Price just half affordability equation

Income - and it lags in Metro Vancouver area - is also an important part of housing picture


While Metro Vancouver is notorious for being the most expensive place to live in Canada, it also has the dubious distinction of having lower than average median incomes.

When housing affordability is discussed, the price of houses usually attracts all of the attention. But of equal importance to the equation is income - if incomes don't rise but house prices do, it's obvious that affordability will decline.

Metro Vancouver's median family income is $67,550, which is below the average for all cities (in Canada), a British Columbia Business Council report shows. In 2009, the Vancouver Census Metropolitan Area ranked 22nd out of 33 Canadian CMAs for median family income.

"This is surprising and somewhat concerning because it indicates that incomes are not that high for the typical family," said Jock Finlayson, executive vice-president and chief policy officer at the business council.

Finlayson said the reason for the low incomes is that Metro's economic base is not the type to generate lots of highpaying jobs.

"There's lots of employment, but a lot of it is low to moderate employment," Finlayson said. "We don't have a Silicon Valley, we don't have a lot of major corporate headquarters."

There is also a problem in Metro with another key factor in generating and sustaining jobs that pay well, something called "job land" - the land where industries, manufacturing and other businesses operate - or rather the lack of it.

"People don't necessarily connect the dots between protecting our strategic lands for job space and the affordability of our region," said Brent Toderian, planning consultant at Toderian UrbanWorks and a former director of city planning for Vancouver. "The cities that have abundant and flexible land for job space are going to be the most successful, nimble cities. Under globalization, things changed and a lot of cities gave up this land base. Once the industrial land is gone, you can't get it back."

There are a lot of competing uses for the scarce land available in Metro Vancouver, Finlayson said.

"When you fly over Metro, you do see how limited the land supply is to accommodate population growth and expansion of business activity, so that does put upward pressure on land costs ongoing," Finlayson said.

The land that does exist is not evenly distributed, Finlayson said.

"About one-half of the vacant land is in Surrey, which is good for Surrey, but it just underscores the lack of industrial land in a lot of the other communities," Finlayson said.

Toderian said the preservation of jobs land is a not a city of Vancouver issue, it's a regional issue.

"It's critically important that we keep that job space, not only in the region, but with strategic relation to the airport and the port, which is why strategic lands like the False Creek Flats are so important," Toderian said. "It results in things like pressure on the Agricultural Land Reserve to release our agricultural land to build industrial land that relates to the port." Robin Silvester, president and CEO of Port Metro Vancouver, recently made the case in an opinion article in The Sun for an industrial land reserve, similar to the Agricultural Land Reserve. In the article, Silvester said that 3,000 hectares of industrial land have been lost across the Lower Mainland in the past 30 years.

Finlayson said that much of that former industrial land has been converted to residential development because it's worth more money in the short term.

"If you look at along the Fraser River in South Vancouver and Marpole, it's striking to me. I can remember when I was an undergrad, there was a fair amount of industrial activity along the Fraser River, but now a huge amount has been converted into residential development," Finlayson said. "That's a classic example of what's happened more broadly in the region."

Having expensive "job" land increases the costs of doing business for companies, which may send them elsewhere to cut costs and make it easier for their employees to pay for housing.

"Calgary, to some extent, has emerged as a more compelling location in Western Canada for corporate activity," Finlayson said. "It's partly due to the clustering of all the energy-related businesses there, but it's also because the costs are lower. Taxes are lower, land costs are lower, there is more land for development and, of course, housing costs are hugely lower."

There are some bright spots in Metro employment, including the technology sector, which includes jobs like engineering, architecture, environmental consulting and geosciences, and which Finlayson said doesn't get the attention it deserves.

"If you look at this industry as it's defined by BC Stats, it's got over 80,000 employees and is probably five per cent of gross domestic product provincewide," Finlayson said. "It's an important part of the industrial base here. It is a good fit for our region because it is clean and it's not land intensive. They can operate with a much smaller physical footprint."

Many of these businesses are found in the industrial parks of Burnaby and Richmond, Finlayson said.

But others prefer mixed-use spaces like Gastown or Yaletown, Toderian said.

"Many employers like mixed-use communities like Yaletown, but others need cheap, low-tax industrial lands where they can build large-footprint operations. For example, a multi-storey for a Microsoft office or an operation that's building hydrogen engines or solar cells along the Fraser River or the False Creek Flats," Toderian said.

Ultimately though, Toderian said the most important thing is to keep land that is available for use in the future.

"It's about being able to adapt. I often used to say when people would ask me what I would see the job space being used for 50 years from now, the one thing I can tell you is that anything I guess will be wrong," Toderian said.

"But you are putting all of your eggs into one basket if you're turning your whole city into mixed-use, high-density neighbourhoods. You've got to preserve job lands for the other types of jobs and it's those nimble and resilient cities that keep the job space flexible, I think will win."

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