Pat at VREAA, 17 May 2011 8:11am, writes in response to the anecdote: Doctors Leaving Vancouver – “My friend, a surgeon at Children’s Hospital, said he couldn’t have the life he wanted in Vancouver because of the insane real estate prices here”, 16 Feb 2011 -
“Even though prices are obviously too high in Vancouver, the idea of a highly paid surgeon leaving because he can’t afford to live in Vancouver is absurd.
It says more about that person’s idea of ‘lifestyle’ than anything else. How is it that I can live here very comfortably on a self-employed salary ranging from $35,000/year to $50,000/year with my mature student spouse who earns maybe $15,000 part-time?
It’s ridiculous that someone says they can’t afford Vancouver on, what, $200,000/year. Utter nonsense.”
Many thanks for your comment. Arguments similar to the one you make are made regularly and in various forms, so we’ll headline a discussion here.
We don’t find this surgeon’s decision absurd at all.
It is important to realize that, when “prices are obviously too high” in a RE market, they seem so to people at all levels of wealth and income. The surgeon takes a look at Vancouver RE, and realizes that he cannot afford the type of property that he’d expect to be able to live in, given his training and income. In actual fact he likely earns substantially more than you suggest, perhaps over $300K, or $400K, or even more. He could prudently afford a property selling for, say, $1.6M-$1.8M. But, take a look at what he gets for that on the westside at present. Then compare those properties with the houses that surgeons earning similar incomes, living in Washington State, or California, or Hawaii, or New York, or even Ottawa, get to call ‘home’. That’s the point. The surgeon in Vancouver cannot afford to live a lifestyle commensurate with his training and income. So he moves. This is a completely sane decision.
It is inevitable that a speculative mania in real estate should causes such forces to take effect; the misallocation of resources is characteristic of a bubble. In this case, valuable human capital is squandered and lost to our community. Many skilled professionals have made similar decisions, by either leaving or not migrating here to Vancouver in the first place. There have been anecdotes on these pages of business executives and university professors, amongst others, avoiding Vancouver for these reasons. [See the 'Avoiding Vancouver' post category for some examples.]
So, yes, it may seem that it is unfair for the surgeon to say that they “can’t afford” Vancouver; but their conclusion and their move is also perfectly sensible. It would be more accurate for him to state: “I can’t afford the kind of home in Vancouver that I can afford in every other North American city.”
This line of thinking is relevant to all Vancouverites. You may think you can ‘afford’ Vancouver, but have you considered what a similar income (or your home’s current market value) would get you elsewhere?
We’re not concerned that this specific force will leave our city deserted. Everybody can’t leave at once. It’ll only take a small percentage trying to cash out for the market to crash.
While the bubble remains in existence, however, it is sorely damaging our community by the many perverse pressures that it applies; having professionals leave town is one of them.