Kelowna still 'severely unaffordable'
Kelowna was once again listed among the least affordable places to call home across the globe.
The Demographia International Housing Affordability Study was released yesterday and Kelowna’s affordability was examined alongside 325 metropolitan markets in Canada, the U.S., Australia, Ireland and the United Kingdom.
It's the fifth year in a row that Kelowna earned the dubious distinction of being named“severely unaffordable”, this time earning a placement of 32nd most cost prohibitive. When stacked up against other Canadian cities alone, it was among the top five cost-prohibitive destinations along with Vancouver, Victoria, Abbotsford and Toronto.
While earning a rating of severely unaffordable is far from a coup for city leaders, there is a silver lining to the newest edition of the study.
In boom years Kelowna made the Top 20 least affordable places to live, in 2008 being ranked 13th least affordable and 19th in 2009.
Downward pressure on home prices likely helped buckle its standing, however, the other measure used in the study isn't seeing a lot of upward momentum.
Demographia divides the the median home price by the pretax median income. It offers a ratio that allows them to divvy up metropolitan areas into categories of severely unaffordable, seriously unaffordable, moderately unaffordable and affordable.
Kelowna was slotted into the severely unaffordable category for median home price of $385,100 in the third quarter by the median pretax household income of $58,100. In 2008 the median house price was listed as $446,300, while the median pretax household income has continued to hover in the $50,000 range.
That, explained the Economic Development Commission's Robert Fine, says more about the makeup of the lcoal economy than anything else.
"Our household incomes are always lower because we have a older, non-working population," said Fine.
"We have a lot of small business, so typically our household income isn't as high. When you divide that on the bottom and cost of housing on the top you can see where we can come from."
Fine also said it's worthwhile to contrast that study to a recent report from CMHC. Around Chrsitmas they published a study bnoting that 72 per cent of Kelowna residents own a home— the third highest level in Canada.
"By this measure we're the most unaffordable, but we also have one of the highest levels of home ownership, which shows who lives here," he said.
While locals can use the figures in Demographia's study any way they please, the writers of the document have a clear purpose.
They use the rankings to argue against restrictions on land use. In Canada, in particular, they note smart growth programs and inflexible approaches to agricultural zoning cause much of the problem.
"Vancouver, which like Sydney has largely prohibited housing development on the urban fringe for decades, experienced a significant deterioration, with housing reaching a Median Multiple of 10.6, replacing Sydney as the second most unaffordable market in the Survey, following Hong Kong," reads the study.
"Toronto was also severely unaffordable, at 5.5, a deterioration of 40 percent in housing affordability since 2004, as that metropolitan area's "smart growth" program has taken effect. Montreal has been one of the worst performers in housing affordability, over the years of the Demographia International Housing Affordability Survey, with a Median Multiple of 5.1, up nearly 60 percent from 2004, at the same time as the land for development has been severely limited by an inflexible approach to agricultural zoning. "
Overall the study concludes that land use policies in places like coastal California, Vancouver, Britain and Australia, have dramatically driven up the cost of housing, and that the less intrusive policies of places like Atlanta and Houston has kept prices down . These observers have also noted that measures that restrict land supply, slow growth in the immediate area where the policies are in place and push up housing prices can be very attractive to individuals who already own their own homes.