Unlike many other cities that can sprawl unhindered

Unlike many other cities that can sprawl unhindered

Metro Vancouver near bottom for home affordability

Economist says second-worst ranking may overstate severity, but trend is expected to continue

Metro Vancouver is now ranked the second least affordable area to buy a home in an annual study of international real estate markets.

The annual Demographia survey of 325 cities rated Metro Vancouver second worst for affordability, bumping Sydney, Australia into third place. Only Hong Kong ranks worse.

“The most unaffordable markets, Hong Kong and Vancouver, became even more unaffordable,” according to the findings, which looked at major cities in the U.S., Canada, the U.K., Australia, New Zealand and Hong Kong.

The study calculates a “median multiple” to measure housing affordability for each metro area (including far-flung suburbs) by dividing the median home price by the median household income.

Metro Vancouver’s multiple at 10.6 means it would take more than a decade of a typical family’s entire annual income of $63,800 to cover the $678,500 cost of a home.

That’s more than double the 5.0 multiple at which Demographia considers housing to be “severely unaffordable” and far above the 3.0 cutoff to be counted affordable.

The next worst Canadian cities are Abbotsford at 7.0, Victoria at 6.8, Kelowna at 6.6, Toronto at 5.5 and Montreal at 5.1.

Several U.S. cities, including New York and San Francisco, were also classified severely unaffordable, but at lower ratios between 5.0 and 7.0.

Vancouver’s ranking has worsened from 2006, when it was the survey’s 15th least affordable city with a median multiple of 6.6.

It’s the latest in a series of reports that have red-flagged rising prices in this region.

RBC Economics, which tracks affordability based on local residents’ ability to qualify for a mortgage on a typical home, warned in November Vancouver’s “extreme unaffordability appears to be driving local buyers away.”

Central 1 Credit Union economist Helmut Pastrick agrees Metro Vancouver is “very expensive… these kinds of price-to-income measures verify that.”

But he thinks the Demographia study may overstate Metro’s affordability problem, noting it seems to underestimate the region’s household income levels.

Pastrick also argues high-priced homes that fetch $2 million or more in the most desired parts of the region make the problem appear worse than it really is in more affordable areas, such as Surrey, Langley or the Tri Cities.

“I might quibble with our ranking,” he said. “We might not be number two, but number 10 or so.”

Still, Pastrick doesn’t expect Metro Vancouver will get cheap any time soon.

“We have very unique geographic constraints – mountains, water, the border – so the pressures on land prices are more intense here than elsewhere,” he said.

Those are bigger factors here, he said, than land use restrictions such as the Agricultural Land Reserve or Metro Vancouver’s Regional Growth Strategy, which seeks to concentrate development in areas better served by transit.

“The long-term upward trend in land prices will continue,” Pastrick predicts, adding the old expectation that most people can own a detached house will continue to fade.

More residents will own condos and increasingly buyers will choose smaller units, older units or ones further from the core in response to rising prices, he said.

“It may also mean renting,” Pastrick said. “In the future, I think there will be relatively more renters than we have now.”

New Westminster Mayor Wayne Wright, who chairs Metro’s housing committee, said the shortage of rental housing is also a serious concern.

“If you don’t have a workforce that can get to work and have a good day’s work given to you because they had to travel for four hours, you’re in a lot of trouble,” he said.

Local cities and other groups have formed the Rental Housing Supply Coalition to press senior governments to find ways to encourage developers to build more rental units.

Wright said aging rental apartment buildings are increasingly becoming unlivable and that is making it more urgent to solve the rental supply problem.

Just Posted

The theme for this year’s Fraser Valley Regional Library Summer Reading Club is “Crack the Case” and Katie Burns, community librarian at the Chilliwack Library, is encouraging people of all ages to sign up. She is seen here at the Chilliwack Library on Friday, June 18, 2021. (Jenna Hauck/ Chilliwack Progress)
Crack the case, read, win prizes with FVRL Summer Reading Club

‘Immerse yourself in other worlds and have a bit of fun while you do it,’ says Chilliwack librarian

Cpl. Scott MacLeod and Police Service Dog Jago. Jago was killed in the line of duty on Thursday, June 17. (RCMP)
Abbotsford police, RCMP grieve 4-year-old service dog killed in line of duty

Jago killed by armed suspect during ‘high-risk’ incident in Alberta

Kalyn Head, seen here on June 4, 2021, will be running 100 kilometres for her “birthday marathon” fundraiser on July 23. (Jenna Hauck/ Chilliwack Progress)
Woman’s 100-km birthday marathon from Chilliwack to Abbotsford will benefit Special Olympics B.C.

Kalyn Head hopes run raises awareness, advocates for inclusion of people with intellectual disabilities

Dancers from the Sts’ailes First Nation perform the eagle dance at a welcome banner dedication ceremony on Thursday, June 10. “Ey Swayel” is a Halq̓eméylem term translated as ‘a good day.’ (Adam Louis/Observer)
VIDEO: ‘A good day’ for Agassiz school as Sts’ailes welcome banner is dedicated

Banner hangs above the school’s entrance, welcoming students, staff and visitors

Missing Abbotsford man Adam Hobbs was found deceased on Thursday evening (June 17).
Body of missing Abbotsford man Adam Hobbs found

Hobbs was reported missing Monday after leaving his job site in Langley

Marco Mendicino, Minister of Immigration, Refugees and Citizenship during a press conference in Ottawa on Thursday, May 13, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Canada to welcome 45,000 refugees this year, says immigration minister

Canada plans to increase persons admitted from 23,500 to 45,000 and expedite permanent residency applications

A police pursuit involving Abbotsford Police ended in Langley Saturday night, June 20. (Black Press Media file)
Abbotsford Police pursuit ends in Langley with guns drawn

One person arrested, witnesses say an officer may have been hurt in collision with suspect vehicle

(file)
Pedestrian hit by police vehicle in Langley

Injuries described as serious, requiring surgery

Barbara Violo, pharmacist and owner of The Junction Chemist Pharmacy, draws up a dose behind vials of both Pfizer-BioNTech and Oxford-AstraZeneca COVID-19 vaccines on the counter, in Toronto, Friday, June 18, 2021. An independent vaccine tracker website founded by a University of Saskatchewan student says just over 20 per cent of eligible Canadians — those 12 years old and above — are now fully vaccinated. THE CANADIAN PRESS/Nathan Denette
At least 20% of eligible Canadians fully vaccinated, 75% with one dose: data

Earlier projections for reopening at this milestone didn’t include Delta variant

This undated file photo provided by Ernie Carswell & Partners shows the home featured in the opening and closing scenes of The Brady Bunch in Los Angeles. Do you know the occupation of Mike Brady, the father in this show about a blended family? (Anthony Barcelo/Ernie Carswell & Partners via AP, File)
QUIZ: A celebration of dad on Father’s Day

How much do you know about famous fathers?

Emily Steele holds up a collage of her son, 16-year-old Elijah-Iain Beauregard who was stabbed and killed in June 2019, outside of Kelowna Law Courts on June 18. (Aaron Hemens/Capital News)
Kelowna woman who fatally stabbed teen facing up to 1.5 years of jail time

Her jail sentence would be followed by an additional one to 1.5 years of supervision

The George Road wildfire near Lytton, B.C., has grown to 250 hectares. (BC Wildfire Service)
B.C. drone sighting halts helicopters fighting 250 hectares of wildfire

‘If a drone collides with firefighting aircraft the consequences could be deadly,’ says BC Wildfire Service

A dose of the Pfizer-BioNTech COVID-19 vaccine is pictured at a vaccination site in Vancouver Thursday, March 11, 2021. THE CANADIAN PRESS/Jonathan Hayward
NACI advice to mix vaccines gets varied reaction from AstraZeneca double-dosers

NACI recommends an mRNA vaccine for all Canadians receiving a second dose of a COVID-19 vaccine

A aerial view shows the debris going into Quesnel Lake caused by a tailings pond breach near the town of Likely, B.C., Tuesday, Aug. 5, 2014. THE CANADIAN PRESS/Jonathan Hayward
Updated tailings code after Mount Polley an improvement: B.C. mines auditor

British Columbia’s chief auditor of mines has found changes to the province’s requirements for tailings storage facilities

Most Read