Low Income Households in High Value Housing in Vancouver Prepared by: Jens von Bergmann and Alejandro Cervantes July 14, 2016

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OVERVIEW

Inthisreportwegiveanoverviewoflowincomehouseholdsinhighhousingvalueareasbasedonstandardcensusreleasedatafromthe2006and2011CanadaCensusinVancouver.Thisphenomenonhasbeenobservedbyothersandbyuspreviously.

ThepurposeofthisreportistorefinepreviousargumentsandputthemintothecontextofotherregionsinCanadaandprovidevisualsexplainingthearguments.

WeconcludethatpovertyinhighdwellingvalueareasishigherandbehavesdifferentlyinVancouvercomparedtootherregionsinCanada.Wecan’tusethisdatatoesEmatetheeffect,ifany,thatthisphenomenonhasontheVancouverpropertymarket.ButwebelieveitisimportanttomonitorthisphenomenonbyobtainingandanalyzingmorecurrentdatalinkingincomestohousingtransacEonsandhousingvaluesinordertobeJerunderstandtheVancouverpropertymarketandinformpolicy.

HIGHVALUEHOUSING

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Figure 1. Median Dwelling Values, Focus on High Value Areas (2011)

Inthisreportwearemostlyfocusingonhighvaluehousing.Wedefinehighvaluehousingareasasthoseareaswithmediandwellingvalue50%abovethecity-widenumbersin2011.Forreferenceweincludeamapofmediandwellingvalues,starEngat50%abovetheMetroVancouvermediandwellingvalueof$600,000inFigure1.AninteracEveversioncanbefoundathJps://censusmapper.ca/maps/422,whichalsolinkstoasimilarmapusing2006data.Asexpected,wecanseehowhighvaluehousingisconcentratedonthewestsideofVancouver.

MEASURES OF POVERTY

Forthisreportweconcentrateontwomainmeasuresofpoverty.PovertyisalwaysmeasuredthroughincomeasreportedonCRAtaxreturns.

Astandardmeasureofpovertyisthea_er-taxlowincomethresholdusedbyStaEsEcsCanada,whichclassifieshouseholdsaslowincomebasedonthea_ertaxhouseholdincomeandhouseholdsize.ExactdefiniEonsforthe2006and2011censusyearsarelistedinAppendixA.

Figure 2. Prevalence of Poverty (2010)

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ThegeographicdistribuEonofpovertyratescanbeexploredinaseriesofinteracEvemapsthatwemadeavailableathJps://censusmapper.ca/maps/119,anoverviewmapforVancouverisincludedinFigure2.Asexpected,weseethatdowntowneastsidehaselevatedpovertyrates,howeveritissurprisingthatsomeareasinWestSideneighbourhoodsalsoshowhighratesofpoverty.ThiscanbeexploredinmoredetailinourinteracEvemaps.

Thesecondmeasureweuseisthenumberofhouseholdsthatspend100%ormoreoftheirreportedpre-taxincomeonsheltercosts.Sheltercostsincludemortgagepayments(ifany),propertytaxesanduEliEesforownerhouseholdsandrentanduEliEesfortenanthouseholds.Thisisanindirectmeasurederivedfromcensusdatathatistypicallyusedtoexcludeoddcasesinhousingaffordabilityanalyses.FocusingonownerhouseholdsweexploitthistohighlighttheunusualprevalenceofthesecasesinVancouver.SeniorhouseholdswouldtypicallydrawincomefromRRSPstopayforrunningsheltercostsandlivingexpensesandthuswouldnotfallintothiscategory.

Anumberofscenarioscouldexplaincaseswithsheltercostshigherthanincomes:studenthouseholdsthatmaynothaveincomeandreceivemoneyfromparents,householdswhere

Figure 3. Owner Households with Shelter Cost Higher than Income

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themaintainerisbetweenjobsandlivesoffofsavingstobridgethegap.However,onewouldnotexpecttofindthesekindofcasesinhighhousingvalueareas.

The2006Censusdataallowsustoseparateoutownerhouseholdswithincomelowerthanrunningsheltercosts,Figure3showsascreenshotfromourinteracEveCanada-widemapofsuchhouseholdsthatwehavemadeavailableathJps://censusmapper.ca/maps/420.InthismapwecanclearlyseehowsomeareasontheexpensiveWestSideofVancouverfeaturehighratesofhouseholdswithsheltercostlowerthanincome.Therewere6,800suchhouseholdsintheCityofVancouverand24,380inMetroVancouver.

FurtherwecomparetheratesinVancouvertootherCanadianmunicipaliEesandregionsinFigure4.WeseethatthisphenomenonismorepronouncedinVancouverthaninotherregions.JustlikewithpovertyrateswenoEceanunusualpaJernofclusteringinsomeareaswithhighhousingvalues.

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Calgary

Metro Montréal

Edmonton

Metro Victoria

Metro Toronto

Toronto

Metro Vancouver

Richmond

Burnaby

Vancouver

0.0% 2.5% 5.0% 7.5% 10.0%

Owner Households Shelter Cost > Income (2005)

Figure 4. Owner Households with Shelter Cost Higher than Income (2006)

Standardcensusreleasedatafrom2011doesnotallowtoseparateoutownerhouseholds,makingitmoredifficulttointerpretdataonhouseholdswithsheltercostshigherthanincomeasownershipratesvaryconsiderablyacrossregionsinCanadaandthisphenomenonismoreprevalentintenanthouseholds.Overall,theporEonofhouseholdsinthiscategoryhasincreasedmoreintheVancouverregionthaninotherregionsinCanada.

POVERTY AND DWELLING VALUES

ToexplorehowpovertyratesrelatetomediandwellingvalueswefirstgroupedthedisseminaEonareas(thesmallestcensusaggregaEonunitforwhichthisdataisavailable)inseveralmunicipaliEesandcensusmetropolitanareasintobinsaccordingtotheirmediandwellingvalue.Wethencomputedthepovertyrates,thatistheproporEonofthepopulaEonbelowthe2010a_er-taxlowincomecutoff,foreachofthosebinsandgraphtheresultinFigure5.

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Figure 5. Poverty Rates by Median Dwelling Value Areas (2010/2011)

Pove

rty R

ate

(201

0)

0.0%

12.5%

25.0%

37.5%

50.0%

Median Dwelling Value (2011)$100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 $1,000,000 $1,500,000 $2,000,000

Toronto Metro Vancouver Vancouver Calgary Richmond Burnaby Metro Toronto Metro Victoria Metro Montréal

OnewouldexpectpovertyratestodropdrasEcallyasdwellingvaluesincrease.However,inVancouverpovertyratesfailtodropoffinhighdwellingvalueareasastheydoincomparableregionsinCanada.Runningthesameanalysisagainstonly18to64yearoldsinpoverty,toexcludeseniorsandchildrenthatmightskewresultsbecauseofhighchildorseniorpovertyinsomeareas,yieldsverysimilarresults.

WhileweseethatoverallpovertyratesinVancouver,RichmondandBurnabyarehigherthancomparableregionsinCanada,wealsoseethatforregionswithdwellingvaluesabove$700,000MetroVancouverasawholedisplaysdisEnctlydifferentpovertyratesthancomparableregions.

Weconcludethatpoverty,asmeasuredbytaxdata,inhighhousingvaluearesintheVancouverregiondifferedsignificantlyfromthatinothercomparableregionsinCanadaandshouldbecloselymonitored.

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APPENDIX A

Thecut-offsusedtodefinelowincomehouseholdsinthe2006and2011censusfora_er-taxhouseholdincome,includinggovernmenttransferpaymentsandRRSPs,aresummarizedinthefollowingtable.

LOW INCOME CUT-OFFSHousehold size 2006 2011

1 17,219 19,460

2 20,956 27,521

3 26,095 33,706

4 32,556 38,920

5 37,071 43,514

6 41,113 47,667

7+ 45,155 51,486

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