I knew I was right about this unaffordable housing in Vancouver situation. In the Vancouver Sun today and on the news, a study done a few days ago showed that Vancouver has the least affordable housing in the world. According to the study:
“Vancouver is the most unaffordable of the 28 housing markets measured in Canada and the most unaffordable of the 272 metropolitan markets ranked in Ireland, the U.K., New Zealand, Australia, the U.S. and Canada,” the Frontier Centre for Public Policy concluded in its sixth annual Demographia International Housing Affordability Survey.
“[In] Vancouver the median sale value was $540,900 and the median household income was $58,200, giving a Median Multiple of 9.3 — defined as ‘severely unaffordable.’”
Holy crap, it takes 10 years of your average yearly income to pay off that 750 square feet 1 bedroom Condo in Kitsilano? Whereas it would take someone three years of average yearly income to pay off a huge sprawling gorgeous house with a white picket fence somewhere else in Canada? The authors of the study said that to be affordable, a house has to be about three times your annual household income.
The survey uses what’s called the median multiple method of measuring housing affordability. This takes the median residential house sale value and divides it by the median annual gross household income.
Everywhere else in the world, the real estate prices have plummeted. The real estate sales in Vancouver has actually increased big time compared to last year. What recession, I ask? The Canadian Bank have decided to hold off on increasing the interest rates, so the high housing prices will still continue. I am hoping (for my sake) that the housing bubble here will burst soon. *Snap, Crackle, Pop!* is the sound I hope to hear, and I’m not referring to Rice Krispies!
Even though the rates are so low, I am not too keen on plunking down all my money that I have saved up so far in what Out of Your Rut smartly coins as Dead Equity. Even though it can currently be done, being the responsible 20-something person that I am, I am very hesitant to put down only 5-10% down payment . I would much rather save up the 25% and pay less interest to the banks overall in the grand scheme of things. When (note that it’s not if) the interest rates rise, those with the 5-10% down payment and the 2.25% interest on a home that is already seriously at the upper echelon of unaffordability (e.g. with >32% of your gross monthly income going to mortgage, utitlities, and property taxes)… are frankly kind of screwed. Can you say… foreclosures?
Don’t let the bankers tell you you can afford more than you think you can afford. Like my mom always used to say, “don’t bite off more than you can chew”. It’s quite common to hear that home owners in Vancouver are spending about 50%-60% of their gross income on the shelter costs. It really should be 32%. Max.
What’s the city of Vancouver’s solution to decreasing land availability and increasing and unaffordable housing prices? Allow you to build Laneway houses (e.g. a FRIGGIN HOUSE IN YOUR BACKYARD? Or turning your garage into a house so you can rent it out? You have got to be kidding me. It just looks weird.), allow you to downsize your already shoe-box-like 700 square foot condo in downtown Vancouver to 500 square feet so you can rent out the remaining 200 square feet, and as Give Me Back My Five Bucks mentions, allow for 270 square foot “micro-lofts” in the heart of the city.
I hope I don’t sound too bitter. Really, Vancouver is really beautiful (check out the picture I took ontop of Grouse mountain two summers ago), the food’s cheap and great, culture’s great, people are great, view’s great… It’s just that it’s too bad that living in the city is so unaffordable. *burst real estate, burst!*
I am going to just sit on the fence for a little while longer, I think…and continue to stew in my “home envy”.
Are homes affordable where you live? Do you think we should be biting off more than we can chew when it comes to mortgages?
Wow, I would’ve never guessed Vancouver was the most expensive from that list.
Back home in Wisconsin $500k will get you a 5,000 sq ft new home on an acre of land… not too shabby.
.-= Ryan @ Planting Dollars´s last blog ..The Part Time Job Search =-.
Hey Ryan,
Yes, I never would have thought too =( We started out so small and affordable. Wow $500,000 for a 5000 sq foot home on an acre of land?? (drool! that sound amazing). I don’t know if you’ve seen that show, called “International House Hunters” (not sure if that’s what it’s called) but they basically go around the world and you can see what $1,000,000 will get you, and I saw that in Italy, you can get a CASTLE for $1,000,000! Here you can get a 50 year old small house in the west side of Vancouver!
Here’s a link to the PDF report! I still can’t believe Vancouver is more unaffordable than NEW YORK. WTF?!?!
http://www.fcpp.org/files/1/dhi6-frontierJan2410.pdf
haha, i love the “wtf?!?!”
Well like anything it’s supply and demand so I’m guessing you have a lot of land restrictions?
Hey Ryan,
Yes, Vancouver does have its fair share of land restrictions (we have a lot of parks), but due to the high cost of housing, most people can’t afford to live in a house per se and are opting for condos… I’m not sure WHAT it is… We’re not getting paid enough to be able to afford the houses here. Apparently there’s lots of well-to-do people who have homes here that don’t live here *and i shake my fist at them* =)
btw, I added you on Twitter =)
Haha, crap! I have you and a few other people following me on twitter now and I don’t even use it!!! I’ll have to get on that… I feel like an old man trapped in a 23 year old’s body. My cell phone is from like 2001 and I don’t use twitter… Can I like my blog rss to twitter? How do you use it??? This is embarrassing…
Lol! Wow you’re only 23? I felt like that too (and I’m just 3 years older than you)! I felt like that with itunes (all this newfangled stuff!) You get the hang of twitter. You can link your blog posts to twitter with feedburner (each time you post, it’ll post on twitter–I think it’s under “socialize your feed” or something). If people ‘follow’ you, you can follow them back. And then you use @(insertpersons’name) to “talk/mention” them in public.
[...] Colin, REALLY? Vancouver is listed as the most unaffordable place in the western world, pretty much (out of 300 cities [...]
I know this post is over a year old but I’ve been busy playing catch-up on some of your posts every since MoneyRate linked me to your “joint vs. separate accounts” post. Great reading!
Santa Barbara may not be the most unaffordable, but it probably ranks pretty high up there in terms of just home price alone. According to my agent’s Jan 2011 report, the median sales price for January was $829K. It’s worth it, though– beach and mountains just a few miles apart, and a stable, mild climate
I did blog recently about how expensive it is here, and what different kinds of homes you can get at a certain price point: http://heckledtrio.wordpress.com/2010/11/02/the-crazy-cost-of-housing/
Crazy, eh!
@Helly- Santa Barbara sounds beautiful! Just like Vancouver, but warmer and no rain! The smaller population is appealing too. So what kind of demographic mainly lives in SB? Working individuals? Where do they work? I assume outside of SB?
We do love it here. Summers are never hot like they can be in LA, and winters– well, let’s just say I have to bite my tongue (fingers?) when I see friends’ posts on Facebook about frozen water pipes, blizzards and feet upon feet of snow
We were in Vancouver in June 2007 (hubby was attending a conference there)– I thought it was a lovely place, and only wished we had more time to explore more of the sights.
As for the demographic– hm, I’ve never given it much thought, but seems like a pretty even mix of a working-class population and upper-to-middle class. With of course, a fair share of the wealthy living in the multi-million-dollar homes, including the rich and famous like Oprah. As for living and working in different areas, it tends to be the other way around– many who work here can’t afford to live here (well, they COULD if they lived in a small shack vs. a new 2000-sf home) unless they’re either really wealthy or low-income enough to qualify for subsidized housing. Many of my co-workers and friends live 30-50 miles away and commute to work here. Except for the celebrities or well-heeled retirees, I don’t think anyone really lives here that doesn’t work here as well.
@Helly- I had no idea Oprah had a house in Santa Barbara! That is so cool
Have you ever bumped into her? I’m sure it won’t be too difficult since it sounds like a smallish city/ town.
The best things (barring love) in life are always the most unaffordable! Vancouver’s houses are expensive but they are definitely worth it.
I’m 28 and single. Buying a condo in Vancouver is out of the question for me. I’ve been researching other areas and have finally decided on South Surrey. The Summit House Suites at Morgan Crossing give you access to a huge rooftop patio with a garden, bbqs and a fire pit. The suites start at $349,000. Still pricey but way better than anything downtown Vancouver. And they are gorgeous! High ceilings, beautiful finishings, big windows, stainless steel appliances. Totally elegant.
@Carrey- That sounds amazing!! Congratulations
You might be able to get a very small bachelor/ studio for that price in Vancouver with the same quality finishings, but of course not in the “prime” areas like Kits or downtown. I wouldn’t want to live downtown anyways, it gives me a sense of claustrophobia 
I’m not surprised at all actually. Vancouver is such a wonderful place to live – it has to come with a price. The houses there are beautiful, and the people are friendly. It’s a price I am willing to pay.
Most expensive…maybe. But Vancouver is also one of the most beautiful and friendly places to enjoy your life. The old saying is true, “You get what you pay for.”
@Dean Kirkland- So true
It is so beautiful and there’s so much to do here if you love nature.