Monday, September 27, 2010

Vancouver B.C. - A really expensive place to live

Back in August, I did a posting on the least expensive real estate in the countries of Canada, the United States, Australia, New Zealand, Ireland and the United Kingdom. It turns out that Detroit, Michigan had the most affordable housing in the aforementioned countries. According to the study entitled the "6th Annual Demographia International Housing Affordability Survey 2010", Vancouver, British Columbia has the least affordable real estate among the 6 nations surveyed. Demographia calculates affordability by using the median house price divided by gross annual median household income. The higher the number, the less affordable the housing. In Detroit, the median multiple was 1.6; by comparison, Vancouver's median multiple was 9.3. In other words, a house that falls in the middle of the pack between the most expensive and the least expensive in Vancouver cost 9.3 times the income of a household whose income falls in the middle of the pack between the highest income and the lowest income. Demographia also defines housing affordability by using the same median multiple; when the median multiple is over 5.1, houses are considered to be "severely unaffordable". In that case, Vancouver is off the chart and living in another universe!

Here's a screen capture from the report showing the top 10 least affordable places to live:

According to the Canadian Real Estate Association, the average price for a house in Vancouver in November 2010 was $699,009 compared to the national average of $344,268.

Enough definitions.

As background information for those of you who aren't familiar with Vancouver, it is located on the west coast of Canada. It is Canada's third largest city and had a metropolitan area population of 2.38 million people in 2009. It is the fourth most densely populated major city in North America after New York City, San Francisco and Mexico City. It is often ranked as one of the most liveable cities in the world; it's climate is relatively mild by Canadian standards although it does tend to get abundant rain most of the year with dry months in July and August. Snow is rare and when it does fall, it rarely accumulates. The north and west side of the city border the Coast Mountains; in combination with the adjacent seascape, the area has few rivals for natural beauty. On the downside, the traffic from the outlying communities can be quite heavy but the recent building of a light rail transit system should help somewhat.

Here is a look at some of the houses available in Vancouver from the website. Let's begin with what would be considered a starter home.

Here's a floating 1120 square foot, 2 story, one bedroom, one bathroom home on a leasehold property (with moorage costs of $869) for only $149,000 in North Vancouver. When I searched for single family homes (excluding condominiums), this is the only property that came up over a large part of Vancouver, North Vancouver and West Vancouver.

When I changed the search terms to increase the maximum price to $200,000, this was the next single family dwelling on the list.  Once again, the home is a 900 square foot floating home located in North Vancouver with a leasehold moorage property (i.e. you don't own the "land" the home is located on).

That's all fine, but let's say that you really want buy a lawn mower and cut some grass. I had to increase the maximum price to $400,000 before I actually got a house that was located on a bit of terra firma.  Here it is:

It looks like a reasonably nice 2 story, 1150 square foot house that needs renovating. But (and it's a rather large but), please notice that it is one of three houses located on a single 55 by 122 foot lot, a lot that I would consider a rather standard city-sized lot. Each of the other two houses, found here and here are listed at $389,000! On the upside, maybe you can save a few bucks since you likely won't need to buy that lawn mower after all.

Now let's skip a few brackets and see what you can get for between $750,000 and $1 million.  Here's a nice looking detached 2 story on a 25 by 122 foot lot with a full basement rental suite, 5 bedrooms and 2 bathrooms. As a bonus, it's located relatively close to downtown Vancouver It does sound like the interior is in "original condition" and may need renovation. Should you happen to have $828,000 burning a hole in your pocket, this may be the house for you!

One last listing. I thought I'd take a look and see what a couple of million dollars would buy.  Here's a brand new 2819 square foot home located in tony Kitsilano close to the University of British Columbia. Kitsilano has some of the highest property values in Vancouver and some of the highest rental rates, yet it has a very low vacancy rate. The median household income in the neighbourhood is $67,795 (2006). This particular house has 6 bedrooms and 4 bathrooms and a legal 738 square foot two bedroom suite on the lower level. The house is located on a 33 by 122 foot lot, smaller than I like but then again, I prefer the privacy of country living. Should you happen to have something in the neighbourhood of $2.2 million lying around looking for a place to live, this is the house for you. As an aside, if your family income is around the median, the Demographia median multiple would work out to a nice solid 31. Recall that Demographia defines a media multiple over 5.1 as severely unaffordable!

Just in case you were wondering, the taxable value of the house is assessed at $529,000 and the 2010 property taxes are $3076.08. I guess if you have the $2.2 million, you really don't need to ask how much the property taxes are!

I hope that you enjoyed your little real estate tour of Vancouver. Having spent many years living in the west part of Canada and visiting Vancouver many times, it is definitely a world-class city.....but (and it's a big but), I still think I'd have trouble shelling out the kind of money necessary to buy a house there. But like they say, it's a lifestyle decision.


  1. As I was reading this, I can immediately think of a few other places in the world where home prices as a multiple of median incomes are way higher than Vancouver : Cities like Beijing, Shanghai, Shenzhen as well as
    city states like Hong Kong and Singapore ...

  2. My wife and I are a high income couple, both working in senior positions for a large multi-national, having lived in Finland, then Germany, London, Sydney and now Singapore over the last 10 years.
    Each time we moved, our ratio of earnings to house price has dropped.
    In Finland and Germany, it was possible to buy a reasonable house in a nice part of the capital for 2 or 3x combined salary.
    In London, it was more like 5x annual salary.
    In Sydney it was over 10x our quite high salary.
    In Singapore, to buy our rental place would cost something like 20 times our combined annual salary (6x the national average).
    This makes our Singapore apartment approx 120 times the median Singapore salary.
    Give me Vancouver prices any day...

  3. I concur, but the study only covered the nations of Canada, the United States, United Kingdom, Ireland, New Zealand and Australia. Having just spent time in Japan, I would imagine that the multiple there would be very high as well, making Vancouver look cheap by comparison. What I like the study for is that I think it will show where the next housing bubble burst will be - if housing is way above what people can reasonably afford given their income, problems arise as we are now finding out (and should have known all along).

  4. Is the 'house' price detached?

    The average detached home in Toronto is now $750K, and it must be one of the least densest international cities in North America (perhaps better than LA). It is a suburb hell.

    There are suburbs on the suburbs (the 905 area code) where average detached prices are $550,000.

    Pretty expensive given the enormous footprint of Toronto's hundred thousand square kms. Brampton alone has had hundreds of thousands of homes built in the past eight years which house fresh immigrants (no disrespect to our new Canadians intended). Freeways (410 extension for instance) were built just to cater to hundreds of new developments in the countryside, before they were even built.

  5. Something you may want to look at is P-tax,i have found good deals in usa but the P-tax is off the map and only going up because the Munies are going broke

  6. The problem with your ratio analysis (house price to median income) is that people in Vancouver lie about their income - they are really earning a million a year in Shanghai or Hong Kong, but claim to Ottawa that the family earns 90 k.

    That artificially shifts the ratio up for Vancouver.

    1. just curious... what type of job would one be doing that earns oneself 1 million per year in Shanghai or Hong Kong.. I would like to have that job ~

    2. You can't get that job in Shanghai because you didn't buy your citizenship from Ottawa under the false pretext of investment immigration to Canada (yes, they could shell out a nonrefundable $125,000 after they are approved as investment immigrants to buy their way in without spending a penny investing in anything)!

      Obviously, the money made in China is not entirely legitimate when a vast majority of Chinese are in poverty.

      I have heard that the current conservative government has stopped a lot of immigration cases until further study is done. If that's the case then kudos to Harper, as the current policy has caused nothing but real estate hyperinflation for Vancouverites.

      Vancouver is probably the only city that you see a brand new Lamborghini with a new driver 'N' sign stuck in its rear window (I have the photo to prove it)! Incidentally the rear window of this car was just tall enough to fit the sign. So is our patience for this bull shit real estate industry has put together along with BC liberals.