“Today I read an article in the Vancouver Sun, which stated that …the combined cost of mortgage payments, utilities and property taxes costs the average Vancouverite 88.9% of their household income. … Something is really, really wrong here. How the f*%#k are people affording to live on less than 12% of their incomes?
My husband and I scratch our heads about this all the time. We feel like we are beyond cash poor. We’re certainly not financial wizards, but we take pride in the fact that we manage our debts and try as much as we can to live within our means. Meanwhile, we see people renovating homes, buying new cars, new clothes, paying for daycare, nannies, dinners out, vacations etc. etc. Are all of these people getting by on 12% of their incomes or is there a massive amount of credit spending happening behind closed doors? Are young families around this city floating their lifestyles with plastic? I fear, for many, this may be the case.
For most of us in the “young parent” stage of life, we’re literally “just getting by”…however, I think our definition of scraping through a month has drastically changed. There are conveniences and luxuries we have become used to that are nearly impossible to imagine forgoing. I’m guilty myself of not using up everything in my pantry and going out to buy more groceries (although I don’t shop at the infamous “Whole Paycheque”…something that completely boggles my mind – how in the heck to people afford to do their shopping there??).
Aside from our own needs, which can largely be attributed to growing up in a culture that values consumerism (an entire conversation in itself), and our government’s role in the state of our economy, there is definitely something askew when home ownership becomes so coveted and, at the same time, overpriced that people literally finance their lives away. Now, I’m no economist, but what then happens when the s*%t hits the fan, interest rates rise and these families are not only sat with mortgages they cannot afford, but massive amounts of credit debt incurred to actually “live”?”
– Melissa Carr at TheThirtiesGrind 29 May 2012 [hat-tip to OH YAH]
Nobody in Vancouver is living on just 12% of their income. The math reflects that the average bungalow in Vancouver would cost an average Vancouver household 88.9% of their (get this) pre-tax income. So, in short no average households are buying average bungalows any longer… they simply can’t afford them.
Which is not to say that Melissa’s indignation and exasperation isn’t justified. It is. Vancouver is very, very overpriced, and the 88.9% figure indicates how spectacularly overpriced it is… prices are two to three times those determined by fundamental value.
Housing bulls argue that this simply means that, as in Manhattan, Monaco, and Tokyo, bungalows have become a coveted property, only for the mega-wealthy, and that ‘average’ Vancouver families should accept the ‘new average’ — that they should be happy with properties like a condo or town home in New West or White Rock, or a modest condo closer to Vancouver, or perhaps a basement suite.
We disagree. Just fly into or out of YVR… does that look like Tokyo?.. No! Bungalows as far as the eye can see! (Bungalows, and land, by the way.) Bungalows in Vancouver will never be cheap, but they will certainly become a lot cheaper than they are now.