The 2010 Winter Olympics and Vancouver and Sea To Sky Housing Markets

CMHC Conference Notes November 2006  

Recently, I attended the long awaited Canada Mortgage and Housing Corporation (CMHC) conference to learn more about the projected Olympic Games impact on our housing market.

Carol Frketich, CMHC BC Regional Economist talked about the positive prospects for BC's housing market due to the low inflation and low interest rate environment and gains in employment and incomes. The housing market outlook projects continued high levels of resale activity and new home construction in BC for 2007, albeit somewhat lower than that experienced in 2006, reflecting the continuing shift to a more balanced market.

Charles King, CMHC BC Regional Manager of Business Development, projected the Vancouver housing market will remain strong through the long term owing to positive consumer confidence to 2010.  King made the point that the resale market will benefit from an increase in supply, home buyers will have more options which is positive for both first-time buyers as well as those choosing a home close to amenities, job centres or transit / transportation corridors they use regularly.

The CMHC Market Analysis Centre suggested the main challenges for BC's housing industry in the near term will be to find development sites in the right location and at the right cost. Home buyers will continue to wrestle with housing affordability as prices are forecast to continue to rise for both new and resale homes, but at a more moderate pace than in previous years.

Projected Impact of the 2010 Winter Games on Vancouver and the Sea To Sky housing market

CMHC contracted with the Urban Futures Institute to conduct an in-depth analysis on how the games are likely to impact the housing market in the two areas predominantly associated with the games, specifically Vancouver and the Sea To Sky corridor. 

David Baxter, Executive Director, Urban Futures Institute presented the findings of the research project.

Background
The 2010 Winter Olympics and Paralympics will take place in Vancouver and Whistler.  The impacts of the games will be felt across the entire Southwest Metropolitain region. The research was modeled on a Games vs. No Games basis using the No Games scenario as a benchmark for comparison purposes. This allowed the researchers to present a more clear impact of the potential economic and social impact of the Olympics on the study area.

Key Findings
Minimal Impact. Vancouver-Whistler is the most populous region to ever host the Winter Games.

• Gross Domestic Product (GDP) - Projected growth of 2.0% per annum with the Games vs. 1.8% per annum without at $228.1 billion in 2031, only 4.8% greater than provincial GDP projections without the games.
• Job Creation - Projected an additional 92,000 jobs in 2031 under the Games scenario, which is 74% more jobs than in 2001 and 4.6% more jobs than the No Games benchmark.  This increased demand for workers would have a positive impact on migration to the region. The projected labour force of 2.18 million people in 2031 in the "Southwest Metropolitain region" is 4.5% greater vs. the No Games benchmark.
• Population - Projected to grow to 2.73 million in 2010 under the Games scenario vs. 2.67 million No Games benchmark.  The impact in 2031 is projected to be 4.0% at 3.76 million Games scenario vs. 3.60 million residents No Games benchmark.

Impact On Housing - Modest impact in Vancouver/Lower Mainland with greater relative impact felt in the Sea To Sky corridor / Squamish Lillooet Regional District (SLRD)

Households (Occupied Dwellings) Southwest Metro region - Projected to be 4.0% higher under the Games scenario with total occupied housing stock at 1.58 million units in 2031, vs. 1.52 million No Games benchmark. The games add 27,000 occupied units to the single-family detached housing stock, 14,000 occupied attached ground-oriented units in addition to the 146,000 additional units under the No Games benchmark, plus an additional 20,000+ apartment units over an above the 229,000+ units projected under the No Games scenario.

Lower Mainland (Greater Vancouver & Fraser Valley Regional Districts) 

Population - 3.68 million residents, 58% growth over the period to 2031.  Impact of Games is to add 4.0% more people, 145,000 more residents, by 2031.
 
Housing Starts - 28,000 in 2006, 28,500 in 2007, 25,000 units per year between 2008 and 2016, falling to 23,000 per year from 2017 to 2026 and declining to 20,000 per year to 2031. The Games will also manifest differences in occupancy demand, Rental vs. Ownership, Prices, Listings, Rents and Vacancy rates.

Differential Impact of Games over and above the Benchmark No Games scenario

• Owner-Occupied Units - Demand for 3.9% more ground-oriented units and 3.6% more apartment units
• Rental Units - 4.2% more ground-oriented units and 3.9% more apartment units
• Housing Turnover - 4.3% greater for ground-oriented units and 3.9% greater for apartment units
• MLS Listings - 4.3% greater for ground-oriented units and 4.0% greater for apartment units
• Rental Vacancy Rates - 0.25 percentage points lower
• Residential Rental Rates - increasing in step with inflation.

Sea To Sky Corridor (Squamish Lillooet Regional District)

Population - 75,000 residents, an increase of 40,000+ residents over the period to 2031.

Housing - Occupancy demand for 19,000 new units by 2031, resulting in a total of 31,800 total units.  10,700 additional single family detached units, 5,400 ground oriented units and 2,600 apartment units, or 19% more total occupied units, over and above the No Games base. Housing starts under the Games scenario would result 26% more ground oriented starts, an average of 126 additional units started each year between 2001 and 2031, with 24% more apartment unit starts, or 30 additional apartment unit starts each year.

Differential Impact of games over and above the Benchmark No Games scenario:

• Owner-Occupied Units - Demand for 17% more ground-oriented units and 14% more apartment units
• Rental Units - Demand for 27% more ground-oriented units and 19% more apartment units.
• Housing Turnover - 10.8% greater for ground-oriented units and 9.8% greater for apartment units.

Squamish and surrounding communities (including Britannia Beach, Furry Creek, Porteau Cove and Lions Bay) would see an over and above increase of 11% in population vs. the No Games benchmark.

My Take On The CMHC Research

The CMHC research makes for interesting reading.  If used "directionally" it bodes well for an active and growing marketplace over the next decade.  Barring unforeseen economic, natural or other catastrophe, the combination of a growing population, driven by both inter-provincial and international immigration, growth in employment (number of jobs and wages and salaries), a strong provincial economy, and reasonable interest rates makes real estate a solid long-term investment in the region, especially on the Sea To Sky corridor.

It also means that planned developments along the corridor, e.g. ParkLane Homes at Furry Creek 600 units, Concord Pacific at Porteau Cove 1,400 units, Britannia Beach, and Squamish District should be readily absorbed within the population and housing demand growth projections.  Good opportunities for owner-occupied, seasonal or secondary residences and investment properties!

There are of course, subtle differences among the unique areas and subdivisions that make up the Sea To Sky corridor.

It is also important to note that research studies of this nature are not 100% accurate and you are advised to consult with a local professional resource for a better understanding of specific local market conditions.

If you're considering a move to the area, or thinking about selling, I'd be pleased to discuss your particular situation with you personally.

Please note that you can obtain various research studies as well as national and regional housing information from CMHC.  Visit their site at www.cmhc.ca

Anita Schmitt, Realtor - Royal LePage Northshore

This communication is not intended to cause or induce breach of an existing agency agreement.