The price gap between the starter home and the dream home is widening at a rate that risks keeping first-time homebuyers stuck in less expensive properties for much longer than anticipated, according to a study from the Canadian Imperial Bank of Commerce (CIBC).
The September 8 report pointed to Vancouver, where the housing market is particularly strong, as one of the most concerning cities in the country.
While, on average, home prices in Canada have gone up 5%, the prices of Vancouver homes sold for more than $1.1 million have gone up by nearly 18%. The gap between the so-called starter home and the dream home has widened by $200,000 in the past four years, according to the report.
Young homeownerships rates among Canadians aged 25-35 have dropped from 55% in 2012 to 50% in 2014, according to the study.
… given that the average price of single-detached units in the first-time homebuyer category is north of $1 million — upgrade options in the city are becoming even less affordable.
How weighted do the dice have to be loaded?
What’s wrong with this statement?
I’ve bolded some words.
The underlying subtext in that you must keep up with the Joneses, and everyone is yearning for a single family mansion.
These reports are all staggeringly myopoc and thus, grossly misleading because they do not count the entire region incl W Van, N Van, Burnaby, Delta, Surrey, Langley, PoCo, Coquitlam, Port Moody or MapleRidge ! This is essentially one contiguous city and prices further out are actually quite affordable. It is like saying that downtown Calgary’s houses, which is mainly high rises , is unaffordable as the few single family homes are quite expensive.
Once you actually include condos prices in Vancouver AND AREA ( ie MetroVan) are not all that different from Calgary, GTA or many US cities.
One can get nice 1000 sq ft 2 BRs in New West or Burnaby below 300,000 .., quite affordable blocks from the SkyTrain less than 30 min from downtown.
My wife and I started out with a baby and two cats in less than 900 sq. ft. It was in a walkable area with everything you could hope for nearby. Had we known then what we know now we would have stopped at one child, sold/given/thrown away a lot of stuff, seriously limited acquisitions and probably made it work long term.
Or we could have moved out to the suburbs where my wife would have been forced to learn to drive, or we could have rejected the need to own a home and rented something that suited our needs and moved to a different rental unit when those needs changed.
Like those who commented before me I find it interesting that the dream home is considered a McMansion in Vancouver. If we look to the mainstream media for the source of our dreams we see 60 years of auto-centric suburbia staring back at us. So the dream, unsustainable as it may be, is still within reach and millions are living it every day across this continent. TV forgot to tell us about the 2 hours/day spent sitting in a car, but it wouldn’t be a dream if showed the dark side would it?
Depends on the car ..
“TV forgot to tell us about the 2 hours/day spent sitting in a car…”
“Mad Men”s Don Draper had to commute in on the train from his house in the suburbs. 😉
And so did Rob Petrie on the Dick Van Dyke Show.
When old condos in marginal areas for $300,000 is your benchmark for ‘quite affordable’, it’s possible you’ve been living in Vancouver for too long. But the point of that article was the widening of the gap between condo/townhouses and houses, or in other words the rising price of land – and that is a factor everywhere in the lower mainland, from Point Grey to Langley.
It’s a valid point (you only need to look at a housing price chart for (Greater) Vancouver to see the divergence in condo prices vs. detached prices since 2008), and I suspect that Vancouver is not the only place where this gap is a key factor limiting the ability of land prices to rise and generally constraining the city’s economy and growth.
David/Guest – setting up the McMansion as a straw man is easy, but I don’t think it is unreasonable for people to want to have a patch of lawn and some security of tenure (i.e. not being forced to repeatedly move your kids for someone’s else’s convenience on someone else’s timetable). And even if I did think it was unreasonable, they would still want it all the same. Rather than telling people they shouldn’t want what they want, the question is how do we try to accommodate what people want in a large city where space is at a premium. There’s lots of options (parks instead of lawns, commuter rail lines, huge freeway expansions, pointless referenda, etc.) but that’s the sort of choice we need to think about.
It seems like a minor issue, but as someone who’s tried to hire people to work in Vancouver, and has seen numerous colleagues leave to raise families somewhere else, I can tell you that people are voting with their feet, and this issue is a huge drag on the city and the province. Given the natural beauty and moderate climate of Vancouver, the fact that we are losing people every year to the rest of the country tells you we are mismanaging things (or, at least, managing things to suit those who’ve been here for a long while at the expense of anyone new).
here you go…
http://www.vancouversun.com/Douglas+Todd+floating+life+affluent+transnational+migrants/10083574/story.html
http://www.theglobeandmail.com/life/home-and-garden/real-estate/in-vancouver-race-undercuts-the-discussion-on-affordability/article19873510/
but its a lovely city!
Ron S, great articles. Of course entrenched developer interests will say anything to stop any serious discussion of the frothy real estate ponzi scheme that passes for an economy in Vancouver.
There is no Ponzi scheme here. Just supply and demand. Limited supply of land and rising demand means prices of land will continue to go this way: up up up !
Well, if people leave or do not come here than supply and demand seems to work. There is also a lack of willingness to discuss creating more land in Vancouver and area ( say in low lying tidal land that is reclaimed or damned) The regional growth plan essentially doesn’t even mention it and farmland is not touched either. As such densification is the only growth option available today and in the foreseeable future. As such, buy a house with land, or just land or an industrial building with land as land prices have only one way to go here: up up up !
Look at Manhattan, HongKong or Singapore for price direction and Vancouver is still very very affordable !
I agree with Thomas (yes I know, rare event) that looking solely at the City of Vancouver is a major flaw. The vast majority of Metro Vancouver lives outside the city itself where a house with a yard is well within reach for many. Yes the gap there is widening too, but that’s what happens. We’ve left behind an era where the value of a home was in the construction and entered one where nearly all the value is in how much land it occupies. We can’t turn back the clock. It’s happening everywhere that land is scarce and even in places like Calgary and Saskatoon where sprawl has continued unabated for decades.
I had security of tenure back in that sub 900 sq. ft. townhouse. I didn’t have to own the entire building, the gardens and the parking spaces to feel like I had a place I could call my own. Like I said, had I not been such a collector of “stuff”, had we quickly rationalized two homes full of furniture into one, we could have made a go of it long term. There were bus routes a block away, a park two blocks away, a school three and lots of shopping within easy walking distance. It was cozy, but we really did have it all.
Sadly we didn’t realize it at the time. My wife thought we “needed” a house with a yard so we moved. Having our own patch of grass was great when the kids were tiny, but they quickly outgrew it and we began to notice all of the things we’d sacrificed in our rush to get a yard. Our most recent move was to a place without a single blade of grass, but one with all the shops and services within walking distance that we’d had in the first place. Everyone, including the kids, is much happier now.
I know that won’t necessarily be true for everyone and I would never tell others what they should want, but experience has taught me that some things are more important than a lawn.
Indeed, you pay with money (close to work ie more expensive house and short commute/walk.bike) or you pay with time (cheaper house / longer commute).
As stated, look at Manhattan, HongKong or Singapore for price direction and Vancouver is still very very affordable ! Go to Paris, Munich, Vienna, London etc and try to find a nice house with a lawn in a nice suburb and Vancouver looks outright cheap !
Vancouver is cheap compared to those cities and will never reach the levels of those cities because said cities have international finance, and other corporate jobs that Vancouver will never have.
David, just over a decade ago you could have had a nice little house in Vancouver with a nice little yard in walking distance of shops for under $400k. That gets you a decent 1 bedroom condo now. Maybe the answer isn’t in cramming ourselves into ever smaller spaces, but figuring out how we let Vancouver real estate prices get so out of control and pressuring all levels of government to do something about it.
Such as ?
Disallow immigration ? Build a wall to Alberta ?
Federal Government can start by removing the ability to have Dual passports, which isn’t allowed by the majority of countries, that would remove all the jokers who really don’t give a crap about Canada and treat it like a safety deposit box. Provincial and Municipal government could use a series of taxes and tariffs to slow real estate speculation. And the rise in interest rates will take care of the rest.
Every (foreign/rich) real estate buyer has a (local/Canadian) seller. So reducing real estate values impacts the seller, too, ie less cash for retirement, for example, when downsizing from the $2.5M Dunbar shack to a condo at UBC for $1.2M or in Vernon for $550,000 !
Personally I think we ought to increase property taxes for all residential real estate and land transfer taxes, too. That would monetize foreigners real estate demand here.
Dual citizenship is hard to control. Many people, such as in Germany, will chose to live there but not become a citizen. There is almost no advantage being Canadian yet living here besides the right to vote. As such we must aim to monetize foreign demand for the benefits of Canadians, for example by taxing all residential real estate far higher, but giving a tax credit to Canadian residents on tax filing time as many foreign buyers, or even folks that live here pay little to no income taxes.
If you read the article below, there are numerous Chinese nationals who obtain Canadian passports as insurance policies while they make their money living overseas. If you want to move here and contribute to our society, start a business that employees Canadians, then you are welcome to be here and toss your old passport in the garbage. If this quote doesnt get your attention nothing will: “(Canadian citizenship) is more like an insurance policy.” Other transnationals refer to their years waiting in a new land for a passport as “immigration hell.”
http://www.vancouversun.com/Douglas+Todd+floating+life+affluent+transnational+migrants/10083574/story.html
Indeed the price to come in is far too low for some, including access to free education and free healthcare. One of the issues right now with the teachers strike is too many ESL kids. As such, real estate ownership is taxes too low. The old revenue model of taxing income and consumption to fund healthcare and education need to be tweaked. Perhaps people ought to prepay four years of education or healthcare premiums. The debate has to happen how to monetize folks coming here as the current system – see teachers strike – is broken !
Author
David
It world be great if you had some pictures to illustrate the two places. Be pleased to post.