The million dollar question
Prices are dividing the city to a record degree—and that’s before we even address the actual average cost of a detached home
December 29, 2015
This article was originally published in the September 2015 issue of Vancouver Magazine.
Back in the Middle Ages, lords of the manor owned the land and serfs scraped by in a desperate bid to live safely within the fiefdom. How little things have changed. These days in the fiefdom of Vancouver, the homeowners are the lords and everyone scrambling around the periphery to find affordable, central housing is a serf.
That’s Saeid Fard’s deliberately hyperbolic take on things, anyway, but there are many who feel he’s not far off. Fard is the young entrepreneur and blogger whose incendiary Tumblr post “The Decline of Vancouver” went viral earlier this year. In it, he says, “We have two classes of society forming along a divide that is growing difficult to cross.”
Therein lies the nub of our unaffordability problem: it’s creating a class divide, a deepening division between the haves and have-nots. Never before has the gap been so wide. For decades, we had an East Side vs. West Side rivalry based on class distinction (and a downtown vs. Shaughnessy rivalry before that). But anyone from the rough part of town could work their way up. Those days are gone: home ownership throughout the city is now a privilege, not a certainty.
Today, the average detached-home price in Vancouver proper is $2.23 million. That’s according to journalist Brent Jang, who requested detailed data from the Real Estate Board of Greater Vancouver.
Normally, the board only releases “benchmark” prices for the city of Vancouver, a calculation that overlooks high-end houses. (It does publish average prices for the Lower Mainland.) This benchmark notion has caused some confusion about the reality of detached-home prices within city limits. For example, the June figure of $1,123,900 caught fire as the average price for a property in Metro Vancouver. But that figure doesn’t come close to reality. Remove Burnaby, North Vancouver, Richmond, et cetera, and the actual Vancouver average is double that inflammatory number—and, increased by 19.2 percent from the true $1.873 million average of May 2014. If this trend continues, by 2030 the average price of a detached house in the city will be $4.4 million, according to a forecast by Vancity. Meanwhile, the average household in Vancouver brings home around $78,000 a year. As experts say, there has been a complete decoupling of housing from income.
In his book middle power, Middle Kingdom: What Canadians Need to Know About China in the 21st Century, author and former ambassador to China David Mulroney says: “When the housing market is priced far above what local people can ever hope to afford, they must either forego the dream of owning their own home or move elsewhere.”
Such is life in the decoupled city. South China Morning Post columnist Ian Young, who covers Vancouver real estate for a mostly Hong Kong-based audience, prefers to call it a “freak show.” We used to understand how our city ticked. Now most of us don’t have a clue. There’s little tolerance for old Vancouver. We stand by as old housing stock is razed, to the tune of three houses each day.
If you’re already a homeowner without much of a mortgage, you’ve reached the end of the rainbow to find a pot of gold. But what is left for a millennial like Fard, who’s the co-owner of a startup? Having worked in the investment industry, he believes like many that home ownership is one of the best ways for average folks to grow their wealth. He bristles when critics lambaste him for being “entitled,” as if members of his cohort are expecting too much by wanting to buy a detached house in their hometown. (To those urging purchasers to enter the market with a condo: new condos are getting smaller, not bigger, and have flatlined in resale value. A real-estate agent told me today’s resales are still at 2006 prices.)
In his post, Fard put it this way: “Most in the room say, ‘Hey, look it’s an elephant.’ Property owners say, ‘No, we can’t be sure it’s an elephant, there’s a bed sheet covering part of it.’ Politicians say, ‘We can’t be sure it’s an elephant, we need to study it more.’ And developers say, ‘We did a survey and concluded it’s a hamster.’ ”
The most overt example of doublespeak on the topic comes from the premier. Around the time that housing activist Eveline Xia mounted her #donthave1million social-media campaign, someone asked Christy Clark if she intended to introduce a tax on foreign buyers, to make the market more affordable. She responded that if we were to move foreign owners out of the market, housing prices would drop. “That is good for first-time owners, but not for anyone who is counting on the equity in their homes.” At least the premier acknowledged the impact of foreign ownership. However, she later said of it: “The data we have does not support this perception.” She went on to say that, according to her analysis, foreign ownership accounts for only five percent of the market. It would be interesting to see data that does support such a theory, especially data that are not provided by a BC Real Estate Association with a vested interest in keeping luxury taxes at bay. (Clark’s analysis was conducted by the BCREA and the Ministry of Finance.)
Fard says the idea that we need more data is a weak justification for doing nothing. He compares it to littering: do you launch a study to determine the extent of the littering or do you just issue a fine? “Sometimes I wonder if it’s wilful ignorance or if it’s intellectually dishonest,” he tells me. “You hear people make these statements and part of me thinks, ‘You’ve got to know better than that.’ ”
UBC geography professor David Ley says he finds it astounding that the B.C. government has done nothing to collect the data that are standard in other cities under-going economic transformation. The academic has studied housing markets in Singapore, Sydney, Hong Kong, and London, and has written a book about the emergence of global Chinese wealth, called Millionaire Migrants. He does not mince his words: “I am talking about foreign investment, because that’s what drives the top end of the market,” he tells me in one of our many interviews. “Anyone who says otherwise is either misleading or misled. This was said all through the 1990s as well—that it’s not overseas investment driving the market—and yet when it ceased and the market dropped, that pretense fell away.”
Fard has never been fooled by politicians or anyone else inclined to maintain the status quo. He understands that any pressure applied to the top end of the market directly affects the rest of it. “You don’t need a degree in economics to see what’s going on,” he says. “Even a small increase in demand for housing that is detached from the local economy could have a massive effect on local prices. If that five percent is willing to do anything it takes to buy a detached house, they are defining the pricing of the market. The locals aren’t.”
So here we are. In a city that seldom protests, housing has become deeply politicized. We’ve seen a blog post gone viral; a petition for government to intervene that has been signed by 25,000; a hugely successful hashtag campaign that mobilized the online masses; a couple of rallies for affordable housing; and a market where houses sell for—on average—$2.23 million. So far, the premier has offered up only one solution: if you can’t afford Vancouver, she says, move to Fort St. John or Kitimat or Prince Rupert. “The views are amazing.”