- Joined
- Sep 2, 2007
- Messages
- 17
My thoughts on Metro Vancouver, BC Housing affordability. I welcome yours. I suggest that Vancouver housing Median Multiple range belongs higher than other Canadian Cities, and also now belongs higher than its historical average, but not as high as it currently is (9.x)
NOTE: As per Demographia.com, Median Multiple is median house price divided by gross annual median household income. I.E. Higher Median Multiple is less affordable.
My read of the Demographia International Housing Affordability Survey told me that Vancouver was the least affordable market in the English speaking world, but I saw a newspaper article indicating Vancouver was the least affordable city in the ‘world”. If anyone can point to an original source to clarify this, I would like to see it.
I suggest that Vancouver housing Median Multiple belongs higher than other Canadian Cities and should remain in a higher range than historically for the following reasons:
[*]Climate: It has a more pleasant climate than most of Canada for much of the year and therefore most people consider it a more desirable place to live. (Victoria, Abbotsford and to some extent Kelowna metro areas also benefit)[*]Air, Water, Recreation: The air is clean. We have abundant, clean water and plenty of recreation, for ocean sports, to winter sports, plus all the usual sports. One might argue that other cities have plenty of recreation as well, but Vancouver certainly ranks up there in life style.[*]True Physical Land Limitations: Hemmed in by Mountains, ocean, and the US boarderEconomic pressure not to cover the farm land: Most cities have regulations to restrict development on farm land, but the Fraser Valley Farmland is some of the most valuable producing farmland in Canada and there is a very limited supply of land with this climate in Canada. As such, there is a true economic resistance to development on the farm land, rather than just a legislated one.Is one of Canada’s largest cities: Larger cities are typically less affordableIs a global city, not just a Canadian City so both affordability and absolute price comparisons to other world cities should be considered. Meaning, people around the world know about, and many consider moving to Vancouver. Not just the English speaking world, but Asia and other locations as well. Many of these cities might have better affordability, but higher absolute prices (Ex: London, Hong Kong). If people with money decide to move to Vancouver due to the quality of life, the affordability, for an average person, is less of an issue than the fact that it may be less expensive than where they are coming from.Many immigrants are ok with higher density: Note that the often quoted Demographia.com International Housing Affordability Survey that shows Vancouver as the least affordable market in the English speaking world compares “House” prices, not “home” prices. Vancouver has many condos and higher density living, to a much greater extent than most Canadian cities, but not necessarily more than many international cities. Many immigrants to Vancouver come from dense cities, in particular, from Asia. I do not know the numbers, but expect that many Vancouverites are comfortable with – in fact may prefer – higher density living. I suggest this means that Vancouver house Median Multiple range belongs higher than the historical average. Another way to put it is to ask the question: If people in different cities have a different concept of a “home” (I.E. Detatched house, vs condo), then which is a more relevant comparison “home affordability”, or “house affordability”? My read of the survey makes me believe it is about “houses”, not “homes”. WHAT MEDIAN MULTIPLE RANGE DOES VANCOUVER NOW BELONG IN?
I am guessing that Median Multiple for houses belongs in the range of 5 to 8:
This topic, of course, affects what types of Real Estate transactions and methods are currently wise business in the lower mainland, as different approaches work for a “high priced” market, than for an “over priced” market. Example: Buy, then lease-to-own is fine in a high priced market, but risky in an over priced market.
As a further note, it is unclear to me whether the affordability index for Vancouver really covers “Metro Vancouver”, or just the Vancouver Real Estate Board area. I.E. Whether or not Surrey and Langley are included or not.
NOTE: As per Demographia.com, Median Multiple is median house price divided by gross annual median household income. I.E. Higher Median Multiple is less affordable.
My read of the Demographia International Housing Affordability Survey told me that Vancouver was the least affordable market in the English speaking world, but I saw a newspaper article indicating Vancouver was the least affordable city in the ‘world”. If anyone can point to an original source to clarify this, I would like to see it.
I suggest that Vancouver housing Median Multiple belongs higher than other Canadian Cities and should remain in a higher range than historically for the following reasons:
[*]Climate: It has a more pleasant climate than most of Canada for much of the year and therefore most people consider it a more desirable place to live. (Victoria, Abbotsford and to some extent Kelowna metro areas also benefit)[*]Air, Water, Recreation: The air is clean. We have abundant, clean water and plenty of recreation, for ocean sports, to winter sports, plus all the usual sports. One might argue that other cities have plenty of recreation as well, but Vancouver certainly ranks up there in life style.[*]True Physical Land Limitations: Hemmed in by Mountains, ocean, and the US boarderEconomic pressure not to cover the farm land: Most cities have regulations to restrict development on farm land, but the Fraser Valley Farmland is some of the most valuable producing farmland in Canada and there is a very limited supply of land with this climate in Canada. As such, there is a true economic resistance to development on the farm land, rather than just a legislated one.Is one of Canada’s largest cities: Larger cities are typically less affordableIs a global city, not just a Canadian City so both affordability and absolute price comparisons to other world cities should be considered. Meaning, people around the world know about, and many consider moving to Vancouver. Not just the English speaking world, but Asia and other locations as well. Many of these cities might have better affordability, but higher absolute prices (Ex: London, Hong Kong). If people with money decide to move to Vancouver due to the quality of life, the affordability, for an average person, is less of an issue than the fact that it may be less expensive than where they are coming from.Many immigrants are ok with higher density: Note that the often quoted Demographia.com International Housing Affordability Survey that shows Vancouver as the least affordable market in the English speaking world compares “House” prices, not “home” prices. Vancouver has many condos and higher density living, to a much greater extent than most Canadian cities, but not necessarily more than many international cities. Many immigrants to Vancouver come from dense cities, in particular, from Asia. I do not know the numbers, but expect that many Vancouverites are comfortable with – in fact may prefer – higher density living. I suggest this means that Vancouver house Median Multiple range belongs higher than the historical average. Another way to put it is to ask the question: If people in different cities have a different concept of a “home” (I.E. Detatched house, vs condo), then which is a more relevant comparison “home affordability”, or “house affordability”? My read of the survey makes me believe it is about “houses”, not “homes”. WHAT MEDIAN MULTIPLE RANGE DOES VANCOUVER NOW BELONG IN?
I am guessing that Median Multiple for houses belongs in the range of 5 to 8:
- Vancouver belongs less affordable than the Canadian average.
- Vancouver belongs less affordable than other world cities with similar economic opportunities, but lower quality of life.Vancouver might belongs more affordable than other world cities that are also nice to live, but have strong economies and even less space than we do (Hong Kong?).
IS MEDIAN MULTIPLE OF 9 TOO HIGH?
I think Yes. I suggest that the “range” belongs higher than it historically was, but that the current, historically high, Median Multiple of about 9 is an extreme that must settle back. I suggest that the current extreme is influenced by temporary factors (government stimulus and Olympics), as well as longer term trends (Canada doing better than most other developed nations, and Western Canada economy being a driving force within Canada. I further suggest, that during this time when prices have fallen in much of North America, that this discrepancy creates a pressure to bring Vancouver’s down. Since I don’t know of a reason why wages would increase, then prices need to come down.
This topic, of course, affects what types of Real Estate transactions and methods are currently wise business in the lower mainland, as different approaches work for a “high priced” market, than for an “over priced” market. Example: Buy, then lease-to-own is fine in a high priced market, but risky in an over priced market.
As a further note, it is unclear to me whether the affordability index for Vancouver really covers “Metro Vancouver”, or just the Vancouver Real Estate Board area. I.E. Whether or not Surrey and Langley are included or not.