Jamie and Jenny Sorensen hoped that 2016 would be the year that they finally settled down in Vancouver.
Instead it gave them a crushing education in the realities of buying property there.
Jenny and Jamie Sorensen. (Photo courtesy of Jamie Sorensen)
After months of searching, the expectant couple landed on a two-bedroom, 960-square-foot condo in Vancouver's popular Main Street area.
It had its own patio and a separate entrance, and they soon fell in love with it. It was listed at $699,000 after an identical unit had sold for $690,000 in the same building.
They put in for $750,000. A neighbour who lived in the building said that seemed a little high.
But the Sorensens' offer was topped by a competing bid of $820,000 — about $120,000 over asking, and way over market value, their realtor told them.
"I guess market value doesn't mean anything right now," Jamie said. "It's so in flux."
The defeat was crushing enough to take them out of the house hunt for a time. But it also gave them a premonition of what's coming — a day in which even the average condo is out of reach for working-class Vancouverites.
A day, by the way, that may be coming sooner than people think.
Housing costs vs. incomes across Canada
The year 2020 could prove a milestone in the history of Vancouver real estate, if an analysis by The Huffington Post Canada is borne out.
It would mark the final year before monthly payments on a single-family home exceed the average monthly income in the city. And it would be the last year in which condos could be considered within the range of housing affordability (30 per cent of income), if trends continue as they have.
Condos along Downtown Vancouver's waterfront. (Photo: Compass and Camera/Getty Images)
You might call it Vancouver's "Rubicon" year, a point of no return at which basically every form of housing is unaffordable for local residents.
The graph below shows where average income (blue) could grow to over the next decade, if current trends continues. The red line represents the benchmark price of a single-family home, the orange line condo prices. The purple line is the affordability cutoff — the maximum amount the average homebuyer should be devoting to housing.
It shows condos bumping up against the maximum affordability range in just five years:
Greater Vancouver:Create line charts
(Scroll to the bottom of the story for methodology)
These forecasts don't account for possible developments such as an interest rate hike, nor any possible new regulation by the federal government, or a crackdown on capital outflows from China (which is entirely possible).
It merely shows just how difficult buying conditions could be for local residents if nothing changes.
The trend was concerning, if not particularly surprising, for David Eby, the B.C. NDP's housing critic.
He said prices are being driven by external factors, such as foreign money snapping up Vancouver real estate market, creating a situation where it "doesn't really matter to the market that mortgage payments exceed incomes."
David Eby, the B.C. NDP's housing critic. (Photo: John Lehmann/Globe and Mail via CP)
Eby is concerned about how such a trend could hurt the city's economy.
"I'm talking to people who are trying to recruit and hire people to work at businesses in Vancouver," he told HuffPost Canada.
"And they're choosing not to come to Vancouver because, on the salaries that are being offered, they can't find adequate housing for their families."
But Vancouver isn't the only city where housing is outstripping local incomes.
Toronto, too, could soon see single-family home prices overtake in the foreseeable future — albeit some years later than in Vancouver:
Toronto (416 area code):Create line charts
Toronto (905 area code):Create line charts
Toronto housing in the 416 could reach its "Rubicon year" for single-family homes just after 2026; the same could happen for condos beyond that year.
The Canadian Real Estate Association (CREA) has noted that sales have effectively flatlined in both cities.