Data shows that most can afford Metro Vancouver housing

The latest "Condo King" speech spurs debate

Living in Vancouver really isn’t as expensive as some would make it out to be. That was the thrust of a speech delivered by well-known marketer Bob Rennie at a major Urban Development Institute (UDI) luncheon last week.

Due to his ability to sell lots of real estate, Rennie is better known in these parts as the “condo king.” It’s a moniker he’s grudgingly embraced as we’ve watched him sell out one concrete high rise after another.

Rennie’s detractors are quick to dismiss his speech as nothing more than self-serving promotional hype being used to drum up even more condo sales. However, the statistics he cited appear to burst the bubble of those claiming Vancouver has become one of the world’s most unaffordable cities.

“When you look at the region as a whole, there is a still a lot of real estate on the market that is within the reach of average working people,” said Rennie. “The upper end of the market has simply skewed the numbers to make Metro Vancouver look more unaffordable than the sound bites want you to believe.”

Rennie said the amount of clear title home ownership by 55-74 year olds in Metro Vancouver is valued at $88 billion (113,000 homes, average $777K). He claims a lot of that equity is now being used to help the children of those homeowners to get into Vancouver’s housing market. As a result, simply looking at income to measure the level of affordability doesn’t provide the public with a complete picture.

Of the 19,300 condos registered at the land registry in 2011, the bottom 80% sold for an average $315,917. After crunching the numbers, the annual family income required to purchase a home in this category is $52,800.

Anti-gambling crusader and former Vancouver council candidate Sandy Garossino isn’t buying what Rennie has to offer. In a sharply worded comment on Twitter, she wrote “accepting Rennie's opinion (on Vancouver real estate) uncritically is a bit like asking Goldman Sachs' advice on mortgage-backed securities.”

When I read that tweet to Rennie, I could hear him chuckle over the phone. His preference is for critics, such as Garossino, to produce numbers and statistics of their own to discount his theory. As he rightly points out, the data he used for his UDI presentation was obtained from independent sources.

Regardless of what you think of him, you have to give the “condo king” some credit. He’s managed to stir up a debate that is often laden more with folklore than fact.

– post by Daniel

Kudos to Terry Lake: we bid adieu to AirCare
Michael Geller, Seoul Brother

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  • Everyman

    Sandy is absolutely right. In less than a generation we’ve gone from a young couple being able to start a family in a new three bedroom home, to that home morphing into one of Rennie’s 600 sq ft shoeboxes. That’s not progress. And it certainly isn’t justified by any stellar performance on the part of Metro Vancouver’s economy.

    • Working Mom

      That is so true Everyman. Shoebox living is cruel to families with children – it is a form of child abuse. This city does not even provide enough facilities or activities for parents to take their kids to. This city has even shut down an open air swimming pool for what – a freaking community garden for a few people. When it employed people and thousands every year enjoyed the facility.

      If we had a real homes (and no strata or property managers) with a garden we can create fun activities for our children and also know they are safe in their own back yards. Children can be Children rather than having to constantly be concerned about the neighbours who freak out over every little noise they may make or deal with loud drunken parties of the those who do not have children.

      Bob Rennie and the likes of him really have no concept of family living or if they do – then they just don’t give a crap about the living condition of families, and that is truly a shame.

  • Donna

    Neither my parents or my husband’s parents had any of that equity in a plus $700,000 home. We have always been a one income family as we chose to have one parent at home with our children. Where exactly are we supposed to buy? So we can either live at least an hour commute away or live in one of those 700 sq ft condos.

  • Stuart

    My experience of looking at real estate/condos in Vancouver shows that the bottom 80% are either bachelor or very small one bedroom condos. Hardly what one would call family housing. As for the income necessary to support that category, that must be with a very healthy down payment. My mortgage certainly doesn’t support that kind of number crunching.

    • Steven Forth

      We have similar experience as Sandy. We are looking for a dwelling for a couple with two children and a dog. The couple has a low six figure income which I believe is not bad for people in their late 20s. It is difficult for such people, many of whom would also have student loans, to come up with the $50K, and in any case, a more reasonable price is more like $600K. The numbers don’t really work.

  • West End Gal

    What a lots of crap!
    Right from the Profiteer’s mouth, ha!
    “Data shows that most can afford Metro Vancouver housing… “Condo King” speech spurs debate… living in Vancouver really isn’t as expensive as some would make it out to be.”
    Bob Rennie and his ilk are the reason why housing is affordable in Vancouver. Developers and Realtors along are the cause. real Estate scalpers is all they are. You could hear them saying: “I have Houses for sale, Condos for sale, yes , how many do you want?”
    Disgusting!

  • skippy

    Lets have Mr Rennie fully disclose the data so we can audit and review. I would love to discuss and debate but not out of ignorance. Also, would love to find a nice comfy place here in Kits for $300K…or maybe those are the 500 sq. foot condo’s out in a remote neighbourhood in Maple Ridge with no amenities and a two hour commute each day that brings down the average. I never really considered Maple Ridge part of Vancouver … but apparently Mr Rennie does.

  • Doug

    How is this affordable? If the parents take equity from their home to help the kids with their house, then the parents have now taken on debt and the kids have taken on debt to make up the balance.

    Worse, the high price of housing locallly is preventing people from spending money on the goods and services that makes our economy run. If most of your money is going to real estate (the actual construction of the home costs a lot less than the land), then you’re not putting money into things that create jobs and add value to materials.

  • Michelle

    Are you one of those parents who own their $500,000 -1,000,000+ , mortgage free house in Vancouver? With your adult “kids” still staying at home? Duh, the economy… than, watch-your-back! 🙂
    No, but seriously, you are now an inheritance target! Thanks Rennie, Vancouver, BC, Canada!
    Sweet…
    I hope you’ll be next, Bobbie!

  • The Angry Taxpayer

    Here’s some housing stats no one is talking about.

    1) How many of those “mortgage free” single family homes, where good ol’ mom and dad are gonna hand over the poceeds of sale to their kids, have outstanding property taxes owing?

    As some of you know, there’s virtually no barrier to deferring your property tax after age 55 (apparently the money owed doesn’t affect services as the muni can “borrow’ against what’s owed). It ain’t all millionaires living in older homes, here on the West Side, folks. Many retiress I know are using this deferral beause–ta da!–they don’t have the income to pay that tax. Which could cause a bit of a calamatous situation if the market “softens” just when they need/want to cash out.

    Over 20 or 30 years, based on, let’s say, $6,000 per annum, that’s a chunk of change, which will come off the top when that home is sold.

    Giving the dough to your kids would depend on what the market is doing THEN, as opposed to NOW. Who really knows that?

    2) Maybe Mom and Dad, if they are smart, will want to use the proceeds of their homestead to look after themselves, in their old age.

    Again, seniors residences are not cheap, unless their greedy darlings want to stick their parents into a provincial facility (which will most certainly NOT have capacity for all the aging boomers coming along). Factor in $6,500 to $10,000 per month for a place like Revera Group homes, and again, you are talking about serious coin.

    What’s the old saying? Don’t count your chickens before they’re hatched–especially when it comes to financing a second or third gen’s housing. Seems most apt, here.

    Because that’s what I call speculation.

  • The Angry Taxpayer

    BREAKING NEWS!

    CTV British Columbia ‏@CTVBC

    200 living in Yaletown building handed eviction notices http://bit.ly/Lkn85I

    Wonder how many of these renters will be able to buy back into this building?

    Condos as rentals, maybe not the best solution?

    • Max

      @ I am guessing the Bosa boys have not heard of the Mayor’s affordable housing task force and 2011 campaign promises….

      • Paul H

        I thought Bosa was knee deep in STIR projects….

      • The Angry Taxpayer

        @Max

        Ha!

  • Eric

    Vancouver is quite a good place to live. Our neighbors come from Manitoba, Scotland, the US, England, Saskatchewan, Quebec, & etc. We work with people from all over the planet too. With the massive growth of the airport, the port and the film and video industries the city has become discovered by an increasingly mobile world. Consequently, over the past twenty years Vancouver has become a much more international city and the Canadians from other provinces continue to come. It’s impossible to imagine that in a place like this that real estate could ever be cheap. Successive waves of newcomers, both wealthy and otherwise, manage to buy their own property.

    If one is of modest means one cannot zip into Paris or London or Los Angeles or even Bombay and easily buy a nice little detached house. Vancouver is now no different.

    • Steven Forth

      Fair enough, but as many have pointed out (i) Vancouver does not do well when the income : housing costs ratio is considered and (ii) the high cost of housing is pushing creative people out of the city. Vancouver is a great place to live and will not be cheap but we need more options – different forms of ownership like co-ops, more variety of housing, more infill housing, more transit to tie the city together so that one does not need the expense of a car … we have a lot of challenges.

    • Mira

      Eric,
      get over yourself:
      “If one is of modest means one cannot zip into Paris or London or Los Angeles or even Bombay”
      Vancouver is none of these cities. Don’t get fooled by the paid for, ads in the magazines. Vancouver doesn’t have the background, the density, the historical richness, the culture, and last but not least… the people. Creativity is dead and replaced by condos.
      We are self esteem sufferers, sorry to bring you the news but that’s it.
      Same thing with trying to bike in Vancouver like they do in Copenhagen. I heard former guru of Planning Brent Toderian is pushing for some attention, LOL as always, in Copenhagen…It took them one hundred years of white people biking around a flat surface, in order to achieve that. Here we have one called Meggs and another one called Robertson that want to tear down Viaducts and paint five more bike lanes.

      • Steven Forth

        Having lived in Vancouver and Copenhagen I see no reason why Vancouver cannot have as many cycle trips as Copenhagen. Vancouver is not particularly hilly, I can ride anywhere in the city on my fixed gear and I am a fat guy in his 50s. On a geared bike it is easy. My former neighbour, who has sadly passed away, cycled from Kits to downtown into her 80s.

        There is no reason Vancouver cannot grow great jobs and continue its history of being one of the more creative cities on the planet. Go to art galleries anywhere in the world and there are books about Vancouver artists. We puunch way above our weight.

        But yeah, affordability is a real problem and we are not seeing any real solutions. And affordability makes it less likely creative young people will stay here and harder to attract people to work here.

    • eric

      I completely agree. As I’ve written before, Vancouver is not a head-quarters city and therefore there only exists a small amount of high paid corporate and other white-collar jobs, compared to places like Toronto, New York, London, etc. Nevertheless, from a Canadian perspective, the lower mainland is absolutely one of the best places to live and retire to in Canada.

      The architecture of Vancouver leaves much to be desired, to say the least but whenever there is a development proposal there are opponents. Many people oppose the new lane houses. Any proposal to develop row houses is met with opposition. Even a six story proposal will meet opposition in single-family areas. Imagine how much a developer has to factor in for community contributions, social housing contributions, community hearings, style committee hearings, sight-line view hearings, and now sustainable and bike provisions approval hearings?

      There’s loads of land to be developed. Loads of single storey houses within a few blocks of downtown and even single storey commercial right downtown on Cambie, even some still on the downtown peninsula. All these reasons keep prices high. It will take many years to build out. As long as those built are snapped up, then more will be built.

      • Ron

        Pssh, look at all the single family homes a stones throw from 29th and Nanaimo stations along the expo line – transit stations built 2+ decades ago.

        The planning community cheers for us all to live in dense communities near transit yet doesn’t zone for it were it would be increadibly attractive to developers and economically viable.

        While they are at it instead of trying to drive the prices down through artificial subsidised housing why not make it family friendly by zoning for minimum square footage. That way the places might actually be viable for families which would help keep the character of the primarily family oriented communities.

  • Lee L

    Look…it’s all about mortgage rates. The rates are as low as they have ever been, there is demand for housing in Vancouver, so people bid the prices up simply because they CAN. Working people can qualify for very big loans because rates are at a historical low.
    When my wife and I bought our house, interest rates were over 14 percent and we could not qualify for a huge loan amount. Now they are under 3 percent, which is a close to 1 fifth what they were in 1982.

    When rates rise, your income will only qualify you for a smaller loan and prices will fall, however when there is demand, like there is in Vancouver, you will still need 2 people working to service a smaller loan.

  • Rebecca

    Daniel,

    I would like to point out that even though the bottom 80% of the condo market may go for an average of $315,917, as Mr.Rennie says, I think he purposefully tried to mislead his audience by not addressing the square footage that the buyer gets for that price. What is it that one gets for that 316K? 500 to 650 square feet?

    It’s not the price on the page that makes Vancouver unaffordable, it’s what you can get for that price. If I were a single professional person, I could probably afford to buy something in that bottom 80%, and it would be no problem for me to live comfortably in that small space.

    But I spent two years living in 650 square feet with my husband and two young children. Yes, it’s possible; we got creative and there are lots of articles and features in all kinds of magazine with ‘ideas for small spaces’ to help out; but at the end of the day, it was really, really cramped, and there were lots of things that we couldn’t do (hobbies, entertaining, sports) because we didn’t have room.

    I want to call you to task on failing to see the flaw in Mr.Rennie’s argument on affordability, and I challenge you to do right by your readers by balancing the argument by seeking out the data on average price per square foot for that bottom 80%.

  • Johnny Needles

    Stop calling them condos. They’re broom closets. Denial won’t help anyone.

  • boohoo

    Broom closets, child abuse oh my!

    Take a look around the world here people–perspective please!

    • ned

      Then the kids are grown up and they have no place to invite their friends, to entertain, it will end up with the aging parents… taking long walks around the Lost Lagoon. Just like, their own kids! boohoo why don’t you move to Hong Kong or Shanghai to enjoy the crowd and the generous space. I don’t want to live like them if that’s what you’re saying. That’s why I LIVE HERE! Capisci?

      • Steven Forth

        “why don’t you move to Hong Kong or Shanghai” What, only people with the same opinions or lifestyles are allowed to live in the same city as you?

  • Max

    Interesting article by Pete McMartin. Seems the densification strategy being shoved at us – is a myth…

    http://www.vancouversun.com/McMartin+Vancouver+goal+urban+density+just+plain+dense/6692175/story.html

    • boohoo

      Cox has been discredited I believe already, but let’s pretend he’s right. Ok, no new higher density equals more lower density–so where do they go?

  • Everyman

    RBC just released figures showing Vancouver’s affordability has deteriorated further, to a breathtaking 88.9% of average income to service a standard one story house.
    http://www.theglobeandmail.com/report-on-business/economy/housing/home-affordability-in-top-markets-deteriorates-rbc/article2446180/

    Who is right: The Condo King or Canada’s largest bank.

  • Working Mom

    Thank you Stuart for a wonderful and well written article regarding our neglected neighbourhood which shows the lack of respect Vision has for our community and other communities at large.

    I think it is quite sad that there have been such severe budget cutbacks and layoffs at City Hall and Parks Board and the media have not covered this or its ramifications. It just goes to show how the media is sitting in the back pocket of Vision Vancouver and not presenting some of the serious issues regarding the running and maintenance of Vancouver.

    What I would like to know is with all these budget cutbacks, where is the money going/spending. How come there is such a need for these deep cutbacks when in the past this was not necessary?

    Why has the media not covered these cutbacks and layoff?

    A couple of years ago Vision closed down a public open air pool – without public consultation and converted it to community garden. Let’s see the rational of this: people lost their jobs and thousands of people no longer have access to a pool – which is great for exercise and family fun – and for what? So that a handful of people can have a small garden, I just don’t get it? If you want a community garden then use the unused land under the skytrain tracks or how about vacant lots that overgrown with weeds?

    I had also called 311 regarding the condition of the parks and state of the street with over-gown vegetation that can scratch cars and cyclists while causing blind spots at the intersection. I also talked about how in the park field there are no washroom facilities so people who play in the field for sports leave trash and defecate in the bushes. In the picnic area I see chicken bones and other trash lying around after some event. The grassy areas are so over-gown that it is even difficult to clean up poop after the dog!

    We have people who illegally fish along the river and leave fishhooks, fishing lines, beer cans and other junk behind.

    I have spoken to some of these people and they have told me that they have even caught sturgeon and that it tastes good! Can I say POACHING???? However, when I spoke to Park Rangers regarding all these issues they told me that there is very little communication or cooperation between the city, park board and department of fisheries so nothing can be done.

    City workers I have spoken to told me that moral has reached an all-time low and many are ashamed and frustrated at how dilapidated this wonderful city is becoming.

    I was also told that maintenance of empty lots of land is responsible by the city and they in turn bill the land owner. So when I hear of lots of land that are rat infested and full of junk, or areas that are so overgrown with weeds that is it a danger to motorists and pedestrians I wonder who is benefiting from this? I think it is funny that Vision likes to blame the land owner when it is really their responsibility for the clean-up and then they send the bill for work done. Is this the case or was I miss informed by a city worker?
    Yes Mr. Mayor who wants the greenest city is the world; you are getting us there with a green city, green with weeds and moldy junk.

    Nice Job Bud!

  • Ron

    “Of the 19,300 condos registered at the land registry in 2011, the bottom 80% sold for an average $315,917. After crunching the numbers, the annual family income required to purchase a home in this category is $52,800”

    Of course, when you put in your strata fees (never mind any special assesments) it would not give you much money to do much of anything else. I guess it’s less of a problem when you dont’ need to spend money on furntiture.

    What happens to this poor smuck that has leveraged themselves to six times their income if….

    A) The market actually goes down in price, making his mortgage underwater.

    B) Operation building envelope means you get a very special assesement.

    C) When it comes time to renew the mortgage the rock bottom interest rates you bought with are now even modestly higher from their historic lows?