Vancouver millennials can buy a house in Vancouver, a new study has found. They just have a wait a little bit longer than their parents did.
In 1976, it took a young Vancouver resident six years to save enough for a 20-percent down payment on an average Lower Mainland home. In 2016, a Metro Vancouver worker can do the same, but in 23 years.
“This study will show that Vancouver is now the most difficult city in the country in which to make a home as a young adult,” reads the report by Generation Squeeze, an awareness campaign that was founded at UBC. “We think the data show that these patterns risk turning the city into a generational ghost town—one in which the vast majority of young people cannot house a family in anything resembling the norms that were taken for granted a generation ago.”
In addition to larger down payments, British Columbians are also struggling with higher mortgage expenses.
“Average monthly mortgage payments between 1976 and 1980 equaled $1,583,” the report reads. “By 2014, the average monthly mortgage payment reached $2,487. An extra 35 hours of labour a month are required to cover this average mortgage, or 2.5 months of extra work per year, compared to a generation ago.”
It lists a number of explanations for this situation. The first discussed in the report is simple geography.
“Today our population is over 35 million (Statistics Canada 2014), and we converge more in urban settings in search of employment,” it reads. “With horizontal space in our urban cities a limited commodity, growing demand for a constrained supply has increased prices, while driving developers and buyers to look upward in search of space, often in skyscrapers.”
The report warns that conversations about housing affordability can be “overly distracted” by a disproportionate focus on multimillion-dollar home purchases. That could be interpreted as a reference to the extent to which Vancouver discussions about real estate gravitate to West Side homes worth more than $2 million.
A second force driving the country’s affordability problem is a decline in wages, according to the report.
“As housing prices doubled across the country since 1976, and tripled in Metro Vancouver, incomes fell for younger Canadians,” it reads. “After adjusting for inflation, full-time earnings for a typical Canadian age 25-34 have fallen over $4,000 compared to 1976-1980. In BC, the drop in earnings is worse than any other province. Full-time earnings are down over $9,000 for a 25 to 34 year old compared to 1976-1980. Earnings in Metro Vancouver have tracked the provincial pattern.”
The report also mentions foreign money, an issue that has dominated much of the debate around rising real-estate prices in Vancouver.
“Extreme housing prices in Vancouver may, or may not, reflect the influence of wealthy investors living abroad, or wealthy newcomers settling in the region,” reads a footnote to the report. “Recent research looking at vacant homes in the city suggest that vacancy has been stable over the last dozen years (Ecotagious 2016). This finding urges caution before judging that non-resident 'foreign investment' is the primary driver of Vancouver’s surging housing prices. Further data are required to sort out the scale of influence such patterns are having on the local market.”
Another interesting point included in the report is an acknowledgment of how much older Canadians have benefited from millennials’ affordability problem.
“It is time to recognize that Canada’s housing market, especially in hot zones like Metro Vancouver and Metro Toronto, has transformed regular people who came of age as adults in the 1970s and 80s into the global one per cent—even as retirees!” it reads. “With housing prices more than doubling in Canada after inflation since 1976, and home values over $1 million becoming common in major Canadian centres, a number of Canadians who earned incomes in regular jobs now reside in homes that make them the elite from a global perspective.”
Generation Squeeze’s website lists its funding partners as Vancouver City Savings Credit Union (Vancity), United Way Lower Mainland, and the Vancouver Foundation.