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The average MLS price for a single family home in the Greater Vancouver area stood at $679,381 in September. (Doug Pensinger/Doug Pensinger/Getty Images)
The average MLS price for a single family home in the Greater Vancouver area stood at $679,381 in September. (Doug Pensinger/Doug Pensinger/Getty Images)

Economy Lab

Housing bubbles: Vancouver a likely suspect Add to ...

Patti Croft is recently retired as chief economist, RBC Global Asset Management, with 30 years of experience on Bay Street working as an economist and global asset allocation strategist



I can never figure out the Vancouver housing market. On a national basis, September home sales gained 3 per cent, the second monthly gain in a row, while prices were down slightly as compared to year-ago levels.



However, sales are still down 20 per cent year-over-year, with sales in B.C. off by 36 per cent. But in September, the average MLS price for a single family home in the Greater Vancouver area stood at $679,381 - that is more than two times the national average of $331,089.

Yes I know that it is a beautiful city (when the sun shines) and a desirable locale for foreign investors - it is cheap compared to London and New York, don't you know.



But one of the key metrics I use to gauge whether a bubble is in the making is affordability. RBC's Housing Affordability Measure calculates the share of pre-tax income it takes to service a mortgage, including principal and interest, taxes and utilities.



The latest data show that affordability has deteriorated once again in Vancouver - homeownership costs account for almost 83 per cent of household income for a two storey home. How does anyone afford to buy a house in this city? Qualifying income is more than $155,000.



There is a fabulous website called crackshackormansion, created earlier this year when sales had reached a frenzied pace; you won't believe how little $1-million will buy.



While talk of a bubble may have been timelier earlier this year, I still say the metropolitan housing market most at risk is Vancouver.

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