Van­cou­ver struck by one-two punch of low wages, pricey homes

City sits at top of un­af­ford­abil­ity rankings: study

Windsor Star - - FINANCIAL POST - NATALIE OBIKO PEAR­SON

Want to pay San Fran­cisco hous­ing prices on a Colum­bus, Ohio in­come? Move to Van­cou­ver.

While pol­i­cy­mak­ers from Seat­tle to Bos­ton la­ment a grow­ing ur­ban af­ford­abil­ity cri­sis, a new study of home prices and earn­ings across more than 100 ma­jor U.S. and Cana­dian metropoli­tan ar­eas shows Van­cou­ver in an ig­no­min­ious class of its own.

The me­dian cost of a Van­cou­ver home, ad­justed for pur­chas­ing power par­ity, is US$672,000 — costly but still 15 per cent to 26 per cent be­low that of San Jose and San Fran­cisco, the two most ex­pen­sive hous­ing mar­kets, ac­cord­ing to Andy Yan, di­rec­tor of Si­mon Fraser Univer­sity’s City Pro­gram, whose study ac­counted for the dif­fer­ence in buy­ing power of a dol­lar across ge­ogra­phies and cur­ren­cies.

What pushes Van­cou­ver to the top of the un­af­ford­abil­ity rankings is pal­try wages.

In Canada’s third-largest city, the me­dian house­hold earns the equiv­a­lent of US$61,036 a year — in line with Colum­bus and less than fam­i­lies in Omaha, Neb., Kansas City, Mo. and even Lan­caster, Penn., a ru­ral com­mu­nity of 59,000 known for corn­fields.

The Pa­cific Coast city ’s prop­erty mar­ket is en­ter­ing a slow­down af­ter pol­i­cy­mak­ers in­ter­vened with a slew of mea­sures to tem­per de­mand, in­clud­ing a for­eign buy­ers tax and tighter mort­gage rules, along with higher in­ter­est rates. Sales hit a five-year low last month, while the num­ber of homes on the mar­ket swelled to the most in three years.

But the fig­ures show just how dif­fi­cult it will be to close the af­ford­abil­ity gap af­ter a run up that’s seen the price of a typ­i­cal home triple since 2005.

“You need one of two things: ei­ther Van­cou­ver real es­tate prices need to halve to at­tain a cer­tain level of af­ford­abil­ity, or you need to dou­ble in­comes,” Yan said. As for Toronto, Canada’s big­gest city is the eighth most ex­pen­sive hous­ing mar­ket on the list. With a me­dian house­hold an­nual in­come of US$65,833 — about as un­af­ford­able as San Fran­cisco or San Jose but still bet­ter than Van­cou­ver.

Low wages aren’t a Cana­dian prob­lem ei­ther. Cal­gary, the oi­land-gas cap­i­tal, ranks fourth on the con­ti­nent in house­hold earn­ings with US$83,650, while a well­paid govern­ment sec­tor puts Ot­tawa above Dal­las, Port­land and Chicago with US$68,925 a year. An out­right cor­rec­tion would be po­ten­tially dev­as­tat­ing for Van­cou­ver — real es­tate de­vel­op­ment is the prov­ince’s largest in­dus­try and hous­ing a key driver of the lo­cal econ­omy.

Dou­bling in­comes is wildly am­bi­tious — sim­i­lar in scale to a 10year goal that China has set for it­self.

“That’s the Her­culean task of what Van­cou­ver is fac­ing,” Yan says.

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