It's not every day that you wake up, read the news, and learn that your beloved city has just earned the title of being the least affordable urban center on earth. That's what happened last week, when local headlines trumpeted the news that Vancouver, BC, edged out almost 300 cities to score this dubious distinction. Want to find out how your city rated? Keep reading.
First, a bit about the rationale used to determine how affordability is ranked. Every year for the past six years, an organization called the Frontier Centre for Public Policy conducts something called the Demographia International Housing Affordability Survey. The survey gathers information about housing costs, then compares this data against median household incomes.
The report's authors, Wendell Cox and Hugh Pavletich, who based their findings on 2009 third-quarter data, said that to be considered affordable, housing prices have to have a Median Multiple of 3.0 or less – or, in other words, the price of the average home must be equivalent to no more than three years’ household income for an average family in that area.
The Median Multiple scale progresses upward from there: Moderately Unaffordable is 3.1 to 4.0; Seriously Unaffordable is 4.1 to 5.0; and Severely Unaffordable is 5.1 and higher.
The survey report states that “[In] Vancouver the median sale value was $540,900 and the median household income was $58,200, giving a Median Multiple of 9.3.’”
I guess they haven't gotten around to creating a Super-Mega-Severely Unaffordable category. Maybe next year!
Rounding out the top five list of least affordable cities were four Australian destinations: Sydney, Sunshine Coast, Darwin, and Gold Coast. Honululu was ranked number 6, making it the least affordable city in the US.
At the other end of the list, Detroit was rated the most affordable city in the world, with a Median Multiple of 1.6.
What does this all mean for Vancouver in real terms? Well, sadly, people – particularly creative types and families – seem to be leaving in droves, as there's very little in the way of affordable housing, and even less in the way of affordable family housing, in the city. It's unfortunate, because one of the things that has always made Vancouver a fun place to live has been the diversity of people who live here. More importantly, diversity is touted as an indicator of the health of a community. It'll be interesting to see what changes the next few years will bring.
Read the full report here: 6th Annual Demographia International Housing Affordability Survey
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I love my affordable city. Allow me to brag on my cute house, needing very few repairs, that I bought for less than $80K in 2009. <3 you, pgh.
Property taxes should be considered as well. In my area, extremely high taxes make home ownership much more expensive than it would appear to be if you looked only at the cost of the house.
Atlanta made 17.. whoop whoop. I just bought my house close to the city center in Nov. It was $210K for a 1920s, 2 bed one bath, 850 sq footer with a tiny yard near the city center. Not quite as cheap as the majority of suburban houses but my house rocks. YAY!
I am a Vancouverite. I love this city, but the thought of trying to afford a house here makes me want to cry. The homes in any of the desireable areas run well over a million and prices don't seem to be coming down much if at all, despite the crap economy. I watch real estate TV shows like House Hunters with great envy.
sad for me in honolulu. i'll be taking donations.
I wish I was surprised by the fact that, aside from Honolulu, all of the USA cities were in California. I figure I'll rent for the rest of my life (which, don't get me wrong, has a huge number of perks for me but still).
From the actual study:
"Unless we are vigilant, high-density zealots will do their best to reverse centuries of gains and drive us back towards a Dickensian gloom. Revealing information sources such as the Survey are an invaluable resource to counter attempts to herd us backwards into an archaic past. "
Ha! Apparently living in cities is the "archaic past". Suburbs are so futuristic!
We live in Metro Vancouver, and are thinking of leaving because the job market here is awful. Plenty of low-paid positions in the service industry...at minimum wage or just above, mind you. Frightening lack of opportunities for professionals. The cost of housing is extortionate, yet the realtors continue to induce panic in everyone by saying 'buy now, prices will go higher' and inventing non-existent buyers to pit people against.
God help everyone when the interest rates go up, and they will.
We have just read 'Who's Your City' by Richard Florida (there are both US and Canadian editions). Some very useful points to help you decide where to live. Some of the research findings may surprise you.
Lab director, I tried to feel pity for your Hawaii-residing predicament, but as I gazed out my window at a frozen lake and gray skies, it just didn't happen ;-)
But there's ways to build in cities and surrounding areas that aren't highrise slums and tract house wastelands. Pasadena, CA is a small city, outside of LA. It's lumped in with "suburbia", which isn't correct.
People, even creative types (which is a meaningless term, anyway) where jobs are, and California's legislators make it very hard to start a business here--even a small business has to jump through a zillion hoops and inspections.
Detroit might be afforable, but where do you work? The top 6 on that list are rust-belt towns with no industry.
I love Vancouver, but that's precisely why I don't live there anymore. Thank goodness for creative-friendly rent in Portland, OR.
I'm sad the picture for this post wasn't a Vancouver Special, although you can see one peeking through on the right of the picture.
http://www.vancouverspecial.com/
http://en.wikipedia.org/wiki/Vancouver_Special
Yep, another Vancouverite here. If you want to make money, go to Toronto. Here, taxes are high and wages are subpar. If you choose to live here, it's for the lifestyle (the skiing, the seawall, the mountains, the island, the great food and coffee scene).
But as a single person in Vancouver, I know that it's unlikely I'll ever be a homeowner.
heather77- ha! I know i can't complain. I chose to move back here after school because the reasons for doing so are so much greater than affordability.
I usually ignore these types of lists as a result, I think my priorities are often quite different from most people. And for those reading this, my reasons are secret and this place sucks.
SF is 7. I am from the Bay, so this does not surprise me. I currently live in LA, which seems considerably more affordable, though it's still not cheap by any means.
boston's median income is so high that our absurd housing prices make it seem affordable to live here by use of this median multiple scale. good luck...
as for detroit and flint back in michigan. with median incomes that low outside investors can buy swaths of land at a stretch. really sad to see happen.
My husband and I left Vancouver in 2006 for this very reason. Ironically, we moved to another city in the top ten and both found excellent jobs and within a year bought a lovely house in an up and coming neighbourhood. We certainly pay to live here, but as someone else mentioned we feel the lifestyle is worth every penny. My daffodils are coming up. In February.
The Frontier Centre is a super right-wing think tank here in Canada, so there may be an agenda at work here. At any rate, I know I won't be buying a house anytime soon...
I'm in the same town as lab director. Whenever people ask me why I didn't get a larger apartment I have to laugh. I'm lucky I even have one. Unfortunately in Honolulu we have the added bonus of high cost of living plus low wages. Don't get me wrong--there are a lot of things to like here but its a struggle for most people.
My family lives in South Bend IN, which is right up there with Detroit at number 1. My favorite thing to do when I'm visiting home is to pick up one of the free realty magazines at the grocery store. I flip through and drool at all the gorgeous houses for sale under $200K. I mean, GORGEOUS. The crappiest fixer-up in my neighborhood (Chicago, #118 nationally) go for $350K. Bah.
I just bought a TOTALLY rehabbed two bed/one bath colonial revival built in 1950, with finished basement and attic, big yard AND garage, for $112,000 in St. Louis, and that was at the high end of what I can afford. I am glad my location allows an painter to buy a house!
This is mildly useful information, but I think we all see it's of limited value, at best, in actually figuring out where you might want to live (as opposed to assessing larger policy issues about housing).
As others have pointed out, the authors seems to have put the study together as part of a larger anti-urban (or perhaps anti-urbanist) agenda. Not sure if that means the study is flawed -- I have no reason to doubt their price and income figures. It's just that the study doesn't really support the conclusion they seem to be suggesting -- that we should encourage suburban and exurban growth rather than higher-density growth. One could also draw the conclusion that cities with more restrictive land use policies tend to be more desirable places to live, as evidenced by the willignness of people for spend a larger percentage of their incomes on housing (and forgoing spending on other things, perhaps transportation) so as to be able to live there.
Basically, this study shows that places where many people want to live tend be expensive, with a fair number of exceptions
Hmmm... I wonder which city would rank highest for both affordability and livability? Portland comes to mind for the West Coast... but as I don't live there, I could be wrong. Compared to the Bay Area, it seems idyllic.
The current housing bubble makes me HATE Vancouver.
When our local newspapers run stories urging people to "buy now or be priced out forever" it makes me mad; I feel sorry for first-time buyers who will be the most hurt if/when it crashes.
A very bitter Vancouverite, here. I grew up in this city, and it breaks my heart to see it hijacked by an incredibly smug, progress-at-all costs development agenda. As I sit typing this I'm looking accross the water at the North Shore mountains, and it seems like the developed area is creeping higher towards the summit every day.
I can't go more than a week without someone, with no prompting from me, blathering at length about how they bought their house for $350K ten years ago and now it's worth more than a million. Meanwhile, first-time-buyers are being lured by soon-to-expire tax breaks and ridiculously low interest rates that make their monthly payments just barely affordable. Once rates go up (and they inevitably will), those payments may be beyond their ability to afford.
My family is here, my heart is here, but unless prices fall substantially, there's no way I'll ever buy a home here. I am curious to see how this all plays out.
OMG my home town of Leicester in the UK is 54th! its mainly because we r 99 miles from London and have regular trains all the people who commute to London live in Leicester because (supposidly) the houses are cheaper, when apprantly they arn't.
I miss Leicester tho, nice place, everywhere u want to go nice and close without being so huge u have to treck across town to get to where u want to be.
Hahaha! This post really made me giggle. I live in the Lower Mainland near vancouver and yes it is ridiculously expensive to do just about anything here.
I get paid minimum wage and earned about $10,000 last year.
This little one bedroom apartment had a rent of $750/month which adds up to about $9000 per year.
Can you imagine if I lived alone? Can you imagine paying bills and feeding yourself on a thousand bucks a YEAR? It's very easy to become dependent on others... and people in vancouver often act like EVERYONE earns a six-digit annual income. It's sick.
"Oh these new 10' x 10' "micro-lofts" will be affordable to anybody at just $650/month!"
Dream on!
We just bought a house in the bay area last year, which I didn't think we would ever be able to do ...but only with the price of housing bottoming out, good credit, an FHA loan, a loan from my mom, and 2 incomes. Growing up in SF, we always rented, so it's a weird feeling to OWN something. I totally get the feeling of wanting to cry about ever owning a home!
30 years ago we bought a tract house in Fresno. It is now paid for so we have it as a cushion should be want to continue to live here. However, I want to live in SF which has so much more going for it. We have leased a diminutive studio in SOMA for more than I used to earn in a month. This is our new post retirement adventure.
Ugh, this is so depressing. The ability to own a home in Sydney is becoming increasingly difficult. My husband and I are hoping to start a family soon and I don't know how we are going to be able to afford a family home (even on our admittedly comfortable incomes). I love Sydney and wouldn't want to live anywhere else, but 2 bedroom apartments in the areas we like start at half a million dollars! Seriously unaffordable! Whatever we buy we will have to compromise on either size or location (or both), and that makes me sad :-(
22 out of 23 Australian cities were "severely unaffordable... leaving one merely "highly unaffordable". Woot! Australia wins!
It's funny that the list of World's Most Livable Cities and the list of World's Most Unaffordable Cities show considerable overlap: both are dominated by Canada and Australia.
Moving to Australia in May... now officially scared sh!tless.
Geez remind me not to move. I can find several decent contenders for a house around where I live (Greenwood, Indiana) for 100K that are over 1000 sq ft.
Vancouver is the least affordable urban centre on EARTH?
What about San Francisco? Hong Kong? London? New York? Copenhagen? Or Geneva?
Having skimmed the study, it seems to be limited to the English-speaking part of the world...
I don't know, but am dubious about the information inputs in this study. London is so unaffordable for example, that they now have a serious shortage of teachers and police -- they have to live so far away, that they refuse to commute to work in London.
mschatelaine other cities may have higher housing prices, but their average income is higher than it is in Vancouver. So yes, Vancouver is entirely unaffordable.
However, it's beautiful and I've lived near since I was born. I'm currently living on Vancouver Island because it is (slightly) more affordable, and I'm still able to visit the city on weekends.
and ps! Theres a Vancouver special next door to the house pictured!
heather77, I tried to feel pity for you, but you're looking out your window at a lake!! ;-P
Oslo and Tokyon do not even make the top 50, come on they have been the two most expensive cities to live in the world forever and they don't even make the top 50. This is a skewed and biased report.
One of the worst things about Vancouver is that prices don't drop drastically as you leave the urban center. You could move to Port Coquitlam to save money but you're still looking at 500k plus for a home that's not a fixer-upper. But you're also facing an 1 1/4 commute if you work in the city.
They are talking about single family homes, it does not cover apartments, condos, townhomes, etc., which would explain why places like Tokyo do not make the list.
Another Vancouverite here who bought their first (and only) home at age 30 with my husband. How? I saved like crazy for 15 yrs. It can be done. Sure, I live in East Van, but I'm in the market. Most of my friends are homeowners as well.
I'm not a professional (I'm an Admin Assist) and still manage to do it. It all depends on your priorities. Can't afford a detached house? Buy a condo like my single friend did two years ago. Again, in East Van.
Like my parents did when they bought in Vancouver in the 60's and my grandparents did in the '40's, we simply don't spend money on things like going out for meals. Going out for dinner is a treat. We host friends, they host us...all at a minimal cost. We share a car, only take vacations that require flights every 4 yrs....
My point is simply it's a matter of priorities. If a house is a priority, then you must sacrifice other things.
Also, Vancouver is a city. Not a small town. To think that everyone deserves to live in the city proper is ridiculous.
Little ole Kelowna, B.C. nudges out, Toyko, Oslo, Copenhagen, Hong Kong............. give me a break.
My home town (Galway, Ireland), not only is the most expensive city in the country (relative to income), with the housing price collapse... housing dropped by the least amount here. Rent likewise dropped by the least amount.
It's not like you can get the same salary as the Capital (Dublin), it it's just the city is... as we say in Ireland... great 'craic'. Rains all the time
I think its time we North America's realized a different idea of a home and think more in terms of a European idea of living. The North America idea of everyone having a single family home is simply not sustainable as our populations grow yet we are still fed this post war ideal of the 3 bedroom single family home. Sure I would love to have a house with a garden and all that, but the way I see it most people with those houses use their home the same way I use an apartment. Europeans live in smaller homes in general and have for some time, and have more active and sociaable lives because of it. I also think its important to remember that most desirable cities in the world are incredibly expensive to live in. I wouldn't trade my expensive Vancouver apartment for anything.
U can get a really nice 3,000. sq foot foreclosure for $179,900 n my city...which is gud seeing that charlotte, nc is 15 mins away.
We just bought a 1956 brick bungalow in Muskoka, ON for $219thou. Has a 2 bedroom apartment in the basement, double wide lot with tons of tall pines, quiet street, well maintained... it's got such huge potential! That being said, we realize that even if we put 50 grand into it to make it "just so", we would lose, because our beloved new home probably won't ever be worth much more than it is now. The market seems to have topped out. I mean, becak "in the day", my parents paid $32 thou for a GORGEOUS new build home- in 1992. finished basement, large yard, garage, 3 bedroom, dining, etc. They sold it last week for $219thou. They MADE money because them erket had room to go up. I don't know if the market has reached the ceiling now, but it sure seems like it. We do feel a bit smug though- friends 1.5 hours away in Toronto are paying what we did for a studio apartment. ;) Yay Muskoka!