“Vancouver – Is homeownership becoming a far-fetched dream?”
That is the question at the heading of a new housing affordability report by RBC Economics Research. And the answer is “yes.” The report claims that to purchase a bungalow, the average Vancouver household has to dedicate 92.5% of its income to housing costs. The second most unaffordable Canadian city is Toronto, where the average household would have to dedicate 51.9%. CMHC defines “affordable” as having to pay no more than 30% of household income on housing.
For a ‘standard two-storey’ the average Vancouver household would have to dedicate 95.5% of their income. Again Toronto is second worse, at 61.4%. Even a ‘standard condo’ in Vancouver is severely unaffordable at 47.1%, also the worst rate in the country.
This is of course not the first report showing how housing prices are out of reach for Vancouver residents. Demographia’s annual housing affordability survey has ranked Vancouver in the bottom three out of about 300 global cities for several years in a row. According to Demographia, the average housing price has been 9 to 10 times the average family income. A report by BMO in June of 2011 calculated that ratio at an even higher 11. For our review of these reports, see here.
Realter Bob Rennie has been trying to argue that these numbers are skewed by high-end sales. But this is simply not the case, because Demographia uses medians (which exclude both low and high end sales for the analysis), and RBC uses ‘standard’ dwelling, to distinguish from the ‘average’.
These indicators of Vancouver’s housing unaffordability point to a severe social crisis in Vancouver, amidst a larger global financial crisis. Prices are not being driven up by rising domestic incomes; therefore, Vancouver residents must either go into debt, or else be displaced from their city. Nor are these prices reflective of the ‘use-value’ of the housing – the price of ownership is rising faster than the rental price.
These prices are a reflection of investment and speculation, as Vancouver real estate is seen to be a relatively safe ‘sink’ for accumulated global capital. The RBC report sites “anecdotal” evidence that some “foreign buyers continue to propel higher-end property values, and part of the momentum created is cascading down to other market segments.” But the majority of real estate speculation in Vancouver is by domestic buyers. Furthermore, capital accumulation generated by Canada-Asia networks is something that Canadian capitalists and the BC government have been aggressively promoting for decades. These networks are therefore produced domestically in order to exploit others. This accumulated capital, generated by global capitalist networks, extract profit from various sources, including resource extraction in Canada and elsewhere, as well as oppressed labour in Asia. As a result, working people on all continents face shrinking wages and higher costs of living.