Photo: Ruth Hartnup/Flickr
Vancouver is “a canary in the national coal mine” when it comes to Canada’s housing market, says a new report on Canadian housing policy.
Conducted by Generation Squeeze, a project from the University of British Columbia (UBC) and the Association for Generational Equity, the report identifies what it views as the main problems with Vancouver’s housing market and offers 10 solutions that it says could prevent the same issues from developing in other parts of the country.
One major concern identified in the report is the length of time it takes the typical 25 to 34 year old in Metro Vancouver to save up for a 20 per cent down payment on an average home. While the average amount of saving time nationally is 12 years, in Metro Vancouver it is nearly twice as high at 23 years. That’s above 16 years in all of BC and 15 years in Metro Toronto; it’s also much higher than the average five-year saving period seen 40 years ago between 1976 and 1980.
Chart: Generation Squeeze
To state the obvious, one reason saving for a down payment takes so long is that housing prices in Vancouver are very high. As the report points out, the average cost of a home in Metro Vancouver is $813,000 — 44 per cent of homes cost more than that, and just 31 per cent cost less than $500,000, the price point most young people tend to look at. What’s more, only 15 per cent of homes in the area cost less than $500,000 and have at least three bedrooms.
Again, that’s vastly different from what young people could expect to afford between 1976 and 1980, when the average home cost just under a quarter of a million dollars. “This means what used to buy two entire homes when today’s aging population started out as young adults now only buys two bedrooms,” explained study co-author Anita Minh in a press release.
Chart: Generation Squeeze
The consequences of Vancouver’s housing situation could be severe. The report describes the city as “the most difficult city in the country in which to make a home as a young adult,” and suggests that it could ultimately become a “generational ghost town.” Meanwhile, it sees Vancouver’s suburbs becoming “bedroom communities for the more central parts of the metropolis.”
However, Dr. Paul Kershaw, the study’s lead author and a professor at UBC, believes that there’s at least one upside to the situation. “There’s much the entire country can learn from Metro Vancouver to prevent problems in other regions from reaching the levels they have on the west coast,” he said.
The report lists 10 points for Canada’s other cities to keep in mind, with the central idea being that the Canadian housing market exists to provide homes at reasonable prices — only secondarily should it be a mechanism to provide returns for investors. To maintain that balance, the report recommends taxing capital gains that result from the sale of homes purchased and sold within a 24-month period.
Other suggestions include taxing housing wealth to slow down increases in home prices, providing more rental accommodation and revisiting zoning for single detached homes in Canada’s housing hotspots.
In terms of what can be done in Vancouver itself, the study recommends that politicians in BC start working to address housing affordability well ahead of the 2017 provincial election. It has launched a campaign called Code Red to support that goal.