Home vacancies are often a sign of overbuilding, and speculation. At the height of the US housing crisis in 2008, a massive 2.9% of all homes were sitting vacant. This made it hard for home prices to retain their value during the downturn, since the vacant units began flooding the market on the way down. But that was the US, and this is Canada – we don’t have that number of units sitting vacant, right? Actually, Canada has more than twice that number.
Canada’s Home Vacancies
The Canadian government still doesn’t officially track vacancies, but they did start tracking which dwellings were “occupied” since 2001. Unfortunately, we don’t have any data for what life was like before HGTV convinced everyone flipping a home is incredibly profitable, but we’ll work with what we’ve got. Academics have been subtracting the total number of private dwellings from the number of occupied homes to determine how many are “not occupied.” This gives us the ratio of homes that are sitting vacant or occasionally occupied.
Source: Statistics Canada.
Using this method, we found the number of vacancies has been building for some time. In 2001, the country had a vacancy rate of 7.85%. This ballooned to 8.4% in 2006, then demonstrated much slower growth until 2016. At the end of 2016, Census numbers show that 8.69% of homes were vacant, about 1.34 million. Growth is tapering, but it’s still growth.
US Home Vacancies
US vacancies are a little more clear, they’ve been tracking them as far back as 1956. Vacancies hit an all-time high of 2.9% in 2008, once in the first quarter and again in the fourth. This is when home builders and speculators were buying at a rapid pace, and people across the US were complaining about “empty homes.”
Source: US Census Bureau.
To give better context with the data we can get from Canada, let’s compare some overlapping years. In 2006, the US had a total vacancy rate of 2.7%. In Canada, that number was 8.4%. In 2011, the US ended with a vacancy rate of 2.3%. In Canada, vacancy was at 8.57% that same year. Most recently, in 2016 the US had a vacancy rate of just 1.8%. In Canada, we are rocking a massive 8.69% – an all time high. Canada has been speculating for more than a decade, and the lack of correction during that time just let the numbers grow.
Source: US Census Bureau, Statistics Canada.
Even with all of the “excess” building before the Great Recession, the United States never hit a rate as high as Canada. This is likely due to the fact that they’ve been monitoring the use of homes for over 60 years. Cities like Toronto and Vancouver have finally started to look into the empty usage, it’ll be interesting to see how they adjust in the future.
Not sure how vacant housing impacts real estate prices? Check out how Georgists break down the economic cycles of real estate.
Like this post? Like us on Facebook for the next one in your feed.
We encourage you to have a civil discussion. Note that reads "civil," which means don't act like jerks to each other. Still unclear? No name-calling, racism, or hate speech. Seriously, you're adults – act like it.
Any comments that violates these simple rules, will be removed promptly – along with your full comment history. Oh yeah, you'll also lose further commenting privileges. So if your comments disappear, it's not because the illuminati is screening you because they hate the truth, it's because you violated our simple rules.
This data is purely speculative unless it is known what type of real estate is vacant.
Is it single family, condos, rentals, newly built, or resale? Urban or rural?
There are very few builders in Canada that build single-family homes on speculation. The home has to be purchased before they put a shovel in the ground. Condos are a similar story. A lot are pre-sold even before the site is cleared. Are these listed as vacant and owned, even though they are not built and unable to be occupied?
Are owned-unoccupied-unbuilt, unowned-unoccupied-unbuilt (condos that are registered but unsold, unbuilt), preowned-unoccupied-resale, unsold-unoccupied-prebuilt all lumped together? Toronto has thousands in these categories.
StatsCan considers a home occupied if it’s capable of being occupied, and a resident is there for the majority of the year. This would include foreign students, and even foreign residents that are not citizens but spend the majority of time here.
Breaking down housing segments doesn’t give better insights to the fact that speculation is rampant. By that measure a national composite home price is completely useless. It may not help *you* figure if you can afford a home, but it gives economists and traders insights to how people are treating housing in a country. And in this case, people went bat sh!t crazy.
Not sure what your point is, or if you are just missing my point entirely.
“Academics have been subtracting the total number of private dwellings from the number of occupied homes to determine how many are “not occupied.””
The problem is not the ‘occupied’ bit, it is the ‘number of private dwellings’ bit. What constitutes a ‘private dwelling’? This figure can be greatly inflated if it includes ‘not yet built’ dwellings. Once a builder starts to build, that is a ‘private dwelling’, but obviously not able to be occupied. Same as registered-and-sold-but-not-built condos.
How stupid is this – Admin please provide the details by count wise
“about 1.34 million”
Says right in the article. If you’re looking for city by city, there’s dozens of articles breaking down vacant homes on this site. Try mashing a city into Google with “vacant.” I believe the author’s point is that Canadians still have the attitude that housing is a commodity, and that died down in the US in 2009.
This is painfully obvious in commercial real estate. If you’re looking at industrial space, expect to pay 3x what it was just three years ago – even in 8 – 10 hours away from Toronto. Canadians would rather it sit empty than trade for a fair price, and that’s a national issue.
May be the house likes these in the picture are vacant -hoax news
Joe Schmo that likely does a deal a year has no idea what he’s talking about.
This is no longer residents guessing, the *government* has acknowledged these homes are rarely used. The part most people don’t understand is vacant includes “temporary and foreign residents.” The confusion with most people is they think that includes people here on a work or student visa, it does not. That number includes homes that are vacant, or are occupied by someone that spends the majority of their time in another home. If you work here the majority of the time, your home is occupied.
City of Vancouver used these numbers and said they were a problem.
I have listed my house as vacant , since every buyer need the houses asap
Obviously the definition of “vacant” is different between the US & Canada. Canada’s numbers count “temporary” and “foreign” occupants the same as vacancies. Seeing as more foreign students are coming all the time it’s not surprising the percentage has been rising. Maybe vacant homes are increasing in Canada but the numbers presented prove nothing and the comparison made to the US is without merit. “This is likely due to the fact that they’ve been monitoring the use of homes for over 60 years”: No, that’s not why, get real.
“Seeing as more foreign students are coming”
Incorrect. Foreign students are technically occupied dwelling since they spend the majority of the year in them. For a property to be vacant, it needs to be unoccupied for the majority of the year.
The CoV cites the same method in one of their reports for determining use. Homes of a foreign buyer that spend the majority of their time in it, are not considered unoccupied.
The article I read about City of Vancouver stats says that it’s the number of unoccupied dwellings on census day (in May). Taking that at face value, it seems likely that student-occupied dwellings would tend to be unoccupied over the Spring/Summer session, i.e. outside the normal University calendar. This count of empty homes is more than double the year-round number CoV came up with based on hydro bills.
Secondly, look at the trend! As far as we know Canada’s rate has always been much higher, so the numbers are most likely different for a methodological reason. There’s certainly no reason for the gap to close anytime soon. The idea that we have more empty homes because we’ve “only” been keeping stats for 15 years is ludicrous.
[…] Read the full article here. […]
Love the comments here. Author makes a point to show that Canadians are misusing houses, everyone pretends they’re attacking their local market. Since most of you are too dumb to understand what they said, your takeaway should be:
* Canadians are either over concentrating in certain areas, and leaving areas that have already been developed empty. This is the case with places like Newfoundland, where the government has failed to keep locals in place.
* Canadians are holding homes empty for speculative purposes. The Ministry of Finance has released numbers and said they know this is a problem.
* Canadians are over commoditizing housing compared to their peers south of the border. This is neither good, nor bad – and I don’t believe the author made any claims to either side. It just shows that Canada have a larger vacancy number than the US, which in a similar economy – with similar pay and cheaper housing. You can not say that the majority of Canada needs to be priced 2x to US homes, it’s insanity.
So based on this chart the vacancy rate in Canada was 7.85% in 2001. And now in 2016 it grew 8.7%… This is such insignificant difference… Saying that this percentage is higher than US before bubble burst means nothing because it was also way higher back in 2001 and it does not mean there was bubble in 2001. Don’t see how you can make any sort of conclusion based on this data.
Not saying there is no bubble in Canada, just saying these numbers most likely do not represent what happens in reality. In reality number of empty homes grew at much higher rate especially in last few years when so many people were flipping properties
Found the person that doesn’t deal with money or housing for a living.
1. Canada had frothy levels of real estate speculation in 2001. Canadians didn’t have a tech bubble, they pumped their cash into extra condos and homes for real estate developers.
2. A jump from 7.85% to 8.7% is a massive jump in terms of total homes. Canadians just don’t understand numbers, which is why they think almost any home in the country is worth 17% more just one year later. Housing typically moves just above inflation, it doesn’t make money by the day.
Sidenote, my firm has sent people to walk the grounds in cities like Toronto and Vancouver. In Vancouver, you can find so many boarded up houses it looks like Detroit. Toronto is slightly better since it’s so spread out, but there’s also a huge number of houses waiting for the great re-zoning everyone that can afford a second home is waiting for. Got news for those people, developers don’t want your extra house at 30% above, they’re waiting for you to sell it in a fire sale.
There is little evidence that Canadians are misusing housing. Canada has two entry point system – Toronto and Vancouver. These are major cities and housing prices reflect that. Housing prices reflect primarily organic demand and also demand by investors and speculators that are found in all major markets due to the potential for vast financial gains.
It would appear that low rise housing may be reaching a peak though not even this is certain since government intervention may have caused a sea change in sentiment/perception and ultimately the slowdown in sales. On the other hand more affordable options such as condos continue to sell a tenant a brisk pace for ever increasing amounts.
Toronto is in a cycle. It I see neither good nor bad. The Toronto economy and housing sectors are healthy and willing remain so in the foreseeable future.
[…] Canada has twice as many vacant homes as the US did before the crash betterdwelling.com […]
You are missing the point entirely.
It may be true that the Chinese are not buying outside of China with converted renminbi, wealth from within China, but this does NOT mean they are not buying.
They have invested so much in the rest of the world, that the returns in dollars on these investments is continuing the spree.
The Waldorf Astoria in New York is a perfect example. They bought it, and are now converting it to condos, that they will sell for American dollars. This return will never be brought back to China, but will be used to continue the buying spree.
Just the interest alone on the trillion dollars of US debt that they own, payed in American dollars, makes 40 to 50 billion dollar loss in wealth coming out of China insignificant.
They are buying up the rest of the world, using money they are getting in dollars from the returns on their holdings outside of China. They don’t need any more wealth to actually leave China to continue the buying spree. They are using the wealth they are sucking out of the world economy to do it.
[…] Canada Has Twice As Many Vacant Homes As The US Did Before The Crash […]
It’s a pity you don’t have a donate button! I’d without a doubt donate
to this outstanding blog! I guess for now i’ll settle for book-marking and adding
your RSS feed to my Google account. I look forward to new updates and
will share this site with my Facebook group.
Comments are closed.