Canada’s vacant home problem is improving but not very quickly. Statistics Canada (Stat Can) Census 2021 data reveals vacant homes fell from 2016. Resort towns have the highest share of vacant homes. This occurred despite the boom in year round residents in these cities. Let’s take a dive into the data.
Canada’s Vacant Homes
The term vacant home is triggering to some, so let’s quickly go over what they are (and aren’t). Canada only measures the number of private dwellings occupied by usual residents. This leaves us with the total number of private dwellings, and primary residents. By subtracting usual residents from the private dwelling total, we get vacant homes.
Most people think of a vacant home as a run down property with the windows knocked out. The kind you see when you drunkenly walk down a side street at 2am, and it’s clear no one could live there. This number includes more though, including any secondary residence(s) or vacation homes. New homes built and ready to be occupied, but aren’t yet, are also included in this number.
In real estate crazy Canada, the term is more controversial than the rest of the world. A similar criteria is used in the US, where they do an annual vacancy count and call it so. The OECD also uses a similar criteria, but some people aren’t a fan of calling a vacation home, a vacant home. Aw, muffin. Buck up. One person’s vacation home is another person’s vacant home. It’s not personal.
There is a fair bit of misunderstanding about the numbers. One key point often made is, students and temporary residents aren’t included in the data. That’s not true according to Stat Can, which includes both as usual residents.
Further, private dwellings require not passing through the living space of another person (or persons). That means dorms and long-term care facilities aren’t even counted as private dwellings. So yes, those students are excluded, but so are the dwellings they live in. It doesn’t matter if collective dwellings are occupied or not, they aren’t included.
Canada Still Has 1.3 Million Vacant Homes
Canada still has an unusually large number of vacant homes, but they’re falling fast. There were 1.31 million vacant homes in 2021, down 2.62% from the previous 2016 Census. This translates into a drop of 35,070 units, which is impressive for such a short period of time. There will always be some vacant units as people shift around, but this is still high for a small population.
Canadian Vacant Home Count By Province
The number of homes that were not occupied by the usual resident at the time of Census, by province.
Source: Statistics Canada; Better Dwelling.
Canada delivered a lot of homes during this period, driving the vacancy rate lower. The share of vacant private dwellings fell to 8.0% in 2021, down from 8.7% in 2016. Nearly one in ten homes vacant feels like a high number, but it’s lower than the US at 11% of stock sitting vacant. It’s still 9x greater than the UK though, and they consider it to be a serious housing issue.
Canada’s real estate industry took aim at the OECD for using 2016 data in their recent vacancy study. After all, the market began booming after that so it must have fallen. Lame, this is stale data, right? Once again, the 2021 data shows some improvement but not to the extent implied.
Canada’s “Resort Towns” Have The Most Vacant Homes
The highest share of vacant homes were in resort towns where the population is booming. Canmore’s housing stock had the biggest share at 25.9% in 2021, but that’s down from 27.9% in 2016. Wasaga Beach is in second with 21.5% of stock, down from 28.1% over the same period. The town of Sainte-Agathe-des-Monts was third with 19.9%, down from 25.9% at the last Census. High rates in small places that are considered vacation spots are somewhat expected.
The above markets are some of the fastest growing for price and population. RBC observed these “resort towns” have the fastest population growth across Canada. They attribute this to higher income city residents moving out to where they can afford. At the same time, the bank says this is eroding affordability for locals. As towns used for vacations turn into cities, there’s going to be a lot of debate as to what is a valid use of housing.
Toronto Now Represents 1 In 10 Vacant Homes
Toronto real estate is the largest market, so it doesn’t surprise that it has the most vacant homes. There were 131,730 vacant homes in 2021, up a whopping 32.75% from the 2016 Census. It works out to around 30,000 homes, or roughly 1 in 10 vacant homes across the country. It’s almost half the size of all vacant homes in the UK.
Despite Toronto building as fast as it can, the share of vacant units is rising too. About 5.5% of the city’s housing stock was vacant, up from 4.4% over the same period. Considering 1 in 4 homes in the region are sold to investors, it shouldn’t be a surprise. It’s a challenge to find another city with 200 vacant units in a purpose built rental building complex.
Canadian Vacant Home Count By City
The number of homes that were not occupied by the usual resident at the time of Census, by top 50 cities.
Source: Statistics Canada; Better Dwelling.
Vancouver’s Vacant Homes See A Sharp Drop
Vancouver real estate has become notorious for its vacant homes, but it’s improving at a rapid rate. There were 61,213 vacant homes in 2021, down 8.25% from the 2016 Census data. Could you imagine an eight point drop for anything but vacant homes, and not hearing about it every day? It’s huge.
Greater Vancouver has added a ton of housing stock while driving the vacant rate lower. Vacant homes represent 5.5% of the region’s housing stock, down a full point. While it’s now at the same rate as Toronto, they’re both heading in opposite directions. BC recently implemented a vacant home tax that applies a penalty for low use. There are numerous exemptions and loopholes, but it’s clearly forcing scrutiny on use.
Andy Yan, director at the SFU Urban Planning department, described the change as “astonishing” to the Vancouver Sun. He’s been studying the use of housing in Greater Vancouver, especially underuse. He attributes the dramatic change in behavior to a number of policy moves in BC.
Canada Is Designing A National Vacancy Tax
Both the City of Toronto and the Federal government are scrambling to create a vacancy tax. Toronto is likely to have it live first, modeling it largely after Vancouver. However, don’t expect the same results from the Federal Government’s vacancy tax. Exemptions are being discussed that won’t appear in legislation, according to a parliamentary committee. One example will be vacation properties that don’t have a definition as of yet.
Canada is making some headway in reducing the number of vacant homes in its major urban areas. However, as Millennials get priced out of cities, they’re fleeing to “vacation” towns. Many of these homes are three-season, so it’s easy to see it as “obviously” a vacation home. However, the government is missing that many Millennials buy these for year round occupancy. It seems to be another miss for privileged policymakers that would never consider living full-time in a 3 season home. Millennial buyers just insulate them. This is no doubt one of the reasons cottage country leads in price growth in Ontario.
Essentially, some progress is being made. However, adding another policy inefficiency is likely to move the issue from big cities to small towns.
Seems like a complicated way to address an issue that would largely resolve with higher interest rates.