Vancouver Housing Crisis ‘In a League of its Own’ Among Worldwide Cities

We all know we’ve got it bad here in terms of housing prices. But it’s easy to calm our anxiety by telling ourselves that most other major cities have it pretty bad, too. 

But as more and more organizations come up with savvier ways to crunch data and publish comparisons, it’s getting harder for us to ignore that our crisis is uniquely severe. The gap between average wages and average home prices is more extreme here than in any other city apart from Hong Kong. 

In every study, Vancouver is by far the most unaffordable housing market in North America, and the second most unaffordable in the world. Our housing prices have grown the fastest since 2000, skyrocketing by over 300%. By comparison, San Francisco’s prices have gone up by only 155%. All this money poured into a previously quiet little provincial western city has created the world’s most intense case of FOMO among longtime residents. It’s no wonder everyone’s obsessed with real estate. It’s the new gold rush. 

The reason behind the huge surge in prices is pretty clear. Our housing costs are uniquely disconnected from our labor market. Our market is affected more than anywhere else by foreign money. A recent study showed that homes purchased by recent immigrants to Metro Vancouver are on average valued $824,000 higher than homes purchased by Canadian-born buyers. 

We’ve taken steps to mitigate this by cancelling the federal government’s ‘investor program’, which allowed foreigners to essentially buy their way into the country. But our market is still insanely distorted by buyers who’ve made their money elsewhere. And way too many of these buyers manage to avoid paying income tax here, thus causing taxpayers to essentially subsidize foreign homeownership. There are literally tens of thousands of mansion owners in Metro Vancouver who report earning almost no income in the country. 

In 2018, $5.3 billion of laundered money made its way into the B.C. real estate market. This influx raised real estate prices by 5%. It’s impossible for Canadians working for Canadian money to compete with the richest people in the world – especially the richest criminals. 

A typical Vancouver household spends 85% of its income on ownership costs – compared to 44% in Montreal, and 34% in Edmonton. We’ve elected a provincial government on a mandate to attack these economic outrages, and they’ve made attempts through several new taxes aimed at curbing foreign speculators. But as we’ve said before, we can’t tax our way out of this. It’s going to take real courage from both our government and our citizens to pull an emergency brake on foreign purchases, especially when those purchases are illicit. 

As developers, we want to build more homes and rental properties to drive down prices through an increase in supply. We need the government’s help in terms of reducing permitting times, waiving DCCs and increasing incentives for purpose-built rental and affordable housing projects. But none of this will make a difference if we don’t have a plan for marrying housing prices to real Canadian wages, which need to be getting MUCH higher. The gold rush has to stop. We need leaders who can execute long-term visions for a healthy housing market for Canadian citizens without giving in to short-term greed. It’s already gone way too far.