City tops index in unaffordability

Home costs rank third in North America, while income levels are near the bottom

Median home values in Vancouver are known to be the highest in Canada, but it’s a whole other stratosphere to see them come in third in North America, up there with the economic powerhouses of Silicon Valley and San Francisco.

And then, it’s a dramatic shift of the eye to see that median household incomes in Vancouver are near the bottom of a list of 51 North American metropolitan areas, sandwiched between two much sleepier places: Lancaster, Pennsylvania, and Columbus, Ohio, Vancouver was number 50. “Columbus has a hockey team so I knew where that was, but I had to look up Lancaster,” said Andy Yan, director of Simon Fraser University’s city program.

This is Yan’s latest offer of perspective on the gap between what Metro Vancouver residents earn and what home values are.

It comes as regulators and major banks are assessing the risks of their exposure to Vancouver housing, while general debt levels in the country remain at what Bank of Canada governor Stephen Poloz recently described as “worrying levels,” even though tighter lending regulations have helped to steady prices.

Yan took 51 metropolitan areas in Canada and the United States that have a population greater than 500,000 and — using Statistics Canada, 2016 census, U.S. Census Bureau and other 2016 figures — pegged median home values in Metro Vancouver at $800,220 and median household incomes at $72,662, accounting for purchasing power parity or what a dollar can buy in different markets.

Both median housing values and household incomes in the metro area of San Jose- Sunnyvale- Santa Clara, Calif., were the highest of all the cities at $1,085,595 and $131,000, respectively.

Apple Inc. has been building a US$5-billion campus, set over 175 acres, in Sunnyvale (located in Santa Clara County) that will include a spaceship-like building for 12,000 workers. The area is also home to the likes of Google LLC and Cisco Systems Inc.

“I’ve heard they have some pretty good economic development,” deadpanned Yan. “Some solid startups.”

San Francisco-Oakland-Hayward came in second for both highest median housing values and median income.

When Yan divided median household incomes by median housing values to make an affordability index, Vancouver topped the entire chart at 11, compared with the next closest metropolitan area, Los Angeles-Long BeachAnaheim, at 8.8; San Jose- Sunnyvale- Santa Clara was 8.3; Toronto was fourth on that list with an index of 8.3; Calgary was 4.5.

“Vancouver is an expensive place to live and a hard place to make a living,” he said.

For Yan, this means there is a change in the narrative of what life in Vancouver means or offers.

“Whereas our parents busted arse to make a life in Vancouver, it’s now going towards ‘how much of life in Vancouver is about doing a day of honest work?’ Or is it ‘the luck of inheriting it all?’ And is this a story that we want to follow? And who are the writers of it?

“There’s no magic bullet, but what’s needed is a thoughtful tool kit with two trays. One is affordable housing, which is about both supply and demand measures. And the other is economic activity, the fishing and hunting for companies and attracting them, and growing them here.

“Inadvertently, our high residential real estate actually discourages companies from being here. The numbers touch upon how our high residential real-estate prices undermine our competitiveness.

“They displace other activities when it’s better to flip real estate than build a company,” said Yan. “That has consequences.”

Inadvertently, our high residential real estate actually discourages companies from being here.