Housing affordability drastically erodes in Vancouver suburbs: Vancity
A Vancity Credit Union report shows affordability dropped 2.9 per cent in Vancouver, but fell by more than 30 per cent in the suburbs.
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From the multi-million dollar epicentre of high housing prices to the farthest reaches of the ’burbs, a new Vancity analysis of home prices compared to incomes shows just how far “the ripple effect” has spread.
“The places where people used to find refuge in affordable housing, like Delta, Langley, Mission, Abbotsford, Maple Ridge, have all had affordability in those areas drop quite significantly,” said Ryan McKinley, senior mortgage development manager with Vancity Credit Union.
“You see this trend of the suburbs, where people did go to find affordability, and that’s started to dry up.”
Vancity calculated its affordability measure by taking a year of home price movement for detached houses, townhomes and condominiums, and then comparing those trends to the median household income for the various municipalities in Metro Vancouver.
In Vancouver, for instance, median income is $79,498, while for Abbotsford-Mission it’s $73,637.
Between February 2016 and February 2017, the report authors found that overall affordability for Vancouver fell 2.9 per cent. But affordability dropped much more dramatically in the suburbs: by 38 per cent in the District of North Vancouver, by 31 per cent in Delta and by 23 per cent in Maple Ridge.
The ripple effect happens when high housing prices in Vancouver, West Vancouver and North Vancouver push both first-time buyers and buyers looking to sell and move to something with more space have to look farther and farther afield.
The analysis shows the stark contrast between detached homes and everything else (townhomes and condos). For instance, buying a detached house in Surrey would take a 61 per cent bite out of a median income earner’s paycheque, while a condo in would require just 18 per cent.
McKinley pointed out that municipalities that have embraced high-density development, like the City of North Vancouver and the City of Langley, are doing much better on affordability than their single-family dominated neighbours, the District of North Vancouver and the Township of Langley.
While detached homes in Richmond “vaulted to record unaffordability” between 2016 and 2017, requiring 114 per cent of a median income, apartments, which require just 29 per cent of median incomes, have contributed to slightly improving affordability (up one per cent).
Like other credit unions and Canadian banks, Vancity relies on residential mortgage lending for a large part of its business.
“When we qualify people, we qualify them at a higher benchmark rate to stress test,” McKinley said.
“We also look at people’s true income to see what is affordable. There are many people who do find affordability in more creative ways, like co-owning properties with people or having a significant amount of rental income.”
Vancity is recommending that municipalities that haven’t experienced a severe housing affordability crunch before make a plan now.
For consumers, if you have your heart set on buying a home, meet with your financial institution to make a plan, McKinley emphasized. But financial institutions should also “encourage renters to look beyond home ownership to long-term investment vehicles, such as indexed mutual funds,” according to the report.