Vancouver ‘severely unaffordable’

News Flash! This just in, hot off the presses!  Vancouver has become one of the most unaffordable cities in the world.

Vancouver not only has the least affordable housing of 28 markets measured in Canada, but of 272 metropolitan markets ranked in Ireland, the U.K., New Zealand, Australia, the U.S. and Canada, according to statistics compiled by the Winnipeg-based Frontier Centre for Public Policy.

We’re number one! We’re number one!

The numbers are calculated by dividing the median (or middle) residential house sale price from the third quarter by median annual gross household income. In Vancouver, for example, a median home price of $540,900 was divided by median household income of $58,200 to create a multiple of 9.3. The group describes as “severely unaffordable” any reading of 5.1 and over.

Not only that, it is “unprecedented in modern history,” the group said.

Ah! A brave new era!  We’ve broken records and surely now prices have nowhere to go but up!  Congratulations to everyone who took part in the contest by bidding up home prices, and a special thanks to the CMHC.  I don’t think we could have done it without your generous support!

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anonymous
anonymous
10 years ago

Tim – The Montreal Olympics didnt face an Global economic situation as there is now all over the globe. Also there wasnt a US housing crash where some of our US neighbours have lost so very much. The Montreal Olympics went ridicuously over budget and Canadians got stuck paying the bill. Which will probably happen a second time around come Vancouver 2010. Certainly some are hoping for a severe correction. Who knows when it will happen. You dont know and I dont know. The people who are on this site arent suking and hoping for a huge drop. The people on this site are educated university debt laden grads who are trying to pay off their student loans after obtaining their degrees. Hey some kids dont have mommy and daddy big bucks waiting in the wings to help them out.… Read more »

someone
someone
10 years ago

First time homebuyer….I cant sit here and tell you I know whats exactly the right think to do for you and your family. I am in the same position.

My thoughts are to hold out. I have a large downpayment saved up. I have a great job..which I hope hold out until after the olympics and for many years to come.

Unfortunatley, many of my customers are losing their jobs and are skilled trades people, managers, business professionals etc. If your parents are going to be providing daycare service please think about what could happen if they become ill suddenly, etc. Its something my cousin had to deal with.

Whatever you decide to do I wish you all the best and everyone else whos out there thinking about making a big step into homeownership.

Let the bubble burst!

Belly Dancer
Belly Dancer
10 years ago

I wonder….Do you suppose that if you live in this city long enough, the constant rain eventually starts to short out those synapses responsible for logical deductive reasoning?

tim
tim
10 years ago

@patriotz:

Montreal Housing prices had started to fall in 1975 and the correction was around 23% from 179.1K to 138.2K by 1978. That's two years after the Olympics.

The Los Angeles stat that you mentioned, from 1984 to the early 90's… that's over 6 years of lag.

I think many here are under the impression that we just have to outlast the Olympics and there will be a sudden drop. If this study proves true, you should be thinking down a target purchase date of 2014-2018 for a… 20(?)% discount? Not that it's anything to sneeze at, but I'm willing to bet some have been on these sites for 3-5 years complaining about real estate prices and hoping that it'll drop to 40-50%.

Don't hold your breath.

Anonymous
Anonymous
10 years ago

@bubbly: It must be because we're running out of land. Canada has more people and less land than the US right?

😉

macchiato
macchiato
10 years ago

@Vansanity said:

"9.3 times income? Again, I know it’s an average and plenty of homes have more than one income (spouses, mortgage helpers, grow ups, whatever) so it’s to be taken with a grain of salt, but it’s just so outrageous!"

No, it's not averages. It's much worse than you are suggesting.

It's medians. Further, it considers median HOUSEHOLD INCOME, so spouses and the lot are counted.

Quote from financialpost:

In Vancouver, for example, a median home price of $540,900 was divided by median household income of $58,200 to create a multiple of 9.3.

Little
Little
10 years ago

I am raising my family in a small space – 944 sq feet to be exact. In this space I have a dog and a child with another one on the way. Do I feel guilty that I am raising my kid without a yard? Not on your life. I am walking distance to a kids waterpark, an outdoor pool, surrounded by playgrounds and dog parks and have only filled up my gas tank once in the last two months. I suppose some of you would say that I should have a little yard, but for what? So my kid can play alone? Forget it. I lived in the burbs, and I don't have fond memories specifically of hanging out in the yard as opposed to the park or lake with other kids. This North American concept of the big… Read more »

blueskies
blueskies
10 years ago

@mino3:

Disingenuous Dave trots out the CMHC numbers on a regular basis. He knows they are a very narrow subset of all available rentals but this is the only argument

he can come with.

There will be a great selection of units available after the Olympics. "Mortgage helper" basement suites as well as condos held by newly minted reluctant landlords. ….gonna be fascinating to watch this tank…….

mino3
mino3
10 years ago

Dave is looking at CMHC rental stats for purpose built apartment buildings. There haven't been any built in decades (although some condos were converted to apartments due to lack of buyers) so of course they're in short supply (compared to the horde of lower-middle class stiffs) and rents aren't falling. CMHC tries to track the secondary market, but their methods are so flimsy as to be practically worthless.

So as usual, Dave is right on the money…

doug r
doug r
10 years ago

@1st Time Home Buyer:

Sit tight until after the Olympics and rents come down a bit. Then enjoy your rental for a year or two until mortgage rates go up and force prices down.

Or not. Just don't count on those mortgage rates staying down this low for much longer.

patriotz
10 years ago

@tim: No evidence of a post-Olympics boom or bust for host city real estate prices: UBC study The headline does not reflect the actual conclusion, which is: “We do not find support for the argument of host city backers that the Olympics delivers positive economic benefits, nor of the arguments made by opponents that there is some post-Olympic bust,” says Tsur Somerville Somerville is saying that there is no evidence that the Olympics cause a boom or bust after the event, not that such a boom or bust never happens. For example, there was a RE bust in Montreal shortly after the 1976 Olympics, but it had a lot more to do with the election of the first PQ government than anything to do with the games. Similarly, there was a RE boom (or should I say bubble, it crashed… Read more »

patriotz
10 years ago

@Dave:

I believe it was you who said we have to rewind all the way to the mid 80’s to get back to this valuation (price/rent of 120 for condos).

No it wasn't. I have said on this board that the price/rent for houses was 100 in the mid-80's. As the other poster said, we saw a price/rent of 120 (or less) for condos as recently as the turn of the century.

No, the market price is the price that both sellers and buyers are willing to accept.

Did I claim otherwise? What I said that what an asset is worth to a buyer, i.e. its economic return, is the present discounted value of its future income, unless he can sell it for more.

"Price is what you pay, value is what you get." Get it?

Straw man much?

bubbly
bubbly
10 years ago

Are Canadians rubes?

The average US resale home costs $178,000. In Canada, the national average right now is $337,410, or in US dollars $300,294.

http://www.howestreet.com/articles/index.php?arti

stagnate
stagnate
10 years ago

rents-thousands either negotiated a reduction or got more for less but tens of thousands saw the standard increase and ergo overall rents went up. for the first time in awhile new renters likely faired better than existing renters. a bit of even up. i anticipate a lot of renters were cranky when they got the 3% increase this year, psychologically may have pushed some into the first time buyers pool despite the renters premium.

Anonymous
Anonymous
10 years ago

sweet "micro lofts" thats RE speak for broom closet
http://www.cbc.ca/canada/british-columbia/story/2

logic
logic
10 years ago

80 – "Only person ever moved to Los Angeles from Vancover"

———————

Don't. Be. A. Fucking. Retard.

Slow enough for you?

Informer 10
Informer 10
10 years ago

"You need to be allowing the land on the fringe to be opened up to development without the planners telling where the development must occur."(paragraph from study) Similar issue was introduced by Professor Robert Shiller in 2008 but Professor was unable to conclude desire to live in perticular place. In result most of the pre-sale buyers in Dubai left their deposit with developers and their Cars on the Dubai Airport for free(nice building but no ass hemps in surrounding area). Even some people who have thought that velley is within reach of Vancouver also withdrew their deposit from the left over Infinity Towers 3 hanging in the air 4th and fifth never commenced (Nice architect rendering on table but it was not close to Robson Street)in contrast to that Bessley in Vancouver was sold on cheated(artificial) low prices overnite. If… Read more »

domus
domus
10 years ago

For what it's worth, I have heard several (many) people I know well saying that rents are going down. In particular, a guy just moved to a different apartment in the same building (cool, hip place). The new apartment is larger and 10 floors (!) above the old: price difference? He is saving around $50 per month with respect to the old price.

Some rent inflation, uh?

realpaul
realpaul
10 years ago

Fart-iculous * adverb

– a combination of indigestible bullshit that has by-passed the colon and stinks up an entire town. Causes mental fatigue, disgust,delerium, inflammatory speculation.

-origins

see: Bob Rennie, Tony Parsons, Ozzie Jerkoff , REBGV, CREA, and acilliory commentators and pretend economics professionals of Credit Unions and Banks.

history

pending mass insanity and screaming 'I buy treeeeee, my huzba buy treeeeeee!

First postulated by Realpaul, Vancouver Condo Info.Expected to enter Wikipedia very soon and become common venacular for the mental state of real estate fools.

Ex: BOC governor says real estate is no where near farticulous in price, but we're keeping an eye out due to 'excitement' in the Otttawa region.

Informer 10
Informer 10
10 years ago

@VRENGD:If seatlle or los angeles were more attractive then Vancouver. Why American people move here to live in Vancouver BC? Only person ever moved to Los Angeles from Vancover was Re-Esteven (1st ever r.e. number publisher)He has sold his house in West Vancouver in 2007 for Two million Dollars and the place that he have bought in los Angeles is going down,down,down,and down.I am 100% sure that he has lost entire gain he has earned from West Vancouver Home and he had loss half of the principle amount as well.Now he don't have any other credit card to fly back to Vancouver. Those who don't understand Vancouver economy can double check article for restriction of land,There is demand of more than 21,500 in Vancouver every year in normal time it ended up at 35000 unit sometime goes upto 60,000 unit.… Read more »

Lilypad
Lilypad
10 years ago

@1st Time Home Buyer:

Check this out:
http://www.gailvazoxlade.com/resources/guide_to_b

2…The financial rule of thumb says you shouldn’t spend more than 35% of your net income on housing. (That includes mortgage/rent, condo fees/maintenance, property tax and utilities.) If you’re spending more than 35%, either you can look for ways to cut back on your housing costs, you can make more money, or you can trim in other areas (like transportation) so you end up balancing at the bottom line.

Ulsterman
Ulsterman
10 years ago

Suburban Rents: As someone who has been renting out a basement suite in Burnaby for the past 18 months i can confirm rent deflation. I was able to get 900 + bills in Sept 08 and by Sept 09 i was lucky to re-rent for 850 all inc. I checked Craigslist and 850 was the going rate.

OtherTed: In 2001/02 one bedroom rentals off Commercial & 7th/8th sold for 90k and rented for 600 (150 times rent). I remember at the time that based on a 5 year fixed the rent almost covered mortgage, tax and strata.

Drachen
Drachen
10 years ago

@bestplaceonmeth:

"950K is the average, benchmark is 766K, just 5K below the May 2008 peak."

Yes, that's the average detached. The 'average' Turner was referring to was the housing average ie. averaging all types of housing together, condos, attached AND detached.

Informer 10
Informer 10
10 years ago

"News Flash! This just in, hot off the presses! Vancouver has become one of the most unaffordable cities in the world."

Aha? ahan? excuse me please!

When bulls have been telling their bears friends that Vancouver real estate never goes down they mean it while bears were predicting crash!!!!!

What else on earth will convince the bears instead of truth itself?

None other than this Article,This news is a proof that hey…..@V R E N G D:

jesse
10 years ago

@Dave: "The latest CMHC report showed that rents were increasing at faster than inflation"

… for the City of Vancouver. The suburbs are seeing rent deflation. Anecdotal reports from property managers, and what I am observing, seem incongruous with the CMHC report. FWIW.