For more than a decade, housing has dominated BC’s public conversation due to surging prices for home ownership and tight rental housing markets. Now, real estate industry sentiment has shifted towards pessimism. Some in the industry continue to project “a recovery just around the corner” while others are calling for major changes, like the removal of foreign ownership restrictions, to reboot the market.
Recovery means different things to different people. The housing boom of the last generation failed to meet the needs of low- and moderate-income households. For those on the outside looking in, lower prices are welcome—but still extremely high by any historical standard. For renters, recent trends point to a modest improvement, including falling rents amid higher vacancy rates, with more new rental supply still under construction.
This post recaps how BC got to this point, reviews the current moment and challenges self-serving proposals from the real estate industry. It builds on and updates our Building Equity report from 2024, which goes into greater detail about local, provincial and federal housing policy changes. Much stronger provincial and federal policies and spending are still very much needed to address homelessness and housing insecurity for low-income households, including new non-market housing supply.
How did we get here?
Over the past quarter-century, housing as an asset class surged in value well beyond what would be justified by economic fundamentals. Housing spans multiple, inter-related markets, including resale of existing housing, the rental market and new construction of both ownership and rental housing. It also has significant non-market components, income supports and regulations that are sometimes overlooked or viewed as impediments to housing markets.
Several engines propelled housing demand over this period: population growth was strong and steady, incomes were rising due to a growing economy, and people took on more mortgage debt due to historically-low interest rates. For primary residences, any capital gains when the property is sold are untaxed, shifting incentives away from other taxable investments like stocks or bonds and into housing.
As Figure 1 shows, by the late 2010s the price of a detached house in Metro Vancouver had surged to more than 25 times the median income, compared to eight times income in the early 2000s. The ratio has come down to about 19 times as of 2025, but is still greatly elevated relative to the past. Condo prices jumped from three times median income to seven times by 2025, after peaking at more than nine times in 2018.
For existing homeowners, the result was like winning the lottery, with massive jumps in assessed values. Even if owners did not plan on selling, surging prices produced a “wealth effect” meaning they spent more overall. Moreover, they were able to transfer some of that wealth to their children as “the bank of mom and dad.” This exacerbated the gap between the haves and have nots.
The run-up in home prices also had aspects of an asset price bubble, with higher prices justifying earlier investments and leading to more investment, in a circular fashion, while creating a psychology that “housing always goes up” and its converse, the “fear of missing out.” Asset booms are often associated with speculative behaviour. Both foreign buyers (especially before 2017) and domestic speculators added to housing demand and higher prices became increasingly delinked from local incomes.
Both the BC and federal governments have put speedbumps on some speculative forms of demand, including BC’s Foreign Buyer Tax in 2016 (increased in 2018), the Speculation and Vacancy Tax in 2019, and more progressive property tax and property transfer tax schedules. In 2023, the federal government required full taxation of flipping profits as business income and banned foreign buyers, originally for two years and currently extended to January 1, 2027.
The condo investor model has been an important source of speculation in the housing market. In order to get the financing to begin construction of a condo project, developers focused on signing up presales, and once about 70 per cent of a project was sold, they could get financing to start construction. Some of those presale investors purchased units they never intended to live in, instead seeking to flip or profit off the price rise during the construction phase. As of 2025, the BC government closed down this loophole with its “flipping” tax on short-term property holdings, which includes presales. Investors can also rent out the finished condo(s), a profitable move so long as rent covers mortgage interest, strata fees and property taxes.
Much of the policy attention in recent years shifted towards increasing supply, with the biggest push around allowing higher density construction. In late 2023, the provincial government implemented sweeping legislation to significantly increase the permitted building space per lot across BC, with much higher densities in the proximity of public transit nodes. It also implemented housing supply targets for municipalities.
Such upzoning generally improves affordability to the extent that more smaller units are available. But per square foot, developers are still seeking market rates for new units. Upzoning also drives up land prices because the economic value of what can be built goes up. This dynamic creates windfall profits for existing landowners that get capitalized in the price of new housing.
Historically, local governments have tried to capture some of this land lift, created at the stroke of a pen, for public purposes through development charges/levies and community amenity contributions. These fund new schools, libraries, community centres and child care facilities, as well as the more mundane upgrades to water and sewer infrastructure to accommodate more people.
In some places like Vancouver, upzoning is leading to demolition of existing (moderately dense and affordable) rental buildings in favour of much larger new buildings. While some renter protections have been introduced in parts of Vancouver and Burnaby to respond to displacement, they are highly imperfect. Policymakers need to do much more to ensure a fair process for renters affected or displaced by redevelopment.
Impact on renters
While much of the public conversation is about housing ownership, one third of British Columbians are renters. As home prices surged, many more households were resigned to staying in the rental market (often renting a condo from households who held it as a second property). Vacancy rates after 2014 fell to around one per cent and lower in Metro Vancouver leading to surging market rents (with the exception of 2020-21 during COVID-19).
Provincial rent controls have reduced impacts on renters, although annual increases in line with inflation are specified by the government. Anyone leaving a rent-controlled apartment has been faced with a large “moving penalty” in the form of higher rent. And for those renting in the secondary market of condos or basement suites, the threat of renoviction or demoviction loomed over their tenancy. The BC government made some positive steps by tightening the rules around “bad faith” evictions (renovictions) and implementing regulations for short-term rentals so that more rental housing units are available for locals. The BC government has also increased the resources available for landlord-tenant disputes.
Rental housing was also facing a longer-term supply issue by the 2010s. The federal and BC governments stopped funding new non-market (social or community) housing in the 1990s. Federal tax breaks for private investments in rental apartments ended in the early 1980s. The result was a generation where almost no new purpose-built rental housing was built. The secondary market of rented condos and secondary suites were the main additions to the stock of rental housing.
On the construction side, rising prices and the overall policy mix favoured condo developments over purpose-built rental housing (PBR) until fairly recently. Local governments like the City of Vancouver initially sought to shift the incentives back towards rentals through reduced development changes and higher permitted densities. The BC and federal governments also aimed to boost private rental construction, starting in 2018, tied to modest affordability requirements for some of the units, in the form low interest loans to developers of rental housing.
The good news is that the rental market seems to be rebalancing towards renters. Rental vacancy rates in Metro Vancouver jumped to 3.7 per cent in October 2025, whereas a healthy and balanced vacancy rate is believed to be around 3-4 per cent. As Figure 2 shows, asking rents for vacant apartments are down seven per cent for one-bedrooms (and, not shown, nine per cent for two bedrooms) relative to peak levels in Fall 2023. However, both are still 28 per cent higher than early 2019. Outside of Metro Vancouver, asking rents surged since 2019, and are still anywhere from 44 to 66 per cent higher than 2019, depending on city and bedroom size. Moderation in asking rents over the past couple years has been more muted.
This easing is partly the result of new purpose-built rental projects being completed, as well as new condos entering the rental market. Federal changes to immigration policies also played a role with near-zero population growth in 2025 and 2026. Going forward, more harmonized federal-provincial approaches should be developed to better align new supply consistent with a return to immigration at historical levels.
Bad ideas from the real estate industry
Much of the current housing anxiety stems from minimal activity around resales. In December, the Greater Vancouver Realtors grimly reported that “2025 saw lowest annual sales total in over two decades.” Across BC, we have seen record low sales volumes and they have failed to pick up despite much hope a year ago.
Prices remain much too high for people who do not already have access to property. While prices have come down somewhat from their 2022 peaks, they remain substantially elevated relative to the pre-COVID period (2019 to early 2020) in all regions of BC. Those selling homes have been holding out for last year’s prices, but, on the margin, foreclosures and court-ordered sales are bringing prices down. Thus, the deadlock of low overall sales.
The panic we are seeing from real estate developers is that the condo model, based on investor presales, has dried up in the face of lower expected speculative gains and high levels of mortgage debt relative to income. Industry figures had hoped that interest rate cuts from the Bank of Canada in 2025 would spur housing—they did not.
Private for-profit developers are seeking a different kind of reboot through removing barriers to foreign ownership. Recent reports put the number of unsold but completed new condos as high as 3,745 units in Metro Vancouver. So removing these barriers would just allow developers to sell unsold units to foreign owners at high prices, rather than lowering prices for locals.
While the real estate industry has stated concerns about a potential drop in new housing construction, this is largely about new condo developments. As Figure 3 shows, overall housing starts were steady through 2025, although much more tilted towards rental projects over condos. The number of construction jobs in BC has also been strong, growing four per cent in 2025. The figure also shows a large wave of housing still under construction, which will help affordability in both ownership and rental markets.
Thus far, Premier Eby has rightly rejected a return to a foreign investors towards boosting BC real estate. However, Prime Minister Carney is considering an “Australian model” that would allow foreign investment in new construction but not resale markets. Ultimately, catering to wealthy buyers living outside BC is not a real solution if the new homes are not affordable to local people.
Developers and the real estate industry have also been lobbying for the removal or reduction of municipal development charges. There is a legitimate debate around what mechanisms are used to pay for needed physical and social infrastructure upgrades that new housing requires. The federal government has established a Canada Housing Infrastructure Fund, but at $6 billion over 10 years for all of Canada, it is nowhere near a proper funding level. In the absence of funding from higher levels of government, revenues from cutting local development charges would need to be replaced by increased property taxes.
There’s good reason to be skeptical that cutting development charges would lead to lower housing prices, in any event. Certainly, if developers faced development charges out of the blue, they could be a problem. Well-specified development charges in advance, on the other hand, will be worked into developer pro forma calculations when purchasing land. Those charges mean developers will pay less for land.
For any new housing, there is a stack of upfront costs, including land acquisition, hard and soft construction costs, financing, and local development charges. The difference between those costs and the sale price is the developer’s profit. But the market price is determined by the demand side—or how large a mortgage a buyer can take on—inclusive of all costs in the stack. Thus, much of the push currently to reduce or eliminate municipal fees largely ends up as higher profits for developers.
In many cases, bubble dynamics led developers to overpay for land. Some condo projects that are unviable without speculative investment are now seeking to get governments to cut the fees that pay for the induced costs of growth in order to make marginal projects profitable.
Non-market housing still missing in action
BC’s new housing minister, Christine Boyle, has yet to reveal any new housing policies, and is largely resting on BC’s 2023 Homes for People plan (reviewed here). Her advocacy for non-market housing as a Vancouver city councillor suggests a potential build-out. Non-market housing accounts for only about four per cent of total housing, and is an often-overlooked aspect of supply. Public investments in non-market from the 1960s to 1990s still comprise a large share of the existing affordable rental housing stock.
A scaled-up effort towards the development of non-market and public housing options can break housing away from the market rollercoaster and may also underpin construction jobs if the downturn accelerates. In past publications, CCPA has recommended 250,000 non-market units over a decade for BC. The current BC government has supported just under 40,000 units since 2018 (some of which are still under construction), although it campaigned on 118,000 new rental units in the 2017 election.
The BC Builds program and the new federal Build Canada Homes program (led by Housing Minister and former Vancouver mayor Gregor Robertson) have much potential to develop innovative non-market housing, but thus far they are essentially pilot projects rather than transformative investments in long-term affordability. In addition to supply, it is important to ensure these investments are benefitting the low-income households who really need it.
For many, the current downturn is actually a relief and this moment offers a chance for rebalancing. Falling prices and rents, while incomes rise, would restore some sanity to a housing affordability challenge that emerged over a generation. Over that time, governments put too much faith in the market to solve the problem. Instead, more non-market housing would provide a buffer against inflation and improve affordability for those who most need it.
