Rent growth in Vancouver's multifamily market in 2022 was unprecedented, thanks to an unexpected opportunity presented by the turnover of tenants during the first two years of the pandemic. Landlords were able to increase rents to market levels, catching up on some of their operating costs. However, the current conditions are causing two specific issues, increasing household debt and livability crises. The obvious solution is to build more rentals, but there are challenges that work against initiating a historic building cycle immediately.

Inflation, construction material shortages, and rapid increases in borrowing costs are major factors affecting the building of more rentals. Local governments, both municipal and provincial, are also providing additional hurdles, exacerbating the initiation of measures that could assist with affordability. Achieving development approval from municipal governments takes at least two to three times longer in Vancouver compared to Edmonton and Calgary, and provincially initiated rent controls are significant deterrents to prospective investors and developers of rental towers.

The pandemic aggravated rental affordability when many tenants moved away from the urban core towards more affordable markets. Regionwide vacancy unwound to nearly 2%, initiating an opportunity for landlords to adjust what was once 'affordable rent' to a rate the market would bear. The new supply of rental housing in 2022 in greater Vancouver amounted to approximately 3,800 units, which is less than 3.5% of total inventory.

Rental construction levels in 2023 are at an all-time high for the Vancouver area. However, the number of units under construction isn't expected to provide significant relief to the segment of renters feeling the affordability squeeze, especially with the spike in international immigration and the housing-replacing-housing model. The solution to the affordability challenges is in the long game, with more units needed quickly and consistently to balance the rental market.

Current owners of buildings older than 50 years should be encouraged to facilitate the densification or redevelopment of new, purpose-built rental buildings. Removing these buildings while coordinating supply and involving housing nonprofit organizations may result in less short-term renter pain as the long game of rebalancing the rental market takes place. The market drivers aren't changing, with demand expected to continue to increase. Therefore, an array of units is needed to accommodate a range of household sizes and at various levels of quality that assist households in a wide range of economic statuses.