BCBusiness

30 BC BU S I N E S S .C A J A N U A R Y/ F E B R U A R Y 2 0 2 5 REAL ESTATE S h u t t e r s t o c k According to a report by Royal LePage, 18- to 34-year-olds in Canada are more likely to own more than one investment property than older people—even though 15 percent of those young people don't own a home they live in themselves. home to live in. That's because the move- in date on a pre-sale is likely three to four years away from the first deposit—too far away for people trying to buy and move into something right now because they just arrived in town, just had a baby, just had a second baby, just got renovicted, just need a place right now. So if that particular set of projects can't find a replacement for the missing investor-buyers—just over 100 of them—one building gets cancelled. That's 450 apartments disappeared from the housing market, 450 units that end users don't get a chance to buy as either a pre- sale or final product. Some housing researchers say it might actually help to have fewer mom-and-pop investors managing their fluctuating sup- ply of individual basement suites or con- dos and have small investors put money directly into REITs that are building new apartment buildings that will be profes- sionally managed. "We need investment in rentals," says Alex Hemingway, an economist with the Canadian Centre for Policy Alternatives. "A lot of the evictions are happening in the secondary market. It's unstable. And the reality is that it can get toxic with both corporate and mom-and-pops being bad actors and using the shortage to squeeze as much as they can from renters." Analysts at the Real Estate Institute of Canada also think a swing is possible and preferable. "Mom-and-pop investors are with- drawing from the market," argues All- wyn Dsouza, a senior researcher at the institute. "But government is providing more support programs for purpose-built rental. They can invest there because the economics work differently than when you have to put 30 percent down up front for a unit." In spite of that, the B.C. housing sector is still very dependent on small investors, and it's likely to be that way for a while. So it's important to have a sense of what will bring them back, something no one has right now. Many current small-time landlords are frustrated with what they see as a system stacked against them. The BC Landlords Facebook group, with about 10,000 mem- bers, is a long litany of frustration from people who have found themselves locked into months-long disputes with tenants over unpaid rent, appliances that myste- riously keep breaking down, new room- mates who appear without notice and much more. The province's caps on annual rent increases and new rules on how much notice tenants have to be given if a land- lord is selling or taking over for their own use have produced much grumbling and threats to sell and get out of the business. On top of that, every new change in pol- icy adds more pain to those contemplat- ing parking their available spare cash in property. Ron Butler, a Toronto mortgage broker who frequently comments on the dynamics of the real estate market, said last fall that investors are essentially being driven out of buying in Toronto and Van- couver in particular because of a change in CMHC rules for providing low-interest loans to developers that makes their projects' financial scenarios unworkable. On the social media platform formerly called Twitter, Butler opined that "the era of small investors buying Dog Crate Condos to rent out is DEAD" and that it "may NEVER come back." The question now is how all those factors will influence the under-40s, that eager and bushy-tailed generation, who are the biggest investors and the biggest optimists about how every- thing is going to work out. They're still there, says realtor Manraj Dosanjh, who works closely with many large developers, as well as a customer base of younger people interested in what they see as the prime remaining good area to invest—the triangle that encompasses West Coquitlam, Surrey Centre and Wil- loughby-Langley. The prices for condos (relatively low for the Lower Mainland) and the potential rents (high in the good- school, good-transit neighbourhoods) form a pleasing combo for them, he says. Those young investors are also often from family cultures that highly value real estate—family cultures where the get-togethers for someone's birthday or a weekly brunch will see everyone exchang- ing information about what they've bought and how it's going. They're likely to have older relatives to talk to about how to sur- vive the kind of down cycle B.C. real estate is going through now. "It will be interesting," says Dosanjh, "to see who comes back."

• Cover