FED UP WITH HOUSE PRICES?
OR READY TO CASH OUT?
WHY THE REAL ESTATE BOOM HAS LEFT BRITISH COLUMBIANS FEELING RICHER AND
POORER THAN THEY REALLY ARE
have seven times their annual household income—which is in the healthy $100,000-plus bracket—socked away, thanks to the sale of a condo several years ago along with savings from their earnings. Justin Jacobsen, who makes a “comfortable six-figure salary” as an investment analyst, and his wife have also banked a huge wad of money. Nels Anderson and his wife have amassed about two years' worth of household income in savings.
These three Vancouver couples in their 30s are, by normal standards, more than well off. They, along with many other millennials in Metro Vancouver, have saved much more than their peers in any other major Canadian city, according to Wealthscapes 2016, the latest annual report on the assets, income, spending and liabilities of Canadians published by Bcbusiness research partner Environics Analytics. The 30-somethings in B.C. have savings and investments that are 50 per cent higher than the rest of their cohort in Canada. Those in Vancouver have 20 per cent more than millennials elsewhere in the province.
But they feel poor, for the same reason they have money in the bank or investment accounts. Even with their relatively good incomes, they can't get into the property market—or at least not into any house, townhouse or condo that is roomy enough and close enough to where they work in Vancouver. That makes them cash rich and equity poor, in a city where real estate hysteria prevails. And all three couples, who have started families and are struggling with the different demands that makes, are enraged and frustrated about it.
“On every front, it's all impossible,” says Anderson, who runs a video game development business. “We have zero debt, four university degrees between us and no security in anything at all.”
Anderson and his wife, Tila, pay $2,500 a month for a two-bedroom condo in the West End just big enough for them and their two-year-old, with a cramped office on the enclosed balcony. If that rental were ever to be yanked out from under them, their house of cards—complicated childcare arrangements, quick commutes to work—would collapse. But buying anything would mean more than doubling what they pay for housing, a piece of math that seems untenable.
“Obviously, there are people who are truly floundering in lived poverty out there,” says Anderson, trying to put his situation into perspective. He's right. Many British Columbians are truly poor, without any of the three pillars of household wealth: company pensions, investments and real estate. Half of all single B.C. seniors get by on less than $25,000 a year, according to the Canadian Centre for Policy Alternatives. About 450,000 people in the province are still considered to live below the poverty line, even though 40 per cent of that group is working. But there's also hardship among his cohort, Anderson contends. “For everyone in the middle, there's nothing for us,” he says. “For young people, the deck is stacked against us.”
Digital designer Harriman and her husband, Eduardo Rabago, who works in software design, live in an 850-square-foot West End twobedroom with their toddler for a modest $1,700. The only thing that seems to be available to them, if they don't want to spend way over 30 per cent of their income on shelter, is “a house in East Van where someone died,” Harriman says.
Jacobsen is equally stymied. He and his wife, Golriz Fattahi, pay $3,000 a month for a floor of an older house near Vancouver City Hall, a roomy place they need for themselves and their two-year-old. They face having to pay double that amount if they want to buy even a small coach house in their area. One they looked at recently was selling for $1.5 million.
“It's kind of stressful,” says Jacobsen, who at this point can't stomach the idea of investing in such an out-of-whack real estate market. It's made him especially resentful about the speculation and capital flight from overseas distorting Vancouver's housing fundamentals, dynamics that make his everyday life uncertain. “You're dealing with a landlord who you don't know what his intention is,” he says. “My son has friends in the neighbourhood, and it would be hard to move.”
“On every front, it's all impossible. We have zero debt, four university degrees between us and no security in anything at all.... For everyone in the middle, there's nothing for us. For young people, the deck is stacked against us” NELS ANDERSON