Posts Tagged ‘condos’
Continuing this blog’s intermittant theme fo unaffordable urban real estate, Bloomberg’s Victoria Stilwell and Wei Lu document how home buying is out of reach for young adults in many American urban centres.
The biggest disparities are on the West Coast. Take the three Californian hubs of San Francisco, San Jose (the heart of Silicon Valley), and Los Angeles (where a developer is trying to sell one of the biggest homes in U.S. history for a record $500 million). The typical young adult in those cities doesn’t even make half of what’s needed to afford a home.
That makes places such as New York, where millennials have an earnings gap of just $6,550, seem relatively affordable. But remember that New York’s metropolitan statistical region includes places that are outside of the high-priced housing market in and around Manhattan, where $374,350 (the median home value for the metro area) wouldn’t even buy you a kitchen.
Almost 80 percent of New York’s millennials reside in three counties: New York County, Queens County and Kings County, where Manhattan, Queens and Brooklyn respectively are located. Using the average median home value for those three boroughs ($749,596) and the 2015 estimated earnings for millennials living there ($49,193), the affordability gap comes out to a whopping $52,262.
Furthermore, Bloomberg’s calculations assume that millennials have already saved up the 20 percent they’d need for a down payment, which is a problem in itself. Families where the head of household was under 35 years old had a median net worth of $10,400 in 2013, according to the Federal Reserve’s Survey of Consumer Finances.
Ken MacQueen of MacLean’s explores, perhaps as an alarmist, the question of whether or not real estate prices in the city of Vancouver have risen so much as it make it impossible for people–including workers–to actually live there. Vancouverites, please chime in.
The city of Vancouver, with a population of about 610,000, is hemmed in by ocean, inlet, river and surrounding suburban cities of Metro Vancouver (which the rest of Canada usually assumes, incorrectly, are part of the municipality of Vancouver). The path to affordability, he said, is densifying Vancouver, dumping the “sacred single-family zoning.” He knows he’ll be accused of self-interest, “a ruse to get more condos.” But with 60 towers in the pipeline to market, he has plenty of business, he says. He knows his idea would see mayor and council impaled upon the white picket fence of the Canadian dream. But while Rennie is a political player, he is not a politician.
There are just more than 47,000 single homes hogging 56 per cent of Vancouver’s footprint. Their values have climbed past reason en route to insanity. “I think there should be a really healthy conversation about alternative forms of housing,” says the condo guy between phone calls and bites of his sandwich. “I say rezone the whole city to townhouse more as an instigator for conversation, but it’s not that stupid an idea.”
Nor is it heresy to say Vancouver may not be the place to raise your kids. Urban flight is already the logical consequence of resisting density, he says. “Nobody is talking about the consequences of our actions. ‘Not in my backyard’— fine,” he says. “ ‘[If ]I want to live in the dying commodity of a single family home . . . I have to acknowledge I am preventing my children and grandchildren from living [nearby].’ ”
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Stoking the debate is a new study by Vancity credit union Vancity. It warns that Metro Vancouver faces a looming labour shortage as Millennials, the next generation of highly educated workers, are driven away by unaffordable housing. Between 2001 and 2014 the average wage rose by 36.2 per cent in Metro Vancouver while the average home resale value climbed by almost 63 per cent. In Vancouver city, house values jumped 211 per cent in that same period. Within five years, the Vancity report said, workers in 82 of 88 “in-demand jobs” (including industrial electricians, civil engineers and general practitioners) won’t be able to afford a single family home in the region. In 10 years only senior managers will have sufficient employment income to buy a house. “At this point, lawyers, electrical engineers and specialist physicians fall off the list.” Vancity also has its roots in east Vancouver, formed in 1946 by 14 families denied mortgages from the big banks. Today clients are shut out of the market by house values accelerating far beyond wage increase, says Vancity’s Andy Broderick, vice-president of community investment.
Children increasingly are a luxury item in a city heavy with apartments and cramped condos. Granite countertops and high-end appliances are essential selling points, but accommodating children and the square footage of second bedrooms, or exceedingly rare third bedrooms, is often seen by developers as a liability. Vancouver joins the ranks of so-called “childless” American cities like San Francisco and Seattle, where households with children have fallen below 20 per cent. Comparable data in Vancouver is hard to find but there are key indicators. Between 2007 and 2014, Vancouver public school enrolment dropped to 52,466 from 56,095, despite overall population growth. Vancouver census data between 2006 and 2011 shows 71,350 children age 14 and under, down 3.5 per cent from five years earlier. Paradoxically, schools in the wealthier west side are bursting while 33 east side schools are at less than three-quarters capacity. Clearly affordability isn’t an issue for some young families, while those buying into the east-side boom aren’t producing the legions of children of generations past.
CBC reports on the housing crunch in Toronto and Vancouver.
The mad rush to buy a home continued in the Toronto and Vancouver housing markets in May, despite a shortage of listings and housing prices that have risen sharply in the past year.
In the Greater Toronto Area, the average selling price for all home types rose by 11 per cent in May, compared with the same month the year before, to $649,599. In Greater Vancouver, the composite benchmark price for all residential properties was $684,400, a 9.4 per cent increase.
In Toronto, a record 11,706 homes changed hands, a 6.3 per cent increase since last year, while in Vancouver, 4,056 homes were sold, a 23 per cent increase. Both cities saw a five per cent drop in listings.
The average or composite price masks the intense competition for detached homes in both markets.
Jonathan J. Miller at the Bloomberg View makes the point that relatively and absolutely expensive housing in urban areas is an economic drag for cities.
Contrary to conventional wisdom, high and rising housing costs in the U.S.’s biggest cities are not ideal for an economic recovery. Just the opposite: When housing costs take a big bite out of incomes, it diverts money that could be spent on local goods and services or invested in new businesses that stimulate growth.
And based on what I can tell, it’s getting worse. U.S. census data on housing costs is only available through 2013, but there’s no doubt that the burden for city residents now is even higher, especially in places such as San Francisco and New York. Since December 2013 the S&P/Case-Shiller 20-City index has risen 7.7 percent.
Several forces converge to make urban housing costs a drag on the economy — as well as for the people who live in cities. [. . . M]ost people don’t own their own homes. For example, as the chart below shows, in New York, just 32 percent of residents own a home compared with about 64 percent for the U.S. as a whole.
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Then there’s the inherent drawback of renting. As the chart below shows, renters tend to pay a larger portion of their monthly household income toward housing costs than owners do. Many large cities have rent controls, which make housing even more costly for renters new to a city looking for job opportunities. According to Harvard University’s Joint Center for Housing Studies, many renters pay almost 50 percent of their income for housing compared with about a third for U.S. renters on average.