A frequently quoted source for Vancouver housing affordability has published an annual update on the subject.
According to the latest edition of Demographia’s annual “International Housing Affordability Survey,” Vancouver is the third least-affordable city out of 293 metropolitan markets analyzed.
For Vancouver, the U.S.-based consultancy and research firm determined a medium multiple of 12.6.
A median multiple is a calculation based on a city’s median price for a home divided by a city’s median annual household income (before tax). The data covered in the report covers the third quarter of 2017.
“Vancouver has experienced the greatest housing affordability deterioration among major markets in the Demographia Annual International Housing Affordability Survey, with its Median Multiple rising by more than 2.35 times, from 5.3 in 2004 to 12.6 in 2017,” the report reads.
In addition to assigning Vancouver an alarming score on affordability, Demographia’s January 22 report also describes the city as one of five with a “greatest bubble risk”.
“Vancouver had already developed a severely unaffordable housing market in the first Survey (2004), which has been associated with its urban containment policy, adopted about five decades ago,” the report continues. “Vancouver has experienced the greatest housing affordability deterioration among major markets in the Demographia Annual International Housing Affordability Survey, with its Median Multiple deteriorating from 5.3 to 12.6, equivalent to 7.3 years of pre-tax median household income.”
In August 2016, B.C.’s provincial government introduced a 15-percent tax on Metro Vancouver real-estate sales to foreign nationals. Demographia acknowledges that action but suggests its long-term impact may be negligible.
“This appears to have cooled the hyper-inflation at least temporarily,” the report reads. “However, house prices are now rising again, with an 11 percent increase over the past year, approximately four times the increase in average earnings.”
Demographia is headed by Wendell Cox, a St. Louis-based academic who in the past worked with various U.S. governments such as that of Los Angeles County. He’s somewhat well-known for arguments against public transportation.
The use of median multiples to calculate comparative housing affordability is not without critics, but the measure is deployed by other organizations in addition to Demographia. For example, last October, a group called Point 2 Homes used median multiples to calculate that Vancouver is the number-one least-affordable city among 50 metropolises across North America.