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, Nebraska, Kansas City, Missouri and even Lancaster, Pennsylvania, 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.
An outright correction would be potentially devastating -- 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 10-year goal that China has set for itself.
"That’s the Herculean task of what Vancouver is facing," Yan says.