Metro Vancouver Affordability: Where Our Household Income Goes

Business in Vancouver
October 1, 2013


As house prices continue to rise despite mortgage interest rates that are creeping up and tighter lending restrictions from federal Finance Minister Jim Flaherty, recent data and reports are characterizing the housing market as demonstrating "renewed vigour" with the "risk of a catastrophic outcome [having been] greatly moderated."

This recent chatter about a rebounding housing market (also known as The Bubble That Never Was) has, not surprisingly, been accompanied by new calls to address persistent concerns about housing affordability.

We all know Greater Vancouver housing is expensive (one need only look at sales price data or the just-released data from the 2011 National Household Survey to verify this). But if the big banks have us perpetually anchored to the bottom of the affordability ladder, and if housing in this region really is so unaffordable, shouldn't this be borne out in a wide range of data sources? Turns out it depends on what data sources you choose to consider and how you look at the data.

For instance, we can examine the notion that Vancouverites need to devote a far greater proportion of household resources to housing than those in other Canadian metro regions (representing one measure of affordability) using data from Statistics Canada's survey of household spending (SHS) released earlier this year.

The most recent comparative SHS data for Census Metropolitan Regions (CMAs) shows that residents of Canada's metro regions devote an average of 27.7% of total household consumption spending to shelter (which includes gross rent/mortgage payments, strata fees and property taxes). The data for the Vancouver CMA shows, perhaps not surprisingly, that we spend more than this average, at 30.9%. This puts Vancouver second from the top (Yellowknife leads the way at 33.4%), followed by Toronto (29.6%) and Edmonton (28.9%). Based on this data alone, it's not really a stretch to reference terms like "unaffordable" when discussing housing in this region.

The discussion becomes more interesting (and nuanced) when we include other housing-related expenditures that must be considered alongside shelter costs themselves. One example is spending on household operations (such as electricity, gas, and water). The Vancouver CMA devotes the smallest proportion of spending to this category (5.6%). This compares with a CMA-average of 6.8%.

If we also consider spending on transportation (cars, public transit, and all things in between), Vancouver again sits near the bottom of the heap: compared with a CMA average of 18.7% of all household consumption going to transport, households in the Vancouver CMA spend only 16.8%, this being a function of the compact nature of the region and the fact that we are constrained by water, mountains and the U.S. border.

Households in the Victoria CMA spend the least on transportation as a share of all spending (15.3%), while Saint Johners spend 20.6%, St. John's residents spend 21.2%, and those from the Queen City (my brother-in-law, who is from Regina, insists there is no singular term to describe someone who is from there) spend the most, at 21.3%.

On average, households devote 53.1% of their spending to the aggregate of shelter, household operation and transportation. This includes a low of 49.6% in Quebec City and Victoria and a high of 56.6% in Yellowknife. Vancouver, far from being an outlier, sits in the middle of the pack at 53.4%a number that certainly doesn't scream "unaffordability."

I would be remiss if I didn't bring attention to the fact that this approach to assessing housing affordability represents an oversimplification of the issueit also doesn't consider the 2011 NHS data that shows the relatively high proportion of Vancouver households spending more than 30% of income on their homeand perhaps this is part of the point. While considering the SHS data runs contrary to previous criticisms I've made about the widespread use of point measures in addressing affordability, this particular data set does not support the notion that Vancouverites have to allocate a far greater proportion of their household budgets to housing and housing-related items than our counterparts in other metro regions.

So if we don't spend a far greater proportion of our budgets on housing, where do we focus our consumption spending?

The data shows that we spend the most of any CMA on education (4.2% versus a CMA average of 2.5%), and we spend a significant proportion on food (14%). Perhaps this is proof that Vancouverites enjoy learning and talking about their food more than they do actually eating itsomething I've suspected for some time now.

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