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'Impossibly unaffordable': Vancouver 3rd-worst city for housing

Report ranks Metro Vancouver as 3rd-most unaffordable housing market for middle-income earners.
Metro Vancouver is the third-most unaffordable housing market for middle-income earners among 94 markets in eight English-speaking jurisdictions. (Black Press Media file photo)

A new report confirms Metro Vancouver as one of the most unaffordable cities in the world for the middle class and warns of unaffordability spreading into smaller B.C. cities. 

Demographia International Housing Affordability's annual report ranks Metro Vancouver as the third-most unaffordable city among 94 markets across eight, English-speaking jurisdictions for middle-income earners. Only Hong Kong and Sydney are less affordable, according to the report, which deems housing in Metro Vancouver "impossibly unaffordable" for middle-class residents. 

"Vancouver has been the first, second or third least affordable major market for each of the last 16 years," it reads. "Troublingly, impossibly unaffordable housing in the Vancouver market has also has spread to smaller BC markets in British Columbia, such as Chilliwack, the Fraser Valley, Kelowna, and markets on Vancouver Island."

The report ranks cities by dividing the median house price through the median household income. It considers cities affordable if the median house price is three times or less higher than the median household income. So Metro Vancouver's ratio of 12.3 means that its median house price is more than 12 times higher than its median household income.

Canada's second least affordable community is Toronto with a ratio of 9.3, which means Canada's largest city is also "impossibly unaffordable." Montreal with a ratio of 5.8 and Ottawa-Gatineau with a ratio of 5.3 are "severely unaffordable"  while Calgary's ratio 4.6 makes it "seriously unaffordable." Canada's most affordable city in the survey is "moderately unaffordable" Edmonton with a ratio of 3.6. 

The report considers housing affordability an "existential threat to the middle class" and blames it on policies that have "skewed" land and housing prices against the middle-class, "whose existence depends upon the very competitive land market destroyed by the planning orthodoxy." 

This "planning orthodoxy" of the past 50 years has prevented cities from sprawling through urban containment areas and greenbelts while increasing density, the report says. "As land has been rationed in an effort to curb urban sprawl, the excess of demand over supply has driven prices up," it reads. 

Ultimately, the report concludes that all cities with "impossibly unaffordable" housing markets follow this “international planning orthodoxy” as do nearly all of the severely unaffordable markets. "A central message of this report is that the most severe housing affordability losses have occurred in markets that follow the international planning orthodoxy," it reads. 

The report specifically points to New Zealand as a country for offering a "hopeful path" toward housing affordability "based upon the understanding of...housing affordability as a land cost problem."

The report notes that New Zealand has abandoned "densification-only" programs (which have become optional) in favour of policies designed to open up more land for housing -- a move that has subsequently drawn criticism from environmentalists. 

This part of the report can thus be read as an implicit criticism of B.C.'s provincial government, whose recent run of housing policies have favoured policies designed to increase supply through increased density, not unlike those in New Zealand before that country's recent change in government. 

When B.C. last year announced plans to increase density on lots currently zoned for single-residential housing, it immediately faced questions about whether this upzoning would actually be counter-productive. Government models acknowledge that higher density would lead to higher land values for single-residential lots, but conclude that higher density would eventually lead to lower prices by increasing supply of what experts call missing-middle housing. 

B.C.'s Housing Minister Ravi Kahlon said in a statement to Black Press Media that the report underscores the challenges that people are facing, adding its findings "validate the importance of the new actions our government is taking to deliver more homes for people, faster."

He added that the "housing crisis knows no boundaries and similar forces are driving increasing rental demand and unaffordability everywhere".

"While it will take time to make up for years of inaction under the previous government where the homes people needed weren’t getting built, I’m heartened to see that our actions are having an impact," he said. "B.C. saw record levels of housing starts, including rental housing starts, in 2023, and so far this year we are on pace to meet or exceed that level in 2024."

Kahlon added that B.C. is on its way toward "creating hundreds of thousands more middle-class homes over the next decade."

He also echoed recent comments from Premier David Eby, who has been calling on Ottawa to step up its financial support.

"(We) continue to call on the federal government to support provinces in building out infrastructure and services as B.C. builds housing like never before — so that we can continue to set communities up for success."

Wolf Depner

About the Author: Wolf Depner

I joined the national team with Black Press Media in 2023 from the Peninsula News Review, where I had reported on Vancouver Island's Saanich Peninsula since 2019.
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