/When it comes to housing, you don’t have to trade affordability for livability

When it comes to housing, you don’t have to trade affordability for livability

Over the past few years, the rapid escalation of housing prices in a small number of Canada’s largest cities has dominated the discourse when it comes to real estate.

But there is more to Canada than unaffordable cities.

Mid- to small-sized cities offer good quality of life, similar opportunities for health and education services and — though it may be hard for some to believe — affordable housing markets.

The desirability of a place or a product determines its value. Cities have limited supply of land, and over time as the city is built out, the developable land becomes scarcer. As cities continue to grow, the value of the remaining developable land starts to appreciate at a faster rate.

A recent brief from Ryerson University’s Centre for Urban Research and Land Development revealed that the City of Toronto led in population growth among a sample of North American cities. Toronto’s population grew by 77,435 in the 12 months ending on July 1, 2018. Phoenix, Ariz., with an increase of 25,288 followed Toronto. For the same time period, New York City experienced a decline in population.

Housing prices are also influenced by interest rates. Prices appreciate faster when interest rates are at record lows and reached a 30 per cent year-over-year increase in August 2016 in large housing markets in B.C.

But there are choices beyond unaffordable cities, including smaller towns at the urban fringe — where commuting by transit is available while housing is significantly cheaper than in neighbouring large cities — or even more affordable neighbourhoods within otherwise expensive cities.

The 2019 Canada Livability Report by RE/MAX attempted to identify affordable places that are also desirable for high livability.

Accessibility to shopping, dining and green spaces topped the livability criteria for six in ten respondents in the survey. Almost 36 per cent of respondents identified proximity to public transit as a desirable neighbourhood attribute. Accessibility to work and good schools were also highly ranked.

 

The RE/MAX report also polled brokers to rate their respective cities on 11 indicators of livability including access to bike lanes, walking paths, green spaces, healthcare, shopping, dining, work, and public transit; housing supply and affordability; economic development; population growth; and high-quality public schools.

RE/MAX brokers ranked Calgary high in seven out of the 11 categories indicating a high score for liveability. Edmonton was also deemed highly livable. The report noted that Calgary and Edmonton “continue to develop as livable cities” despite the talk of an economic slowdown in Alberta.

Not surprisingly, Toronto ranked high for accessibility to retail, but not as much for green spaces. Toronto neighbourhoods with high accessibility to green spaces were also the most expensive in the city. The report identified Scarborough and East York for affordability in Toronto.

By comparison, Vancouver was ranked medium for retail, population growth and housing supply. At the same time, it ranked high for accessibility to public transit and green spaces, top-rated schools, and walkability in places like Yaletown. The report identified Main, West End and Kerrisdale as “the top three all-around livable neighbourhoods in Vancouver while Mount Pleasant, Downtown and Renfrew-Collingwood” were the most affordable.

Mid-sized cities like Halifax, Ottawa and Windsor do not usually make the headlines for housing. However, relative to large cities, housing prices in these cities are more in line with their respective average household incomes. The house-price-to-average-income ratio, an indicator of housing affordability, is 4.1 in Ottawa.

By comparison, the same ratio is 10.5 in Vancouver and 7.2 in Toronto, Canada’s two most expensive housing cities. In addition to high liveability, Calgary and Edmonton also rank high for affordability. The same ratio checks in at 2.6 for Edmonton and 2.9 for Calgary.

Small-sized towns are even more affordable. Moncton and St. John in New Brunswick, Saguenay and Trois-Rivières in Quebec, and Charlottetown are smaller towns that are rich in charm and remain very affordable.

Young Canadians would be well served to think broadly about their career and housing choices. For those looking to build equity, escaping expensive housing markets for affordable ones — even if it means a lower relative income — may be worth considering.

Murtaza Haider is a professor of Real Estate Management at Ryerson University. Stephen Moranis is a real estate industry veteran. They can be reached at www.hmbulletin.com.