Province's attempt to tackle housing affordability still a work in progress
Assessed home values have gone up 30 to 50 per cent in Metro Vancouver
The B.C. government has made it its mission for nearly a year to make homeownership an affordable reality in Metro Vancouver.
But if you take a look at this year's B.C. housing assessment numbers, it's clear that goal is still a long way from reality.
In the last year, some homeowners have made more on their homes than they have earned working for more than five years at a full-time job.
Consider the areas that have long been viewed as more affordable in Metro Vancouver.
In North Delta, the average assessed home price has gone up $277,200 in the last year, from $573,400 to $850,600.
In South Langley, the average home is now valued at $885,000, a $231,000 increased from 2015.
And in East Abbotsford, homes have gone up an average of $204,000 to $639,000.
These areas all also happen to be B.C. Liberal ridings. Younger people who grew up in those neighbourhoods now have a much more difficult time being able to afford the home they grew up in.
"The problem with the real estate market is, because the government left it for so long, there is no good outcome," said NDP housing critic David Eby.
"If prices correct to where they were two years ago, there are going to be a bunch of families under water. If prices stay where they are, there are a bunch of families shut out of the real estate market. If prices continue to go up, it gets even worse."
West Side and West Van worst for affordability
There are no neighbourhoods worse for affordability than Vancouver's West Side or West Vancouver. It is also not realistic to think that every British Columbian should expect to live in one of those neighbourhoods.
But UBC Sauder School of Business professor Tom Davidoff says it is still worth examining Clark's promise of affordability against the increase in those areas that have seen average prices up more than 40 per cent.
"My wife and I did a little study and we found on the west side of Vancouver 1 per cent of homes are affordable for anyone under the top one per cent of incomes," said Davidoff.
"People forming families, working on a salary in Vancouver, saving what they can, it's just not going to work to buy."
No impact on those not selling, says Clark
The government is hoping that will change.
The B.C. assessment evaluations are based on what a home was worth on July 1, 2016. Since then, Premier Christy Clark's government has introduced its most significant affordability policy change, a 15 per cent tax on foreign home buyers.
That tax has had a major impact on home sales in Metro Vancouver. The number of transactions involving foreign buyers plunged from 2,034 deals in the seven-week period before the tax, to just 60 in the four weeks starting Aug. 2.
Already, the price increase of homes has started to slow, which was not reflected in this assessment. Clark has stated on many occasions that current home owners will be fine with seeing assessments go down next year.
"If your house goes up by 30 per cent in one year or goes up by four per cent in one year, if you are not planning on selling it, it may not make a huge difference to you," said Clark in December.
Recipe for a bust
But where concern lies for economists like Davidoff is the rapid increase in prices for neighbourhoods that have never seen prices so high.
Homes in Mission now average $506,000 up from $345,000. In Chilliwack, homes worth $361,000 a year ago now average $481,000 and in West Abbotsford, they have gone up 37 per cent from $424,000 to $582,000.
"I worry about the sustainability because it really is not the prestige buyer going out there. The question in the long run is will the prices stay that way especially because you can build out there," said Davidoff.
"When you quote the more distant locations, yes I worry about affordability, but the other side is you really worry about a major re-correction."
The story could end up being much different when the 2017 assessments are announced in 2018.
In the best case scenario, the provincial government is hoping the foreign homebuyers tax continues to depress the rapid rise in home prices; the tax free loan program encourages first time homebuyers to enter the housing market and the $500 million investment in affordable housing provides homes for thousands who are struggling now to find something permanent.
But in the worst case scenario, all of those changes prove to be too little, too late and on May 9, provincial election day, the voters blame the B.C. Liberals.