Petrifying Property Pricings: A Data Analysis of Vancouver Properties and Mortgage Affordability

Home prices in Greater Vancouver have more than tripled over the past two decades, according to data published by the Canadian Real Estate Association.

Comparatively, the benchmark price for an apartment in Greater Toronto as of Jan. 2023 is $714,200, slightly less than Vancouver.

From the data collected by the Canadian Real Estate Association (CREA), home prices in Vancouver specifically have skyrocketed since 2005.

The property prices most affected by price increases were from Greater Toronto and Vancouver. Apartments are the cheapest types of properties to purchase homeownership of, and yet in these two cities, they were well above average property values compared to the rest of Canada's major cities.

In Vancouver, the benchmark price on a two-storey home was nearly $2.2 million in June 2022.

According to experts, a key reason why housing prices have been rising so fast in Vancouver specifically is because of low housing supply and large demand, as well as lack of places to build.

"We're limited by mountains to the north, agricultural land to the east and the U.S. border," said Robert Boies, a realtor in the Lower Mainland. "(These areas) confine the region we can develop in."

The economic crash of 2008 gave way to a Vancouver housing market crash, but did little to help with affordability due to the ongoing recession at the time.

One recent major attempt to cool the housing market of B.C. occurred in Feb. 2018, before the pandemic. Then premier John Horgan introduced a speculation tax and increased the foreign buyers tax on all B.C. properties.

Following this new introduction some property prices fell by nearly 20 per cent by June 2019. However, during the pandemic, overall benchmark prices on homes in B.C. then rose significantly.

Following the spike created by the pandemic, newly elected premier David Eby announced an expansion plan to increase home supply, which will remove the right for strata property owners to place age restrictions on their buildings and preventing them from banning the rental of condo units.

"It is (...) unacceptable that a young couple that lives in a condo and decides to start a family has to start searching for a new home because that strata has a rule that everybody who lives in the unit has to be 19 years of age or older," said Eby in a statement.

Though it helped to cool housing prices in B.C. in particular, the federal government raised federal interest rates in mid-2022. This caused hosing prices not only in B.C., but also throughout Canada to lower in average prices.

UBC real estate professor Andrey Pavlov argues that although it proves financially safer for someone to put a mortgage on a home instead of renting out a place to live, the initial phase of buying into a property is what he says makes many steer away from placing a mortgage on a home.

For a home valued at $1 million, a buyer would have to initially pay around $200,000 on a 20 per cent down payment. Even if someone has mortgage insurance, which could potentially lead to a five per cent down payment at least, other living expenses are rising in cost; grocery food prices have risen by nearly 12 per cent from last year’s prices.

As Pavlov argues, the B.C. government and their strict housing policies are to blame for the lack of housing supply, and lack of home ownership affordability.

“Pick anything we’ve implemented recently, like the speculation and vacancy tax,” said Pavlov. “This was sold as a way to get empty units into the rental market. But the fact is, the moment you start to interfere with the market, you make it less advantageous and less attractive for people to build more, and to participate in this market to begin with.”

Boies criticizes the municipal government for their strict policies on housing, and says that the process of rezoning, or the changing of regulations on a property to possibly allow for larger housing to be built on it, is not fast enough to match the housing demand.

“Right now, one of the slowest rezoning processes is in Vancouver, (where) it can take over two and a half years just to rezone a property,” said Boies. “So if we could speed that process up a little bit quicker, and get more real estate onto the market, we (could) increase the supply (of new housing).”

With limited options on affordable housing, Greater Vancouver could potentially become one of the most livable cities in the world once again, or it may simply become too expensive to be considered livable anymore.