Vancouver incomes rise - but not enough to match housing
Vancouver's buoyant job market can't keep pace with the increasing costs of housing.
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Metro Vancouver’s booming job growth has paid off, with median household incomes rising higher than the national average over the past 10 years, according to Statistics Canada’s most recent Census 2016 release.
It should be a good news story. But for Jock Finlayson, an economist and chief policy officer for the Business Council of B.C., the numbers don’t add up.
“Notwithstanding some good news in this report that we’ve seen some growth in household income in B.C. and Metro Vancouver, the fact is, housing costs have gone up by more,” Finlayson told Metro.
“In a sense the median household is worse off than they were a decade ago, unless they were already in the market and had acquired a property a number of years ago.”
Median household incomes in Metro Vancouver rose 11.2 per cent between 2005 and 2015, translating to a median income of $72,662 in 2015. During the same period, the benchmark price of residential real estate rose 74 per cent for Greater Vancouver, according to the Real Estate Board of Greater Vancouver.
When Andy Yan, director of Simon Fraser University's city program, isolated just the City of Vancouver, he found surprisingly high income growth of 17 per cent between 2005 and 2015. That's the third highest city income growth, behind Edmonton and Calgary. But he questioned whether even that robust growth kept up with housing and transportation costs.
Nationally, provinces with strong resource sectors, such as the prairie provinces, had much higher income growth than those that are more dependent on manufacturing, like Ontario. British Columbia as a whole saw incomes grow at 12.2 per cent, and a median income of $69,995 in 2015.
“We’ve been seeing job growth in Metro Vancouver at four to five per cent a year, which is absolutely off the charts for any Canadian jurisdiction,” Finlayson said. “That’s obviously paying off with some improvement with household incomes.”
The Business Council of B.C. lobbies on behalf of the province’s largest companies, and Finlayson believes the widening gap between incomes and housing poses a huge risk for the region’s economy. There is still no hard evidence that people are leaving in large numbers, but Finlayson believes it’s inevitable if the situation continues.
Not only have Vancouver prices risen far out of reach of regional incomes, the soaring prices have now affected the traditionally affordable suburbs. Rents have also shot up.
“Eventually we’ll see the economy be strangled and a significant exodus of people,” Finlayson said.
Yan said he was struck by how far behind other cities the region sits. Metro Vancouver has the 15th highest income and ranks 11th when it comes to income growth, with cities like Regina, St. John’s, Kelowna and Abbotsford all outranking Vancouver.
(Vancouver, Toronto and Montreal all tend to have relatively low incomes compared to other cities, because Canada’s largest cities tend to have more low-income people, including more recent immigrants, Finlayson said.)
With the gap between housing and incomes now so wide in Metro Vancouver, Yan wondered about the ability of federal and provincial governments to respond with policy, because Vancouver’s situation is unique among Canadian cities.
“There are very few places in the world where housing costs are more out of line with median incomes than Metro Vancouver,” Finlayson added.