A new report paints a stark picture of how unaffordable housing has become for young people in B.C.’s Lower Mainland in an era of rapidly escalating real estate prices.
The UBC-led Generation Squeeze project found just 15 per cent of Metro Vancouver homes cost less than $500,000 and have at least three bedrooms as of 2014.
Average prices in the region are much higher, but the researchers picked the $500,000 threshold because it’s twice the cost of an average home in the region in the late 1970s, after adjusting for inflation.
“This means what used to buy two entire homes when today’s aging population started out as young adults now only buys two bedrooms,” said Anita Minh, co-author of the report Code Red: Rethinking Canadian Housing Policy. “Often, that’s not enough for a family with two children.”
The report found that while it once took a typical young Canadian five years to save a 20 per cent down payment on an average home, it’s much worse now.
Now it typically takes 12 years across the country to save up that down payment, 16 years in B.C. and 23 years in Metro Vancouver, said UBC professor and co-author Paul Kershaw.
Despite historically low interest rates, the average monthly mortgage payment required from a young adult starting out in Metro Vancouver reached $3,555 in 2014, compared to $1,991 in 1976-80.
That means it takes the typical young Metro Vancouverite an extra 2.5 months of work per year to pay the mortgage, Kershaw said.
The report found only seven cities in Metro Vancouver have at least 25 per cent of their homes priced under $500,000 (in 2014) with three or more bedrooms – Port Coquitlam, Pitt Meadows, Maple Ridge, Surrey, Langley City, Langley Township and Delta. (Maple Ridge is the only one with more than half the homes falling into that category.)
The trade-off for a larger home with a yard in one of those cities is generally longer, more costly commutes, the report said, estimating the extra direct transportation costs of living there adds $120,000 to $180,000 over 25 years.
The Generation Squeeze report was released Wednesday, on the one-year anniversary of the #donthave1million rally on housing affordability in Vancouver.
The report recommends a speculation tax that taxes capital gains on homes flipped in less than two years and a surtax on home values to dampen speculation, especially at the top end of the market.
It also urges more tax incentives for purpose-built rental housing and use of new tax revenue to provide other assistance for housing affordability.