Vancouver housing to get even more expensive
If you think housing in Vancouver is unaffordable right now, brace yourself for what’s to come. According to a study done by Vancity, if the current rise in housing prices continues without intervention, the average detached house will cost about $2.1 million by 2030.
Downsizing the Canadian Dream: Homeownership Realities for Millennials and Beyond, published by Vancity credit union, sheds some light on the issues home buyers would have to face in the next few decades. The report projects that owning a property will cost 108 per cent of an average household’s monthly income in 2030, up from 48 per cent today.
In contrast, Canada Mortgage and Housing Corporation (CMHC) states that housing costs should not exceed 32 per cent of a homeowner’s gross monthly income. Going by the CMHC numbers, the most expensive home someone with the an income of $6,225 per month would be able to buy appears to be $492,667.
The report points out that the condo market has only increased in cost by 43 per cent since 2005 while the average property has increased by 126 per cent. This could be the reason why younger home buyers are being pushed outside the city, a fact further supported by the 2013 Statistics Canada report stating a net loss of 1,571 residents in the 20 to 30 age range.
The percentage of monthly income it takes to own a home in municipalities like Burnaby, Richmond, and White Rock is rising dramatically as well, up from around 45 per cent to 54 per cent in 2014. Other areas such as North Vancouver, Delta, Coquitlam, Port Moody and Surrey are just as unaffordable.
The only areas that Vancity reports as key target areas for affordable housing are Maple Ridge, New Westminster, Pitt Meadows, Port Coquitlam and Langley. But, according to the financial institution, if trends continue, these areas will be unaffordable to the average household within the next 15 years. There is however, a sliver of hope in the seemingly grim future: Langley will remain the only affordable region in Metro Vancouver in 2030 with average property values projected to be stable at $525,000.
Even though condos will get unaffordable in Vancouver, with an average price of $810,500 by 2018, they are expected to remain on budget in other communities.
“The takeaway is that we really need to stop talking and really come up with policies and strategies that will help people to buy homes in the future,” said Andy Broderick, vice-president of community investment at Vancity. “I don’t think the dream [of home ownership] is dead. There’s lots that can be done.”
The report concludes with a list of recommendations for governments, banks, and millennial home buyers, to make the dream of home ownership more feasible. They include:
- Increase zoning for high-density multi-unit buildings, recognizing that a “starter home” will soon be a forever home;
- Increase incentives for developers to build for affordable workforce housing stock;
- Require every municipality to have an affordable housing plan tied to providing safe, decent and affordable housing to its residents;
- Consider non-traditional housing options, including co-ops, co-ownership, intergenerational community living, and smaller houses.