[URBAN NOTE] "Is Canada Really Sitting on a Real Estate Bubble That’s About to Burst?"

[rfmcdonald]

Vice's Sarah Berman notes that Vancouver is not equivalent to all of Canada.

For those of us living in Vancouver, this has been an easy enough narrative to swallow. Housing has been horribly expensive for years now, and the last six months have broken all kinds of records for insane prices and unprecedented sales, not to mention rising eviction complaints. But even as banks pump out new studies that say affordability in Vancouver is the worst it's ever been, there are plenty of reasons to ignore the Lehman bro. That he has an obvious vested interest in a crash, and his former employer was super-duper wrong that one time, is only part of it. The bottom line is: Vancouver ≠ Canada.

To get a better handle on all this bubble talk, I called up Robert Hogue, senior economist at RBC Economic Research and coauthor of a study released yesterday that confirmed housing affordability in Vancouver is in the actual worst in the country. The bank measured this by comparing median incomes to average "homeownership costs" including mortgage payments, utilities and taxes.

Hogue says Vancouver had its biggest drop in affordability since they started measuring this stuff over the first two quarters of 2016. Right now housing costs sit at 90.3 percent of what a Vancouverite earns before taxes. That's an 18.3 percent drop in affordability over this time last year. (Ownership costs for single-detached homes are an even more ridiculous 126.8 percent of median incomes).

"I think the numbers speak for themselves," Hogue told VICE. "This clearly puts significant pressure on affordability that was already stretched to begin with."

But just because Vancouver's prices have shot up an unsustainable 30 percent in a year, doesn't mean the whole country's housing market is about to come down. By Hogue's account, Vancouver is an outlier when you look at the country as a whole. "We're really only talking about two markets, Toronto and particularly Vancouver, where affordability is deteriorating—not only deteriorating, but at an accelerating pace," he told VICE. "Elsewhere the vast majority of markets are balanced and not an issue."

On the list of least affordable cities, Toronto is second at 60.2 percent, followed by Victoria at 51.4 percent. The rest of Canada is holding stable well below the country's 42.8 percent average. "Most markets across Canada are pretty much within historical norms," he said.