Is Vancouver ‘Severely Unaffordable’?

I just found this story in the sun from way back in January – It’s about a study that ranked cities housing affordability based on the ratio between median house prices and median income, and guess what – Vancouver was rated worst in Canada, and 15th worst city in the world for affordability at that time.

This is the second year for the survey, which was developed to compare housing affordability around the world, the report’s co-author Hugh Pavletich said in a telephone interview from New Zealand.

“We felt there was a desperate need for an easily understood measure of housing affordability both within countries and across borders,” Pavletich said. “So it doesn’t matter what currencies we’re talking about, or even the house prices and the household incomes. The key thing is the multiple of household income it takes to buy a home.”

This multiple should not be greater than three, Pavletich said. He called Vancouver’s index of 6.6 “bloody absurd.”

“Historically back in the 1970s and 1980s within the property industry, it was always considered a rough rule of thumb that people should not have to spend any more than three times their household income to buy their homes,” he said.

Now as house prices get “out of hand,” this guideline has faded from public view, Pavletich said.

See? Things are different now! And since things are different that means the prices will never go down. Maybe ‘bloody absurd’ is the new reality?

In unaffordable cities, the key problem was the “strangulation of land supply” by local government, Pavletich said. Not allowing enough land to be developed was creating an artificial scarcity which is driving prices up, he said.

Three cities in Canada made the most affordable list with Winnipeg in third place worldwide with a house price to income ratio of 2.4, followed by Edmonton and Quebec City, tied at 14th with an index of 2.8.

The United States, with the world’s most unaffordable real estate, also had the most affordable, with indices of 2.2 in both Buffalo and Rochester, N.Y.

Pavletich hopes the survey will get people to question housing affordability and urge governments to actually set housing affordability targets.

Hmm.. I wonder how much of a role government can play in prices. Obviously things like interest rates and employment factors have some impact on prices, but is the current boom due to ‘not enough land’ to build on? If they opened up the land just northeast of terminal and main would that make a difference? Should they open up Stanley Park, Jericho beach park and the UBC endowment lands to condo developments?

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Kris Taylor
12 years ago

Severely unaffordable? Vancouver was an expensive city when I LAST MOVED 7 YEARS AGO. Now my landlord is selling the place I live in. I'm a business owner with a fiancee to share the expenses. 1 bedroom apartements for $1000+? This is freaking insane. We're really looking for a 2bdrm so I can have my office in the second bdrm. Just last year my friend picked up a 2bdrm basement suite for $850. I cant find anything like that now, the same place would go for $1300. The problem is the dumb municipalities, theyve gone nuts. They are allowing building permits to knock down massive rental properties to build… condo towers for sale. This condo crap has to end. Apparently the vacancy rate in the GVRD is 0.3%. The population hasnt grown that much… its the fact that they're demolishing… Read more »

bc_cele
bc_cele
14 years ago

Paul said… The agricultural land reserve is there for strategic reasons. As the population of any nation grows they need to maintain internal capacity to produce food. Look at Japan, they have the same thing and even less land to play with than we do. River delta is the richest soil on the planet, it's foolish to build on it. Build on land you can't grow anything on!As for the north shore, the slope is unstable. That's why when it rains everyone up their pisses their pants. The city should never have allowed development to go so far up the slope. Strange, that's what I was told about the soil in SW Ontario. I guess we can argue that point latter.Still, the fact stands that the world is in a production glut. In addition when it comes to production and… Read more »

Paul
Paul
14 years ago

The agricultural land reserve is there for strategic reasons. As the population of any nation grows they need to maintain internal capacity to produce food. Look at Japan, they have the same thing and even less land to play with than we do. River delta is the richest soil on the planet, it's foolish to build on it. Build on land you can't grow anything on!As for the north shore, the slope is unstable. That's why when it rains everyone up their pisses their pants. The city should never have allowed development to go so far up the slope.

metro
metro
14 years ago

Isn't part of the problem that the downtown core is bordered by water? 'vancouver' only really stretches south west and east of downtown. They should be building more bridges to the northshore.The water from downtown is beautiful, but does it limit the growth potential of vancouver? I wonder if surrey, richmond or burnaby will end up taking over a lot of economic power in the lower mainland as vancouver is choked off by demand.

Anonymous
Anonymous
14 years ago

Sorry about the anonymous post but the previous user ids I chose were taken. bc cele the Richmond/Delta/Fraser Valley area has some of the best soil in the province. Why pay large sums of money to have food shipped from outside the province when you can enjoy fresh food produced locally. Have you tasted a strawberry shipped from California? The taste doesn't even compare to that of a locally grown berry. If you live in the West End you should visit their farmers market. I think you would be amazed. http://www.eatlocal.org/

Anonymous
Anonymous
14 years ago

I thought it was common knowledge that Vancouver was unaffordable. It has great beauty and scenery but not an affordable place to be. I have been searching for a reasonable condo for just me but cannot wrap my head around paying over $400K for something less than 800 sq ft. Even out in the burbs (New West/Burnaby) prices are insane. I am not into living like this and it's time to leave.

stuckinburnaby
stuckinburnaby
14 years ago

Too late. The majority of produce in the world is now grown in China.

bc_cele
bc_cele
14 years ago

Capnjack said… Yeah.. but I'm not so sure it would be a good idea to cut into the agricultural reserve to build more housing – I like having fresh local food available instead of trucked half way across the world.Maybe the land thats set aside to not build on is made that way for a reason. So what 'fresh' foods are you buying from this reserve? Apples? Maybe peaches, or cherries, or cranberries? I rather doubt the land is set aside for anything woth while, but I could be wrong – and no, I don't think that wine and some grains are worth it.

Capnjack
Capnjack
14 years ago

Yeah.. but I'm not so sure it would be a good idea to cut into the agricultural reserve to build more housing – I like having fresh local food available instead of trucked half way across the world.Maybe the land thats set aside to not build on is made that way for a reason.

bc_cele
bc_cele
14 years ago

I'm new to the province, but isn't it true that the only thing that stops Abbotsford from expanding is that they have an agricultre reserve surrounding the area. What the heck is this all about? Do you guys have problems with food in this province that the rest of Canada doesn't. We seemed to have a glut of fresh foods back in central Canada so why is this such a special area?

richard
richard
14 years ago

Is that a rhetorical question? I think everyone knows that Vancouver is overpriced. Thats why sales have dropped off and you're starting to see news of a peak or bubble in the mainstream media.Even realtors and marketers are pushing the limits of logic. I saw an article on the cover of a local real-estate rag that looked at the rent/buy comparison. Basically they said that if you find the right place and you want to live in it for a long long time and you can afford the payments then now could still be a good time to buy. Well, duh!

Anonymous
Anonymous
14 years ago

Lets pave over english bay.Think of the views!

the pope
the pope
14 years ago

kam:didn't you know? There are latte-making robots now. No need for baristas!They still need to perfect the robotic personal assistants to throw diamond-encrusted blackberries at though.

kam
kam
14 years ago

d_oush-ok, good luck selling that condo to a movie star, but who's going to make them their latte's if the barista's cant afford to live here?

D_Oush
D_Oush
14 years ago

Maybe it's severely unaffordable (or in danger of getting that way) for people that live here, but what about people who bring money in from the outside? I would think that with oil money, foreign industry wealth or movie star salaries Vancouver is still a great deal.

kam
kam
14 years ago

yes, I think it's bloody absurd. I think maybe its time to check out buffalo or rochester.