So by now many of you will have heard about the statement made earlier in the year by Australian property investor and huge millionaire Tim Gurner criticizing the ‘poor purchasing decisions made by millennials that have resulted in a decline in homeownership’. The guy thinks we can’t afford houses cause we buy avocado toast. People were appropriately sarcastic in responding.
I have several thoughts:
- Avocado toast is great, and if it makes you happy you should keep eating it. Don’t let wealthy Australians tell you how to live your life.
- The median price for a home in Metro Vancouver was $1,400,000 (175,000 Avocado toasts, assuming an avocado toast costs $8) in 2016. If you skipped having avocado toast every day in order to save for a down payment, it would take a little bit more than 95 years. Paying for an entire home would take 657 years of not buying a slice of avocado toast each day. While I do eat the occasional piece of avocado toast, I think it’s possible that there are other issues at play here.
- Homeownership is so far out of the question and really I just want to be able to rent somewhere that isn’t an asbestos infused basement shared with 8 other people.
It’s super easy to present the housing crisis as being about lazy or irresponsible millennials who feel entitled to own a home. But young people are working harder than ever (today students in BC actually work 180% more hours than students in 1975 did), and are in even more debt. Homeownership is getting less realistic for young people than a fairy godmother appearing to grant you three wishes. But despite this, the real housing crisis isn’t about homeownership, it’s in the rental market.
Finding a place to rent in Vancouver (and much of British Columbia) is an ordeal. Everyone knows someone who has a horror story about struggling to find a place on craigslist that isn’t mouldy, overcrowded, or underground, or showing up to see a place that looks half-decent and finding 100 other people there, damage deposit in hand, competing against you for it.
Every year there are fewer and fewer units available, and the rent is steadily increasing. Between 2015 and 2016, the average rent in the region went up 6.4% to $1,223. An even more recent study put the average rent for a 1 bedroom unit in metro Vancouver at $1990 (248 Avocado toasts, for those of you keeping track). Prices are getting out of hand, and vacancy rates (the percentage of units that are available to be rented) are dropping dangerously low.
A healthy vacancy rate is around 3%. The vacancy rate in Metro Vancouver hit 0.7% in 2016. This was worse in Surrey where rates dropped from 1.9% to 0.4% between 2015 and 2016. What this means is that there is almost nowhere to live, and so landlords can charge waaaay too much. 248 Avocado toasts a month guys. CMHC recommends that you spend 30% of your monthly income on rent. Different sources estimate that students earn on average $13,000- $20,000 a year, which means a recommended $325-$500 a month on rent. This is only 40-62 slices of avocado toast.
To make prices lower we need more rental units. Developers could build these by themselves, or municipalities could require that a portion of any new buildings are rental units. The government could also change some regulations and let universities borrow money to build on-campus housing for students. There is huge demand for student housing and so if institutions like KPU were allowed to borrow money and build residences, the debt would be paid off easily through residence fees. We have been asking the government to let post-secondary institutions borrow money to build housing and if you’d like to sign a letter to ask them too, you can do that here.
In the meantime, the best of luck navigating the rental market and enjoy your avocado toast.