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Home prices in the region far outstrip income all the way to Chilliwack and Hope

Matt Robinson, Vancouver Sun , March 5, 2018

Suggesting young people buy a cheap starter home in the suburbs and later buy in the city, as their parents did, is still valid today — as long as you consider places like Chilliwack and Hope as suburbs of Vancouver.

Those are among the few Lower Mainland municipalities with housing prices that appear not to have blown past incomes over the past two decades, based on a bit of back-of-the-envelope math using Landcor and Statistics Canada data. Meanwhile, cities like Surrey and Langley are simply no longer affordable choices in the way they once were.

The buy-in-the-burbs advice made a resurgence last week amid a vigorous and seemingly intergenerational online debate over housing costs and housing expectations. Anger over a tax hike on multimillion dollar homes — like that of Point Grey homeowners David Tha and Paula Maisonville, who were quoted in The Vancouver Sun — was met with unsympathetic comments from mostly younger people hit hardest by the affordability crisis.

In reply, some folks advised the youngsters to follow their lead, forgo frivolous spending and step onto the so-called “property ladder,” which over the past couple of decades had delivered them from suburbs like Burnaby and Coquitlam to Vancouver.

Paul Kershaw, a University of B.C. professor and the founder of Generation Squeeze, called such advice “pure rubbish.” He said serious scarcity of affordable family-sized homes throughout the region, and not just in Vancouver, means youngsters can no longer count on the property ladder.

“They’ve completely missed the rung,” he said.

Postmedia asked Landcor Data Corp, a Vancouver-based analytics company, to compare median home sale prices in 1996 and 2016. It then compared these to median family incomes to see what could be made of the contentious argument.

Buyers could purchase detached homes in Vancouver for 7.8 times the median family income in 1996. Everywhere else in the region — except for West Vancouver — was more affordable, and often significantly so.

By 2016, median prices for detached homes in Vancouver had exploded to 26 times median family income. Families looking to spend no more than their elders had spent on homes in Burnaby and Coquitlam in the mid-90s (relative to their income) would have to buy in Chilliwack or beyond. If they spent just a little more than their elders had, they could consider Abbotsford.

In 1996, median family incomes in the City of Vancouver were $51,281, according to Statistics Canada data.

(For reference, average five year mortgage lending rates were around eight per cent that year, according to Bank of Canada data.)

By 2016, median family incomes increased 66 per cent to $85,557 in the City of Vancouver, according to Statistics Canada data.

In Burnaby, the 1996 median price of a detached home was $355,000 or 6.9 times median family income. By 2016, the median price of a detached home was $1.56 million or 18.2 times median family income.

Homes in Coquitlam went from $286,000 (5.6 times median family income) in 1996 to $1.23 million (14.4 times) in 2016.

Langley and Abbotsford prices rose from 4.1 and 3.6 times incomes in 1996 to 8.3 and 7.1 times incomes, respectively.

While home prices in Chilliwack and Hope have outpaced income gains, the municipalities could be considered the new Coquitlam and Abbotsford, respectively.

The 2016 median price of a detached home in Chilliwack was $475,000, or 5.5 times average family income. That was up from $159,000 in 1996, or 3.1 times income.

In Hope, the 2016 median price of a detached home was $308,000, or 3.6 times average family income. That rose from $130,000 or 2.5 times income in 1996.

The driving distance from Vancouver to Chilliwack is about 100 kilometres and to Hope, it is about 155 kilometres. Those who could spend more to buy in Abbotsford would only have to drive 85 kilometres.

Kershaw’s take was: “Hard work no longer pays off like it used to because home prices have left young people’s earnings behind.”

He called for more empathy toward younger residents in Vancouver — and even for those in cities across the country who face similar difficulties in finding affordable homes these days.

“We need to recognize just how damaging the housing market has been to younger generations,” he said.

Andy Yan, the head of Simon Fraser University’s City Program, and Jens von Bergmann of Mountain Math were just two of several researchers and data miners who warned there are numerous pitfalls in comparing incomes and housing prices over two distant time periods.

For a starter, families have changed, housing stock has changed, interest rates and purchasing rules have changed, tastes, aspirations, workforce participation, traffic, commutes and gas prices have changed. Also, there are data gaps in housing stock and statistics for incomes and prices are at times not perfectly comparable. As just one example, Statistics Canada warned that its 1996 income figure relied on 20 per cent sample data for all families, while its 2016 figure was based on 100 per cent of private households.