In his latest research, Andy Yan, SFU City Program director, showcases that in 2016, the percentage of Metro Vancouver homes worth more than $1 million jumped from 28% to 43%.
In previous years, Yan’s data had only included Vancouver proper, but the symbolic line that once only lived between the west and east side of the city has been pushed further out, including the increasing home prices within Metro Vancouver. The 2016 assessments taken in July 2015 saw Richmond, Burnaby, North Vancouver, West Vancouver, and Vancouver combined having over 60% of homes worth at least $1 million. B.C. Assessment has cautioned that single detached homes in the regional district will be assessed 30 to 50% higher for 2017 taxes than in 2016.
According to The Province, interest rates, housing supply, the exchange rate, and the province’s new interest-free loan program for first-time home buyers are all factors that could impact the continued rise of real estate cost. Likewise, Yan believes property speculation and constrained supply for single family detached housing are also at play. And while recent intervention from the government with the 15% foreign homebuyers’ tax and tighter mortgage rules have slowed down the rampant housing market, there has yet to be any reflection in price.
Unfortunately, the alternatives to home ownership can be just as daunting in a city with a rental vacancy rate almost at zero. According to an article published in The Peak earlier this year, the price ceiling in B.C. for rental homes is projected to rise another 2.9% in 2017 as per the government controlled price limit.
Yan also looked at other factors that can contribute to housing affordability, such as transportation costs. There is a misconception that living further out of the city reduces living costs, a term that he quoted as “phantom affordability.”
“This idea that you can drive (further from the city) until you qualify (to buy a home) doesn’t take into consideration that as home mortgages (cost less) transportation mortgages (in some areas) go up,” Yan said during an interview with The Province.
So what does this mean for millennials that hope to live anywhere in the Metro Vancouver region? According to a report by Vancity, a millennial couple between 25 and 34 years of age buying an average Vancouver home will have no discretionary income and will rack up $2,745 worth of debt per year after paying for essential expenses. Vancity also found that 61% of millennials in Metro Vancouver live at home, and 23% of those between 25 and 34 have yet to move out.
Amidst all of this insecurity, there may be a silver lining. According to the Vancouver Mayor’s Office, Vancouver City Council preliminary year-end numbers show that more than 1,800 new rental units were approved in 2016, surpassing previous years, which is expected to combat the city’s 0.7% vacancy rate. The city also plans to invest $80 million in the 2017 capital plan for affordable housing, the highest amount to date. It might not be too long until millennials see a difference in the housing market.
While the situation may appear bleak, municipalities are increasingly cognisant of this financial burden and 2017 will hopefully see more affordability measures put in place, particularly with the rental market. In the meantime, our parent’s basements will just have to do.