A lot of people seem to be either confused or in denial about just how unaffordable Metro Vancouver is for housing.Some can be excused their ignorance. When I recently told two visiting academics from Philadelphia and Seattle that Vancouver has virtually the most unaffordable real estate in the developed world, they acted as if they’d experienced the same squeeze: They said Philadelphia and Seattle housing is super-expensive, too.Wanting to be a genial host, I didn’t bother to tell them there is no comparison. An increasing number of economic institutions are producing housing unaffordability indexes for the world’s major and most desirable cities. And Vancouver has the unfortunate distinction of always being among the worst.It’s common for people anywhere to feel owning a home is beyond their budget. But it’s crazy to include Philadelphia in the same camp as Vancouver. Philadelphia is actually ranked among North America’s most affordable cities, since its ratio of house prices to average earnings is a workable 3.4 to one.Seattle is costlier than Philadelphia, since Seattle is also a “gateway” Pacific Rim city like Vancouver that is attractive to migrants and foreign investment. But even Seattle’s affordability ratio is just 5.6 to one, according to Demographia, which measures housing prices in almost 300 cities in the mostly English-speaking world.Meanwhile, Vancouver’s unaffordability ratio is 12.6 to one.Demographia was one of the first to publish affordability comparisons across global cities, using the most common and arguably the most revealing statistic: the ratio of average wages to average housing costs. According to Demographia’s list, only Hong Kong, a protectorate of China, has a more egregious housing situation than Vancouver.At least six more organizations have now jumped into the global affordability ranking game, however. And each one puts Vancouver in a league almost of its own.So it was a bit misleading when the city of Vancouver’s former chief planner, Larry Beasley, recently told Postmedia, “Affordability is a major problem in every attractive city in the world, whether you’re talking Melbourne, Helsinki, San Francisco, Seattle, Vancouver or Toronto.”The problem with lumping all such desirable cities into the same over-priced stew is that, even while it’s true that housing is expensive in many global cities that Beasley and some property developers often mention, unaffordability is on a continuum. And the continuum is crucial.Related
The Economist magazine is one of the latest to publish its own interactive guides to affordability in key cities, using different measures. One of its charts shows that, among cities reviewed, Vancouver prices are not only the most unaffordable in North America, they’ve grown the fastest since 2000.The average price of a dwelling in Vancouver has skyrocketed by 300 per cent since 2000, according to The Economist. That compares to price jumps of about 238 per cent in Toronto, 220 per cent in Melbourne and 155 per cent in San Francisco.U.S.-based Knight Frank, which advises developers, has also created a Global Affordability Monitor, which uses different measures again. But, even though some worry Vancouver’s prices have been falling since their peak in 2018, Knight Frank’s ranking all place Vancouver among the most unaffordable of 25 significant cities.Vancouver residents are clearly struggling more than those in Melbourne, New York, San Francisco, London, Paris and Tokyo.One Knight Frank chart shows Vancouver prices rose by 58 per cent in the last five years, while incomes grew by only 12 per cent. Meanwhile, San Francisco housing rose by less, 42 per cent, and the pressure on residents was also alleviated by income gains of 26 per cent. The good news for New Yorkers is prices grew by only eight per cent, while their wages rose faster.
Source: Knight Frank Global Affordability Monitor
In other words, homeowners and would-be homeowners are hurting in most but not all attractive cities, including those mentioned by Beasley (Helsinki is so small it rarely gets ranked). But some residents, like Vancouverites, are hurting much more than others.Canadians in general are facing more money difficulties than people in other developed countries, according to the International Monetary Fund. It recently delivered the bad news that, since 2015, the gap between the cost of housing and incomes has grown the widest in Canada, compared to 36 nations in the Organization of Economic Cooperation and Development.And, even while housing in some Canadian cities is almost affordable, Vancouver is far and away the most costly in the country, according to RBC Economic Research. It found in April that a typical Vancouver household has to spend 85 per cent of its income to cover ownership costs, compared to 66 per cent in Toronto, 44 per cent in Montreal, 41 per cent in Ottawa and 34 per cent in Edmonton.I could go on citing more rankings. But they all point to the same thing. And that is, even if a precious few cities such as San Francisco or Manhattan have homes with higher price tags, Vancouver’s affordability is held back by tepid wages. Housing costs here are disconnected from the labour market; they’re fuelled more than almost anywhere else by offshore capital.In the face of Vancouver’s housing problem, Beasley, who has long favoured increasing urban densities, told Postmedia that “in most of the world, cities are growing so fast it’s impossible to keep up. You can’t design them, you can’t manage them.”But that is not entirely the case in many places, including London, Helsinki and New York. And it’s certainly not true in British Columbia, where the government has recently brought in a series of policies to manage a demand-driven affordability problem that in Vancouver has become among the most appalling in the world.Undeniably.email@example.com@douglastodd
Source: International Monetary Fund. Review of affordability in OECD countries.