Jens von Bergmann (data analyst and mathematician); Nathanael Lauster (sociologist); and Douglas Harris (law professor) have been working since 2018 on a study of how condominiums are used and occupied across Canada. The goal is to use the results to better inform public and academic debate.
They recently presented some of their early findings at the National Housing Conference in Ottawa and have since made that information public. It is still a work in progress, but already there are some interesting takeaways. To start, here is a chart showing occupied housing units in Canada and in select CMAs:
Not surprisingly, Canada is broadly speaking a nation of single-detached houses. But in our three largest cities -- Toronto, Montreal, and Vancouver -- apartments/condominiums are doing a lot of the heavy lifting.
Vancouver has the highest proportion of condominiums. It is a geographically constrained metro area and it is one of the first cities in the country to adopt condominiums as a housing tenure. And in Montreal, there are more apartments under 5 storeys than there are single-detached houses. Not surprising. There's no "missing middle" in this city.
But the really interesting question is, how are these condominiums being used and occupied? It's a challenging question to answer, which is why it's so often debated, but here's what the researchers have found so far:
The owner and renter categories are self-explanatory. Temporary, which is the least common type of tenure, is where the owner has declared their principal residence as being somewhere else. In other words, the condominium is a second home.
The vacant category is effectively that city's condominium rental vacancy rate. These are condominium units which are empty, but that are at the same time listed for rent. There are relatively few of these. In Toronto and Vancouver they're virtually non-existent in this dataset (2016).
Finally, we get to unoccupied units. This one is tricky and the researchers aren't exactly clear on what is driving this number. They chalk it up, at least partially, to the flexible nature of condominiums. For example, it could be empty because the unit is switching from owner-occupied to rental, or vice versa.
That said, it is very interesting to note that Toronto and Vancouver actually have the lowest percentage of unoccupied condominium units. This may be surprising to some of you given the public discourse around investor units in these two cities.
Generally, they found that in Canada's three largest metro areas, the following rule of thumb seems to apply: For every 10 condominium units built, 6 will become owner-occupied, 3 will enter the rental stock, and 1 will go unoccupied. Does that seem right to you?
If you'd like to dig into the methodology that the researchers used, you can do that over here at Mountain Doodles. All of the charts and data used in this post were taken from there.
Condos in Fog by Richard Gottardo on 500px
Earlier today I attended a lunch and learn talking about the renewed interest in rental apartment development here in Toronto. Since this is a topic I’ve written about a few times here on Architect This City, I thought I would summarize some of my key takeaways from the panel discussion:
Market fundamentals are strong for purpose-built rental apartments. Vacancy is very low and demand will likely outstrip supply for many decades to come given the barriers to building (land availability, planning/approvals, and so on).
As of September 2014, CMHC reported 2,212 purpose-built rental units under construction in the Toronto region. And yet the annual demand for new rental housing is likely somewhere between 10,000 to 30,000 units (clearly some of this demand is being absorbed by condo rentals – the secondary rental market).
Millennials and retirees are seen as core markets for new rental apartments. Millennials want to live in urban centers and they like the flexibility that renting provides. Retirees want to know that they won’t be asked to move out because the owner wants to sell their condo unit.
It’s almost impossible to compete against condo developers when it comes to buying land (despite the next point). They (condo developers) will pay more. Therefore intensifying our “tower in a park” building stock is going to be a critical component of meeting rental demand in the region.
Part of what’s driving this interest in purpose-built rental (on the part of developers) is a softening condo market. So don’t be surprised when some developers flip back to condos when it makes financial sense to do so.
It was interesting to hear this last point. It’s something that has been on my mind, but for whatever reason wasn’t really being talked about by the industry. That’s not to say that I think the condo market is in trouble though. It has just become more balanced. And ultimately that’s probably a good thing.
Either way, I think that more rental and more housing options are a positive for the city and for consumers.
Yesterday I came across an incredibly fascinating chart from Eurostat, analyzing housing tenure (in 2011) across Europe. Here it is:
And here’s what I found interesting.
Working from left to right, there seems to be a clear difference between Eastern and Western Europe in terms of the amount of leverage they use to buy homes. If you look at Romania, not only does over 90% of the population own a home, but they also don’t seem to have any outstanding mortgage or housing loan. That means they’re buying their homes in cash.
By the time you get to the United Kingdom, you start to see numbers that are comparable to Canada and the United States. The percentage of owner occupied homes is sitting at or below 70% and the majority of them have a mortgage or loan.
But as a whole, Western Europe seems much more likely to rent than Eastern Europe. And in the case of Switzerland, more people rent than own. Why is that? This seems odd given its economic strength. But the same could be said for Germany and Austria, which also show relatively low ownership rates. Here’s one possible explanation.
Finally, I found it interesting that in Denmark, the Netherlands, and Sweden, there’s virtually no such thing as subsidized rental housing. If you rent, you’re paying market rate (at least according to this chart). I wonder if this has something to do with there being less income inequality.
If anyone has any insights on some of these points, I’d love to hear from you in the comment section below.