no longer practicable for a l l . We must accept more modest housing. We must also encourage housing development. Over the past 95 Working Vapzfti, : Volume. I, (b) "Housing Supply", Advisory Task Force on Housing Policy, Province of Ontario, June 1973, page 1. FIGURE 3 t j j ] ' It's stillpossible,even aroundMetro Toronto, New houses don't need to cost as much as they do. You probably agree. Chances are, though, you don't know what can be done to bring the cost down to where more people can afford them. The problem is that government regulations force developers to build "Buick-type" housing, but most peo-ple don't have that kind of income. So there's no way they can afford them. With different bylaws, devel-opers could build quality homes that people on smaller incomes could easily afford. How could we do it? For a start, lot sizes could be reduced. At today's land prices, 50-to 60-foot-wide lots cost too much. Not long ago. people happily bought homes on lots hall" that size. They could again, and they'd save a lot of money. But first, the bylaws would have to be changed. Then there's the cost of ser-vicing. Today's subdivisions require 'wide,"paved streets and sidewalks, underground phone and hydro wiring, and huge sewers capable of handling storm conditions that'll happen once in a blue moon—if ever. That's ex-pensive. But not long ago, people happily bought new homes with the minimum of necessary services, and then later on—when they could better afford ii —paid through their municipal taxes to have them upgraded. That way. the .whole cost wasn't lumped onto the purchase price of the homes. They could again, but first the by-laws would have to be changed. Then there's the house itself. Without sacrificing quality, costs could be cut sharply by lowering the requirements. Does everybody need three bedrooms, or 2V-> bathrooms, or a garage? They're nice, but they cost a lot of extra money. If people want houses they can afford, they should be asking their municipal gov-ernments to stop forcing developers to build houses that are bigger than they can afford. Put them all together, and you've got yourself a fine new home for S40.000, even around Metropolitan Toronto—or in oth*r areas for a good deal less. There are a lot of other ways housing costs could be lowered: speed up the installation of trunk sewer and water services to put more serviceable land on the market and stabilize lot prices; cut government red tape to speed the planning pro-cess: stop municipalities from charg-ing exhorbitant levies on new devel-opment, which just add to house prices; don't let selfish ratepayers' groups stop badly needed new hous-ing in the name of "controlling growth" and "protecting neighbor-hoods", which causes shortages and pushes up the price of the older re-sale homes that should be an impor-tant source of cheaper housing. It could be done. Today. And a lot of people who've given up hope of ever owning their own homes could be back in the ballgame tomorrow. But first, the regulations have got to be changed. That, means the anti-development municipal councils will have to stop paying lip-service to the need for housing. They'll have to stop "studying" everything to death and start doing something. They'll have to stop playing games with de-velopment and enacting more and more restrictive legislation, which only pushes costs higher. It means those politicians who advocate so-called "non-profit" hous-ing will have to be honest with the public about the real cost. The "low" prjee comes from costs being borne by government departments, and from government grants. It'snot"low cost" housing at all — it's more expen-sive than private housing. But the price is subsidized through your tuxes. The plain truth is that because private devefopers are competitive, they are more efficient. So they can build for the same cost as "non-profit" organizations and still make a reasonable profit. The proof of that is world-wide. Our governments—at all levels —are going to have to accept the fact that the only realistic way to keep prices down, is to do everything they can to make it easier for the private development industry to build gen-uinely cheaper homes. The Urban Development Insti-tute includes Ontario's major build-ers and managers of for sale and rental homes. We want to be able to provide you with a place to live. At a price you can reasonably afford. A n d we can do it. We could be building $40,000 (or cheaper.) homes right now. The trouble is, the government rules won't let us. The Urban Development Institute Suite 601,15 Gervais Drive, Don Mills,Ontario S o u r c e : The. Tononto Stan, Wednesday, A p r i l 30, 197 5, page A6. 141 decade many municipalities within the Province have increased the standard of services and amenities that must be provided by any developer of r e s i d e n t i a l property. These standards have added to the cost of accommodation. If we want lower priced housing we may have to accept lower standards. Many mu n i c i p a l i t i e s , prompted by t h e i r concern over the high cost of providing services, have also adopted "no growth" philosophies and have discouraged new r e s i d e n t i a l development. These measures have served to protect the interests of those already i n possession of accommodation and make the provision of an adequate supply of housing that much more d i f f i c u l t . It appears that there are c o n f l i c t i n g objectives surround-ing the provision of housing units. The desire to b u i l d more housing units to increase the housing supply i s l i m i t e d by the standards that must be met and the opposition to new development and higher densities. • What i s needed i s a commitment to encourage development. The senior levels of government might provide the funds to l o c a l authorities for needed infastructure i n order to overcome municipalities objections and thereby stimulate development. Rent control should be eliminated to again allow the market price a l l o c a t i o n mechanism to rat i o n the supply of rental accommodation and encourage private investment i n rental apartment units, i n order to eliminate the shortage of rental accommodation. The senior levels of government should also provide 142 assistance i n the form of either income subsidies or public housing to help insure proper housing for the e l d e r l y and those on limited or fixed incomes who would otherwise be unable to afford adequate housing. The housing supply process has been functioning well i n the recent past, but there i s always room for improvement. 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S t a t i s t i c s Canada, Housing: Period of Construction and Length  of Occupancy, 1971 Census of Canada, 93-731, Ottawa, November, 1 rv *7 -> 148 S t a t i s t i c s Canada, Housing: Values and Rents, 1971 Census of Canada, 93-732, Ottawa, December 1973. Sternlieb, G., et a l , Housing Development and Municipal Costs, Center for Urban Policy Research, Rutgers University, New Jersey, 1973. Symonds, H., editor, The Question of Housing, Department of Extension and The School of Community and Regional Planning, University of B r i t i s h Columbia, Vancouver, March, 1967. Turvey, R. , The Economics of Real Vn.opeh.ty, T. A. Constable Ltd., Edinburgh, 195 7. Wheeler, M., The Right to Housing, Harvest House, Montreal, 1969. White, P., Mao, J.C.T., Ghert, B.I., "Fluctuations i n the Turnover of Single Family Houses", an unpublished paper, Faculty of Commerce, University of B r i t i s h Columbia, 1966. Wood, R., "Housing Needs and the Housing Market", Housing, Social Security and Vublic Works, Board of Governors of the Federal Reserve System, Postivar Economic Series, No. 6, June, 1946. Working Vapens •• Volume 7, Advisory Task Force on Housing Policy, Province of Ontario, June, 1973. Young, G. A., The Municipal Subdivision Approval Vrocess in  Metropolitan Vancouver, an unpublished M.Sc. thesis, University of B r i t i s h Columbia, 1974. 149 APPENDIX TABLE 4 3 DAWSON CREEK HOUSING CONSTRUCTION YEAR SINGLE DETACHED SEMI DETACHED ROW APT. & OTHER TOTAL S "c U/C S C U/C S C U/C S C U/C S C U/C 1973 19 21 16 — — — 19 21 16 1972 38 29 18 — — — — — — — — — 38 29 18 1971 12 7 9 — 18 — — 32 — 12 57 9 1970 10 .7 9 26 —. 18 20 . — 32 56 7 59 1969 14 21 5 — 6 — • 4 4 18 27 . 9 1968 16 19 12 10 6 6 — 18 26 43 18 1967 29 32 15 2 — 2 32 32 -- 18 — 18 81 64 35 1966 18 19 17 4 2 2 22 21 19 1965 33 37 19 — 2 — — — — 18 — 33 57 19 1964 70 84 23 2 — 2 — — 18 . 4 18 90 88 43 1963 87 101 40 — 2 — — — 4 17 4 11 120 44 S = Started C = Completed U/C = Under Construction Source: Regional Economist, CMHC TABLE 44 KAMLOOPS HOUSING CONSTRUCTION YEAR SINGLE DETACHED SEMI DETACHED ROW APT. & OTHER TOTAL S C U/C S C U/C S C U/C S C U/C S C U/C 1973 659 775 185 50 58 14 10 — — . 244 530 182 963 1363 281 1972 675 650 253 42 42 22 617 527 458 1334 1219 733 1971 242 226 110 26 8 18 503 173 368 771 407 496 1970 183 130 97 6 14 — • — . — . — 59 43 38 249 187 135 1969 149 141 52 16 8 10 66 44 22 234 193 84 1968 133 145 40 2 16 2 135 161 42 1967 141 163 44 16 26 12 — 18 — 35 180 192 387 56 1966 155 213 60 40 46 20 18 — 18 12 130 145 225 389 243 1965 212 192 114 34 30 22 32 32 — 331 313 . 172 .  609 567 308 1964 170 158 88 36 20 18 — • — 241 157 154 445 335 260 1963 144 142 78 16 18 2 28 20 28 94 61 42 282 231 150 1972 figures for Kamloops Census agglomeration 1971 figures for Kamloops City; Valleyview, Brocklehurst, Dufferin, Westside not included. Source: Regional Economist, CMHC S = Started . 1973 _ C = Completed . 1963 -U/C = Under Construction TABLE 45 KELOWNA HOUSING CONSTRUCTION SINGLE DETACHED SEMI DETACHED ROW APT. & OTHER TOTAL YEAR U/C U/C U/C U/C U/C 1973 1972 1971 1970 1969 1968 1967 1966 1965 1964 1963 993 917 70 61 106 130 208 151 164 121 92 1118 845 72 69 110 187 146 151 ,153 98 96 463 576 20 23 30 33 80 69 76 69 45 100 118 78 122 12 10 10 8 12 10 2 15 28 26 32 40 28 46 48 26 30 30 34 46 2 . 4 2 18 16 22 36 11 41 111 26 21 71 73 4 8 26 21 28 101 26 21 114 371 — 1243 1678 525 380 268 273 1486 1308 996 227 212 119 :309 294 141 129 70 104 205 151 131 77 89 45 195 217 77 120 113 57 260 315 98 129 79 .50 365 301 118 — 46 — 183 269 85 18 115 — 236 314 124 154 89 97 232 234 202 96 62 46 239 188 123 S = Started . ' ' C = Conipleted U/C = Under Construction 1973, 1972 figures for Census agglomeration 1961 - 19 71 figures for Kelowna City. Source: Regional Economist, CMHC TABLE 4 6 NANAIMO CITY HOUSING CONSTRUCTION YEAR SINGLE DETACHED SE MI DETACHED . ROW APT. & OTHER - TOTAL . S C U/C S C U/C S C U/C S C U/C S C U/C 1973 449 250 421 42 14 46 10 — 10 179 220 135 680 484 612 1972 339 343 228 22 32 18 16 42 — 286 200 180 663 617 426 1971 6 9 4 6 2 6 96 20 76 108 31 86 1970 12 14 6 5 13 2 8 8 — — 11 • — 26 47 8 1969 20 22 9 14 10 8 23 12 11 57 44 28 1968 24 25 11 6 2 4 56 — 30 83 15 1967 21 21 11 4 4 4 139 100 57 164 125 68 1966 23 35 62 4 6 — — — — 29 15 17 56 56 29 1965 44 37 25 4 2 2 60 147 3 108 186 30 1964 29 25 18 24 24 — . — — — 109 136 90 162 185 108 1963 37 40 14 134 24 117 171 64 131 S = Started C =. Completed U/C = Under Construction 1973, 1972 figures for Census agglomeration: Nanaimo City 1963 - 1971 figures for Nanaimo City Source: Regional Economist, CMHC en TABLE 47 PENTICTON CITY HOUSING CONSTRUCTION YEAR SINGLE DETACHED SEMI DETACHED ROW APT. & OTHER TOTAL S C U/C S C U/C S C U/C S C U/C S C U/C 1973 145 86 87 26 14 14 294 73 277 465 184 378 1972 88 79 39 6 6 2 3 3 — 130 74 56 227 162 97 1971 73 48 35 8 6 2 3 3 — ' 11 84 68 37 1970 60 95 12 — — 2 — 12 — 11 63 11 71 166 25 1969 134 140 48 14 14 2 12 — 12 122 75 59 283 229 121 1968 136 130 51 6 4 2 46 58 12 188 192 65 1967 104 43 46 4 2 3 34 14 24 142 109 74 1966 '70 94 44 4 — 56 52 . 5 126 150 38 1965 109 110 55 2 2 2 12 8 4 25 87 1 148 177 62 1964 111 91 60 2 2 2 44 44 . — 91 73 33 248 210 95 1963 81 67 42 2 — 2 14 — 15 97 67 59 S = Started C = Completed U/C = Under Construction Source: Regional Economist, CMHC TABLE 48 PORT ALBERNI HOUSING CONSTRUCTION YEAR SINGLE DETACHED SEMI DETACHED . ROW APT. & OTHER TOTAL S C U/C S C . U/C S C U/C S C U/C . S C U/C 1973 152 114 115 10 14 6 23 — 23 16 4 18 201 132 162 1972 139 143 78 10 6 10 4 66 6 153 215 94 1971 86 76 60 8 8 6 24 — — 4 68 94 112 134 1970 65 62 51 4 4 4 — --• 24 62 9 72 133 74 151 1969 68 75 50 2 2 2 10 10 24 20 12 19 100 99 95 1968 81 82 58 !0 12 2 24 8 24 11 4 11 126 106 95 1967 39 67 71 4 — 4 12 — : 12 4 — 4 79 67 91 1966 48 .51 38 2 — 60 152 — 108 208 38 1965 43 54 45 2 4 2 40 — 40 67 65 52 152 123 139 1964 51 64 56 2 4 4 — — 82 22 50 141 90 •110 ' 1963 51 69 62 -2 2 4 — — — — 3 3 53 74 69' r S = Started November 1967 Port Alberni and Alberni amalgamated Pre 1967 figures Port C = Completed Figures 1973, 1972 Census agglomeration Port Alberni Alberni does not' in-U/C = Under Construction S o u r c e. R e g i o n a l E C O N O M I S T > C M H C elude Alberni figures. TABLE 4 9 PRINCE GEORGE HOUSING CONSTRUCTION YEAR SINGLE DETACHED SEMI DETACHED •: ROW APT. & OTHER TOTAL S C U/C S C U/C S C U/C S C U/C S C U/C 1973 1204 1190 422 46 54 11 — 49 7 524 326 344 1774 1614 784 1972 1082 903 409 46 47 19 46 34 51 247 157 146 1421 1141 625 1971 326 300 124 33 49 16 55 102 39 82 26 56 496 477 235 1970 195 141 110 40 24 39 77 77 — 4 • — 316 74 219 1969 201 219 69 28 34 16 18 18 • — ' 4 37 4 251 308 89 1968 188 202 92 64 82 * 20 98 61 37 350 345 149 1967 304 409 106 72 120 38 — . 55 — 376 1044 144 1966 402 420 203 132 114 87 239 — 467 230 419. 1001 1002 709 1965 392 292 197 134 114 66 462 231 239 239 72 167 1177 709 669 1964 270 185 152 ' 86 72 46 18 11 8 . — : 67 — . 369 335 206 1963 167 145 67 44 20 34 29 23 6 160 93 67 400 281 174 1973, 1972 figures for Prince George Census agglomeration S = Started 1963 - 1971 figures for Prince George City. C = Completed U/C = Under Construction S o u r c e . R e g i o n a l E c o n o m i s t , CMHC TABLE 50 PRINCE RUPERT HOUSING CONSTRUCTION SINGLE DETACHED SEMI DETACHED ROW APT. & OTHER TOTAL YEAR S C U/C S C U/C s: C U/C S C U/C S C U/C 1973 60 61 15 32 22 15 92 83 30 1972 55 49 16 18 14 5 7'3 63 21 1971 29 18 9 10 12 2 39 30 11 1970 8 8 9 10 14 6 — 40 — 70 — 18 132 15 1969 14 . 24 9 12 12 10 40 40 70 — 70 136 36 129 1968 23 30 20 8 18 10 38 — — 96 — 31 182 30 1967 20 15 28 — — 20 48 10 38 ' — . 140 96 68 165 182 1966 49 192 27 . 4 8 16 4 4 216 — 236 273 204 279 1965 164 61 133 14 2 16 174 63 149 1964 43 60 33 12 18 4 55 78 37 1963 64 40 '53 14 22 10 70 94 -- 148 156 63 S = C = Started Completed 1973, 1963 1972 figures for Prince Rupert - 1971 for Prince Rupert City. Census agglomeration U/C = Under Construction g o u r c e . R e g i o n a l E c o n o m i s t ) Q I H C TABLE 51 TRAIL CITY HOUSING CONSTRUCTION SINGLE DETACHED SEMI DETACHED ROW APT. & OTHER TOTAL YEAR U/C U/C U/C U/C U/C 1973 1 4 1 1972 16 23 4 1971 3 6 3 1970 6 4 6 1969 4 — 4 1968 8 15 — 1967 13 14 7 1966 13 14 8 1965 41 45 9 1964 28 29 13 1963 22 21 14 45 45 30 — 30 — 30 14 44 — 30 — 30 1 4 1 61 68 4 3 6 3 6 4 6 4 — 4 8 45 • — 43 14 37 13 14 8 41 45 9 42 73 13 52 21 44 S - Started 1 9 7 3 j 1 9 7 2 figures for T r a i l Census agglomeration C - Completed 1 9 6 3 _ 1 9 7 1 f i g u r e s T r a i l C l t y > U/C = Under Construction c  Source: Regional Economist, CMHC TABLE 52 METRO VANCOUVER HOUSING CONSTRUCTION YEAR SINGLE DETACHED . SEMI DETACHED ROW APT. & OTHER TOTAL S C U/C S C U/C S C U/C S C U/C S C U/C 1973 8729 8171 3898 370 351 209 954 1479 1192 7281 5579 9325 17334 15580 14620 1972 7311 7077 3462 368 374 202 L635 725 1687 6896 5869 8112 16210 14044 1346:i 1971 5283 4822 2573 391 392 186 L057 1013 886 8822 8757 7043 15553 14984 10690 1970 4482 3919 2155 350 380 182 839 595 835 2766 8594 7678 13437 13488 10850 1969 4763 4927 1625 402 376 214 580 370 501 11945 8574 8864 17690 14247 1120 , 1968 5146 6010 1801 512 468 182 311 255 339 9721 8189 5758 15690 14922 8Q8Q . 1967 5980 5097 2677 348 262 . 126 208 137 283 7360 5819 4254 13896 11315 7370 1966 4327 4608 1804 138 186 42 4299 7336 2709 . 8759 12134 4931 1965 3927 3708 2108 168 108 106 3 25 — 7586 6899 6081 11689 10240 8483 1964 4133 3581 1923 86 66 50 96 74 22 8476 5419 5968 12791 9740 7954 1963 3788 3505 1424 86 100 30 — 201 — 5067 4064 3269 8941 7870 4723 S = S t a r t e d C = Completed U/c = Under C o n s t r u c t i o n Source: Regional Economist, CMHC T A B L E ; 5 3 VERNON CITY HOUSING CONSTRUCTION YEAR SINGLE DETACHED SEMI DETACHED ROW APT. & OTHER TOTAL S C U/C S ' C U/C S C U/C S C U/C S C U/C 19 73 236 223 , 95 10 10 4 4 — 4 275 207 151 525 440 254 1972 215 159 83 10 4 10 20 35 — 81 40 81 326 238 174 1971 88 105 30 18 16 4 23 8 15 51 41 40 180 170 89 1970 121 123 48 10 10 — 12 8 22 63 22 166 196 78 1969 88 56 50 14 18 18 • 18 — 104 24 84 224 116 134 1968 58 78 17 20 22 4 — — — 4 39 4 . 82 139 25 1967 103 96 38 8 6 6 43 4 39 154 106 83 1966 83 83 28 10 • 14', 4 — 12 — — 4 — 93 113 32 1965 67 64 29 4 16 4 12 — 12 69 . 13 4 152 153 49 1964 69 67 26 12 2 14 — 9 — — 25 8 76 63 48 1963 59 52 31 6 — 9 33 — 33 98 52 75 r S = Started C = Completed U/C = Under Construction . . . Source: Regional Economist, CMHC TABLE 54 METRO VICTORIA HOUSING CONSTRUCTION YEAR SINGLE DETACHED SEMI DETACHED ROW APT. & OTHER TOTAL S C U/C S • C U/C •s c U/C S C U/C . S C U/C 1973 1427 1132 797 46 44 28 119 39 172 2421 2191 2212 4013 3406 3209 1972 1241 1232 5061 52 42 26 138 118 76 2761 1998 1998 4192 3390 2606 19 71 998 924 467 36 50 16 113 145 56 1955 1717 1228 3102 2836 1767 1970 743 .817 403 68 168 24 ;89 209 88 1659 1990 990 2559 3189 1505 1969 1009 961 497 278 220 130 226 — 226 2231 1506 1366 3744 2687 2218 1968 624 905 462 126 76 64 1366 1036 641 2516 2017 1167 1967 831 792 344 58 58 14 — — • — 575 629 311 1464 1529 669 1966 714 863 306 28 44 14 :S8 8 • — 863 1061 415 1613 19 76 735 1965 819 874 456 40 32 30 751 1615 610 1610 2521 1096 1964 896 934 517 40 50 22 1738 877 1474 2674 1861 2013 1963 1018 885 593 30 18 30 — • 48 — 800 715 657 1848 1666 1280 S = S t a r t e d C = Completed U/C = Under C o n s t r u c t i o n Source: Regional Economist, CMHC 

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