Posted by: Daryl & Wendy Ashby | November 17, 2010

The Armchair Analyst

Popular University of Toronto demographer, David Foot once said, “Demographics explain about two-thirds of everything.” It certainly plays an important role in our housing market.

It’s a simple equation: the more the population grows, the more new households are formed and the more housing will be demanded (all things being equal). A shrinking population, on the other hand, can virtually halt new construction activity and can even result in a ghost town, example Ocean Falls on the BC coast.

BC’s population recently crested the 4.5 million mark and currently leads all other provinces in the rate of population growth. While the province comprises 13 per cent of the Canadian population, it garners 19 per cent of  national population growth. In fact, all four western provinces have growth rates stronger than the national average.

What’s more, BC’s enviable position is further bolstered by the composition of its growing population.

While the natural rate of increase (births less deaths) accounts for about 19 per cent of BC’s population growth, it has little impact on housing demand as individuals born today will not likely reach out to the housing market for two to three decades.

By far, the largest component of population growth is immigration. More than 70 per cent of the increase in the provincial population is attributable to net international migration which added an additional 51,000 people to the province last year. In fact, from an economic perspective, BC attracts the cream of the crop when it comes to immigrants.

More than half the investor class immigrants to Canada settle in BC, and three-quarters of them are from China, BC’s top source country of immigrants. In stark contrast, Ontario attracts more than half the refugee class of immigrants that come to Canada, with just 7 per cent destined for BC. So immigrants to BC are likely to have greater financial resources than immigrants to Ontario.

BC is also in the number one slot in its share of migrants originating from other provinces. The popularity of Alberta as the go-to employment province has waned along with the downturn in the oil patch.

Over the last three-quarters, 5,000 more people left Alberta, destined for another province than arrived. Coincidently, BC was the top destination for inter-provincial migrants over the same period of time.

What matters is that a growing population helps underpin housing demand and price levels. It also supports expansion of the housing stock through new home construction, not to mention the jobs that go along with it.

A growing population can help smooth out the oscillation of the business cycle by bolstering consumer demand during a slowdown, as well as set the stage for a more robust recover. The long-term investor as well as armchair analyst can benefit from an understanding of a regions’ population dynamics.

Even age-specific components can be revealing. As example, approximately 40 per cent of all home sales through the Vancouver Island Real Estate Board were retirees last year. Now that is impressive.


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