Michael Alexander does a little digging:
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The Vancouver Sun has an article on Demographia’s ranking of Vancouver’s housing as being only behind Hong Kong for affordability.
I didn’t know about these guys, so I looked at their website.
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Demographia is part of the NYU Urban Expansion Program. Opening summary:
The NYU Urban Expansion Program is one of two research and action programs at The NYU Stern Urbanization Project, a think tank and urban action center of the Stern School of Business at New York University (NYU).
The program is dedicated to assisting municipalities of rapidly growing cities in preparing for their coming expansion, so that it is orderly and so that residential land on the urban fringe remains plentiful and affordable. Its work is divided into two components: Making Room for Urban Expansion and Monitoring Global Urban Expansion.
We all understand what it means to prepare adequate lands for urban expansion, enough land to accommodate both residences and workplaces, so as to ensure that land—and particularly residential land—remains affordable for all. Unfortunately, municipalities of many rapidly growing cities often underestimate the amount of land needed to accommodate urban expansion. In the minority of cases where expansion is effectively contained by draconian laws, it typically results in land supply bottlenecks that render housing unaffordable to the great majority of residents.
Emphasis added. So it’s a single-goal study, which downplays or ignores other land needs. Bye-bye ALR (Agricultural Land Reserve).
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It also seems to me that we need to do a better job of making housing prices more closely match incomes (or, better, vice versa), or public pressure will eventually overwhelm the ALR.
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The Demographia story comes around every year about this time, with the same conclusion: it’s government land-use laws that cause unaffordability. Last January, Price Tags has posted the best response so far: Jim Sutherland’s piece in Vancouver Magazine, April 2013. So here it is again.
Response to Demographia on Vancouver unaffordability
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Todd Litman adds his take in Planetizen:
More Critique of Demographia’s International Housing Affordability Survey
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Wendell Cox and Hugh Pavletich just released the 11th Annual Demographia International Housing Affordability Survey (IHAS). I criticized past editions of this survey in previous Planetizen columns, What is a ‘House’? Critiquing the Demographia International Housing Affordability Surveyand How Not To Measure Housing Affordability. The new edition is no better. I hope that everybody using the survey’s results is aware of these problems. Let me describe some of them.
Unclear and Biased Analysis
Any good research clearly explains its assumptions, methods and data sources. The IHAS fails to do this. Although it includes a long list of sources “consulted,” there are no details about the information actually used so it is impossible to evaluate their methods and data accuracy. If Cox and Pavletich want to be taken seriously as researchers they must make their data available for peer review.
The sample of IHAS data I examined shows significant errors. For example, it reports that median Vancouver, BC housing prices are US$704,800 or CA$870,123, which is 36% higher than the CA$638,500 reported for December 2014 by the Real Estate Board of Greater Vancouver. Similarly, it reports median Victoria, BC housing prices at US$445,100 or CA$549,506, which is close to the CA$542,800 median price for single-family houses but not for the CA$444,736 weighted median price of single-family, townhouse and condominium sales.
I therefore conclude that the IHAS analysis overweighs single-family housing and overlooks more compact housing types, as I described previously in What is a ‘House’? If this is true, the Survey significantly exaggerates inaffordability problems in compact cities where townhouses and apartments are a major share of housing.
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Same debate in New Zealand, as noted by Darren Davis:
Housing affordability about much more than land availability
The New Zealand Planning Institute believes the current focus on land availability is too narrow to solve this country’s housing affordability problem effectively.
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The comments come in its submission to the New Zealand Productivity Commission’s ‘Using Land for Housing’ Issues Paper. The Productivity Commission has been asked by the Government to investigate possible improvements to the ways local authorities regulate to make land available for housing.
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But NZPI Chair Bryce Julyan says while supporting the ongoing investigation into the best use of land to ensure that New Zealand has enough housing stock, NZPI also believes that housing affordability is a complex issue requiring a range of integrated tools to address the problem effectively.
“We are unconvinced that the immediate availability of more land for development will, on its own, provide a long term, sustainable solution to the problem. Understanding the current and future demand for housing, including type and location is critical to understanding what supply is needed now and in the future.”
The NZPI’s submission supports the Productivity Commission looking to more research to understand what the real versus perceived effects of government practices are on developer or land owner behaviour. It refers to previous research in Auckland that has revealed that the reasons for development delays were quite varied. It found that many land parcels had not been developed due to personal, family or business circumstances, the cost of developing the land, as well as land holding and speculation for capital gain.
It also annoys me that the headlines every year talk about us being 2nd in the world, when it’s only a few (admittedly, important) countries surveyed.
FYI I always take Demographia’s reports with a grain of salt. FWIW, they are a small part of NYU’s urban expansion program, among other voices with different viewpoints like Rchard Florida.
I’m always surprised why Demographia garners so much press without any seeming crucial analysis.
http://transportblog.co.nz/2014/10/28/why-demographia-is-fundamentally-wrong/
You can also google “Jarrett Walker Demographia” for more analysis.
These studies always assume the sticker cost of buying a house. Sure, Vancouver’s homes are more expensive to buy outright. But renting here is actually comparable to most Canadian cities of similar size. It’s roughly the same to rent a 2-bdrm in most Edmonton neighbourhoods as in Vancouver; and rent is considerably higher in Toronto and Mississauga.
Does anyone know of similar studies that don’t take the cost of a home purchase as a given? What are the most expensive cities in the world to live in if you don’t own your own home? Anyone?
One of the authors is Wendell Cox
Enuf said!