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Vancouver’s low pay out of whack with home prices: tech blogger

Following on news that Vancouver has been ranked fourth on the world’s list of least affordable cities, web entrepreneur Ian Andrew Bell makes the case in his blog that it isn’t just because house prices are so high here.

Also to blame, argues Bell, is Vancouver’s serious lack of higher paying jobs. The kind of jobs that make more affordable than Vancouver “cities like Manhattan, San Francisco, London, Paris, and Hong Kong.”

Bell, whose Vancouver software start-ups include Rosterbot and Something Simpler, looks at data showing that it takes 8.4 years’ average income to purchase a house in Vancouver, compared to the average median in Canada: 3.5. He concludes Vancouver house prices must plummet because “the fundamentals that support high real-estate prices are simply not there.”

Why are salaries low in Vancouver compared to economic hot spots New York and San Francisco? Bell sees various reasons:

“Affordable commercial real estate is hard to come by in the city — leading in some cases to a perverse reverse-commute where urbanites must schlep out to the suburbs to their workplaces — but more importantly this discourages companies from locating here.

“Most large cities with expensive downtown cores operate as financial centres …Vancouver does not…

“B.C.’s resource industries, the bread and butter of Vancouver for more than 150 years, are weak thanks to everything from the U.S softwood lumber tariffs to Kyoto to a number of key mining company collapses. Our province has failed to diversify its economic base…

“The advanced industries like software and aerospace that keep California sizzlin’ have failed to grow in scale in this city. Investment in this area is weak,” with the exceptions of alternative energy and biotech.

“The film industry…is a fickle bride” and “the profits are retained in New York and LA….”

Bell goes on to note that B.C.’s largest industry is the marijuana trade, hardly a good foundation for your basic well-regulated urban economy.

And, when it comes to greasing the wheels of commerce, the Lower Mainland’s transportation system is “pathetic.”

His conclusion: “Not until a software engineer making $60K-$70K per year can buy a 1-Bedroom apartment in the city will the fundamentals be aligned and the market be stabilized. This means mortgage + maintenance of less than $1500 per month using the 30% rule. On a 25-year mortgage that probably means this 1BR apartment has to be less than $200K. If the research that started this article can be believed, we should expect an adjustment of as much as 60% across the board to bring Vancouver back to the Canadian mean.

“So in other words, wait ’til the bottom really drops out, Vancouverites.”

David Beers is editor of The Tyee.

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