Homes under $1 million in Vancouver are virtually extinct
Every person who owns a home in Vancouver is essentially a millionaire, according to data from BC Assessment analysed by urban planner Andy Yan.
Yan recently found that 99.7 per cent of homes in the city were assessed at over $1 million in 2016. It’s a nine per cent increase from the data Yan published in January 2016 that found 91 per cent of Vancouver homes were over the $1 million mark in 2015.
Prior to 2016, there was what Yan called the “$1 million line”: a border down Main Street that divided homes below $1 million from those above. It was last visible in 2015.
Yan previously defended his bookmark of the $1 million value because of “both the cultural significance and touchstone of $1 million in Canadian culture… and also the price threshold that some realtors such as Sotheby’s International define as ‘luxury real estate.'”
BC Assessment says the value of all residential real estate in Vancouver increased by over 32 per cent between 2016 and 2017 and is now valued at over $326 billion.
Yan’s data goes back over 10 years to 2006, when only 19 per cent of homes in the city were valued at over $1 million. It seems like a distant past for Vancouver, where single family home prices have grown over 152 per cent during this time.
Meanwhile Statistics Canada reports the median total income of all families in Vancouver increased from $63,600 in 2016 to $78,870, a growth of only 24 per cent.
Yan was able to answer a few questions for Global News on the data and provide some context into what it means:
Q:What neighbourhood are the remaining 0.3% of homes assessed below $1 million in?
A: These sub-$1 million homes are randomly spread throughout the City of Vancouver and likely have various characteristics like building age, lot size and location that kept their total assessment value at under $1 million.
Q: Your last map was published in Jan. 2016 and showed 91 per cent of homes were over $1 million. In 2015 it was 65 per cent. In 2006 it was 19 per cent. The trend keeps going up, but do you see it going down any time soon? There has to be a breaking point, right?
A: I’m not sure. I think these assessment values are at the convergence of cheap money (low interest rates), fast money (speculation/flipping), and global money that has helped define Vancouver real estate, particularly in the City of Vancouver for the last couple of decades. The key factor is what happens when one or more of these factors change and what the reaction of the real estate values and housing finance market might be. This is not even factoring things like aging demographics and the overall economic environment in terms of the quantity and quality of local employment in the city and region.
I am more an urban planner than clairvoyant on these patterns and their consequences. It’s hard to say whether values are at a peak, plateau or cliff given these internal and external economic and global factors. I am afraid the “breaking point” is largely being carried by an entire generation facing housing insecurity for both owners and renters. This is just a map of single family homes, but I am working on a larger study of other land use and housing types in Vancouver which I think presents even greater challenges towards the economic competitiveness and vibrancy of the city and its social diversity and inclusiveness.
Q: These days there seems to be a difference between what BC Assessment has calculated and what the real selling prices are. Would you say there’s a discrepancy between those numbers, considering the assessments were taken at the peak of the market in July?
A: It is important to note that these maps are based on total assessment values determined by BC Assessment, which is a sum of both land and building appraisal values as of July 1, 2016. There will almost always be a difference between assessment values and market values. In all likelihood, prices have changed. It is a point-in-time measure of assessment values that will change over time, but is nevertheless the best measure currently available to provide a full stock measure of land values in the City of Vancouver – in this case for properties that are zoned as single-family homes.
Q: How did you collect the data and go through the analysis to create this map?
A: The data was obtained through the City of Vancouver’s Open Data Catalogue and was edited, checked and analyzed using a data mapping program called ArcGIS.
Single-family homes are, of course, one form of housing in the City of Vancouver. Most people in the City Vancouver actually live in densities that are higher than single family homes. It is an interest to me because so much land in the City of Vancouver is zoned as single-family homes.
Q: What do you predict Vancouver’s housing market will be like by 2030?
A: I won’t really give a prediction in as much as a call for action. Should Vancouver and, by extension, Metro Vancouver and British Columbia, want to remain livable, competitive, inclusive and relevant in 2030, we will need political courage and civic virtue on a local and provincial level to develop ownership and rental housing that is safe, affordable to local incomes and adequate.
Q: What kind of steps can we take to bring home prices down or increase wages so more people can afford $1 million+ homes?
A:I don’t think there are simple answers to this question, but we need both supply-and-demand measures. We have a distinct shortage of affordable and adequate housing for both renters and owners who have local incomes in the city and, increasingly, the region. We need a housing system that is responsive to the needs of residents who call Vancouver their full-time home and who want to set roots in the community.
Policy needs to be set at meeting “who are we trying to house” as opposed to just “what we build.” A housing system that is also connected and developed with a connected non-automobile-centered transportation system, robust and compact urban design, and resilient social and cultural infrastructures. We need policy and strategies to incentivize good behaviours and de-incentivize bad ones that distort the marketplace. We need to take advantage of our global position, cultural heritages, clean environment and our gifts in terms of education, talent and creativity to create well-paying jobs in numbers that matter.
I can continue, but just want to scope out some of the principles through which we can inform and power housing and economic development policy in the city, region and province. It will take leadership and political courage on a local, provincial and federal level to take these steps to change course on a housing and economic system that has taken decades to take us to this point.
In response to Yan’s findings, the B.C. Ministry of Finance says it continues to address housing affordability in the city, touting the scorned BC HOME Partnership program, a $920-million investment for almost 5,300 new housing units and the newly built homes exemption.
“There remains a need for greater collaboration at all levels of government to help increase housing supply. A recent survey of six jurisdictions in the lower mainland show there are 115,000 development projects at various stages of planning, review and contemplation within those jurisdictions. These represent a critical supply of new housing that could help moderate prices in our communities,” the Ministry said in a statement.
“We have been working with local governments, as well as public and private industry experts, to examine options to create supply. Our work with municipalities is ongoing to help ensure they have the capacity, incentives and performance targets needed to expedite processing, approvals and permitting of development applications. We are also discussing various options where the Province could help municipalities streamline their application approval processes and improve transparency for both developers and consumers. More details will be coming on those measures.”
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