VANCOUVER, BC, Mar 6, 2014/ Troy Media/ – According to the UDI/Fortis B.C. housing affordability index, less than 10 per cent of families can afford a single family house in the City of Vancouver.
Affordability is defined as spending less than 32 per cent of gross family income on shelter, a criterion used by most mortgage lenders. The index then measures house prices against average family income in the area.
Yet, in spite of the very serious plight of a small proportion of the population who are actually homeless, most Vancouverites seem to manage to keep themselves sheltered from the rain and the snow. How do they do this?
The easiest way, and the one that applies to the majority of Vancouver residents, is to live in a house or home acquired before you needed seven digits to buy it. Unfortunately, if you are not one of these privileged, there is not much you can do now to get there.
While Vancouver is regularly named one of the best places in the world to live, this reputation makes the city more costly to live in than other locations, thus requiring you make some adjustments in your expectations if you plan to live there. It’s not like living in Prince George, where you can buy a single family house within easy biking distance of downtown on one income. Ample bike paths aside, these are totally unrealistic expectations for living in Vancouver.
However, there are viable alternatives.
First, Greater Vancouver is composed of many different housing markets, such as new housing and resale housing, purchased homes and rentals, townhouses, duplexes and condo apartments.
Second, there is location, location and location, with very different patterns of housing starts and price movements in the different parts of the Metro area. Canada Mortgage and Housing Corporation (CMHC) has done a detailed analysis of the various components of the housing market using data from the real estate boards of Greater Vancouver and the Fraser Valley. It shows that from 2012 to 2013 single family house prices rose 9 per cent in the City of Vancouver but actually declined by 2 per cent in Coquitlam and Port Coquitlam, with price changes in the other municipalities ranging in between.
CMHC expects Greater Vancouver prices overall to continue to increase, driven primarily by the increase in the cost of single family homes and mainly in the City of Vancouver, itself. Housing starts will also rise and increase the supply of homes, but this will be offset by a growing population and an improving economy, which will both increase demand.
Of course, affordability does improve dramatically as one goes into multiple housing units and moves further out into the suburbs. As shown in the table, and based on Multiple Listing Service (MLS) sale prices so far this year, a single family detached house in the City of Vancouver will set you back close to $2 million. A town house cost less than half that amount at $806,000 and a condo apartment averaged just over half a million this year. But averages tend to conceal as much as they reveal. East Vancouver dwellings are significantly less expensive than those on the west side.
If you are willing to head into the suburbs, you will get a lot more home for your dollar. A detached house on the west side of Vancouver cost roughly five times as much as a single family house in Surrey. That same house is priced more than 10 times higher than an apartment in Surrey.
This brings us back to the whole affordability issue. Less than 10 per cent can afford a new single family home in Vancouver, but over 82 per cent can afford a condo in the suburbs.
And, if the location and style of housing is really important to you and earnings allow, there is always the option of putting a bit more than 32 per cent of your income into that roof over your head.
Troy Media BC’s Business columnist Roslyn Kunin is a consulting economist and speaker and can be reached at www.rkunin.com.
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