Want to pay San Francisco housing prices on a Columbus, Ohio income? Move to Vancouver.

While policymakers from Seattle to Boston lament a growing urban affordability crisis, a new study of home prices and earnings across more than 100 major U.S. and Canadian metropolitan areas shows Vancouver in an ignominious class of its own.

The median cost of a Vancouver home, adjusted for purchasing power parity, is US$672,000 — costly but still 15 per cent to 26 per cent below that of San Jose and San Francisco, the two most expensive housing markets, according to Andy Yan, director of Simon Fraser University’s City Program, whose study accounted for the difference in buying power of a dollar across geographies and currencies.

What pushes Vancouver to the top of the unaffordability rankings is paltry wages. In Canada’s third-largest city, the median household earns the equivalent of US$61,036 a year — in line with Columbus and less than families in Omaha, Nebraska, Kansas City, Missouri and even Lancaster, Pennsylvania, a rural community of 59,000 known for cornfields.

The Pacific Coast city’s property market is entering a slowdown after policymakers intervened with a slew of measures to temper demand, including a foreign buyers tax and tighter mortgage rules, along with higher interest rates. Sales hit a five-year low last month, while the number of homes on the market swelled to the most in three years.

But the figures show just how difficult it will be to close the affordability gap after a run up that’s seen the price of a typical home triple since 2005.

“You need one of two things: either Vancouver real estate prices need to halve to attain a certain level of affordability, or you need to double incomes,” Yan said.

An outright correction would be potentially devastating — real estate development is the province’s largest industry and housing a key driver of the local economy. Doubling incomes is wildly ambitious — similar in scale to a 10-year goal that China has set for itself.

“That’s the Herculean task of what Vancouver is facing,” Yan says.

Canadian delinquency rates, which have been declining since the last recession, will probably reverse and begin to climb by the end of 2018 as the central bank presses ahead with interest rate increases, according to the country’s largest credit reporting firm.

Regina Malina, senior director of analytics at Equifax Canada, predicts late payments on the country’s $599 billion of credit card, auto and other non-mortgage consumer debt will begin to move “modestly higher” by the end of this year.

“Our prediction is that we will start to see delinquency rates inching up a little bit, and debt probably slowing down,” Malina said last week in an interview.

The delinquency rate — which measures the number of payments on non-mortgage debt that were more than 90 days past due — was 1.08 percent in the first quarter, up slightly from the fourth quarter but still close to the lowest level since the 2008-09 recession.

The Toronto-based analyst declined to estimate how high delinquencies will climb, saying it depends on the pace of interest rate increases and what happens in the trade battle between the U.S. and Canada. She cited the experience in Alberta, where delinquency rates rose in some instances 20 percent or 30 percent on a year-over-year basis after the oil-price collapse. Such an extreme case, however, isn’t what Equifax is predicting. “It will only happen if we start seeing deterioration in employment numbers,” she said, adding delinquencies should remain “still very low,” and “they’re just going to start inching up a little bit, probably not double digits.”

CHANGE COMING? 

Household credit has ballooned to unprecedented levels in Canada, as in many other developed countries, amid historically low interest rates. That hasn’t posed too many difficulties so far, because the economy and the labor market have generated solid growth, allowing people to handle servicing costs. But with the Bank of Canada intent on raising rates and the U.S. and Canada engaged in a tit-for-tat tariff fight, that could change.

A red flag in the Equifax data was a decline in the share of people who completely pay off their credit cards each month. The 56 per cent who did so in the first quarter matched the fourth-quarter number and was down from as high as 59 per cent last year. It’s a small but important detail, according to Malina.

“The changes aren’t big, but when they’re consistent and we see it for two or three quarters, we start to believe it,” she said. “Given that less people are making their credit card payments in full, and those people are usually people with lower delinquency rates, we might be seeing overall delinquency rates deteriorating.”

Consumer debt including mortgages was $1.83 trillion in the first quarter, up 0.4 per cent from the end of 2017 and 5.7 per cent from the same quarter a year earlier, Equifax said.

Excluding mortgages, Canadians carry an average of $22,800 each in debt. Some other highlights from the report include (all figures exclude mortgage debt):

• Those between the ages of 46 and 55 have the highest average debt loads, at $34,100
• That age group is also seeing the largest increase in debt, year-over-year, at 4 per cent
• Of nine cities listed, Fort McMurray, Alberta, had the highest average debt levels, at $37,800, as well as the highest delinquency rate, at 1.72 per cent.
• Vancouver and Toronto saw the highest rate of debt accumulation in the first quarter, with 5.2 per cent and 5 per cent growth from a year earlier
• Montreal is the least indebted city, with average debt loads at $17,300
• Ontario and British Columbia have the lowest delinquency rates, at 0.95 per cent and 0.84 per cent. Nova Scotia, at 1.74 per cent, had the highest

Vancouver is the most expensive city for residential real estate in the country and it’s forcing the city’s homebuyers to stretch their budgets to purchase homes in the hot market.

In 2017, 48 per cent of homebuyers in Vancouver exceeded their budgets to buy homes, according to a recent Canada Mortgage and Housing Corporation (CMHC) survey, published last week.

Meantime, the same percentage of homebuyers in Toronto overspent when purchasing a home, while only 24 per cent of homebuyers in Montreal exceeded their budget.

“The data suggests the fear of missing out hypothesis could have an impact on buyers’ budget,” reads the report.

CMHC’s Homebuyer Motivation Survey polled a total of 30,000 homeowners in Vancouver, Toronto and Montreal Census Metropolitan Areas (CMAs) who purchased homes in 2017. The survey was developed to gain a better understanding of key drivers of rapid price growth in Toronto and Vancouver.

First-time homebuyers in Vancouver spent a median $1,228,881 on a single-detached home last year, while repeat buyers spent a median $1,199,221.

To examine if buyers did have a “fear of missing out,” the survey asked whether buyers bought sooner or later than planned. Although the survey results do not support a strong conclusion on whether buyers purchased their home based on fear of missing out, CMHC notes that buyers who deviated from their home buying plans likely overspent.

“[H]omebuyers in Toronto and Vancouver who reported buying a home before they anticipated or after they anticipated making a purchase were more likely to exceed their budget than homebuyers who did not alter their timing,” reads the report.

According to CMHC, buying sooner than expected may reflect a buyer’s lack of information about the market, resulting in them pushing up their initial budget and buying quickly before prices rise. When buyers purchase later than expected, CMHC says it suggests the inability to buy at the desired price, which would cause buyers to increase their budgets.

But why were more homebuyers in Vancouver and Toronto significantly exceeding their home buying budget compared to homebuyers in Montreal?

CMHC suggested two hypotheses to answer this question, but the data failed to support the theories.

The first hypothesis is that first-time homebuyers lack experience managing household finances and, as a result, are likely to exceed their spending budget. CMHC’s second theory is that homebuyers could be pushed to exceed their budget based on the dwelling type they purchase.

However, the survey results revealed that first-time buyers and repeat buyers in Vancouver and Toronto reported similar likelihoods of exceeding their budgets and the property type proved irrelevant as a cause of buyer overspending.

The survey also found that a small percentage of homebuyers reported paying less than they planned in 2017 — 6 per cent of homebuyers in Vancouver were under budget, along with 6 per cent in Toronto and 11 per cent in Montreal.

VANCOUVER—Mountains and public health care are what led 34-year-old Katie Marshall to move to Vancouver this summer, at a time when the pervasive belief is that millennials are fleeing the city in droves.

But Marshall is, in fact, one of thousands of millennials moving to the lotus land despite high housing prices. There’s a lot to love, she explained.

The most satisfying way of working towards a big purchase, a house, a car, a cottage, isn’t by taking a bigger slice of your income pie and putting it towards savings. It’s by making sure your pie is as large as possible and taking the same percentage out. Yes, it sounds obvious, and no one is says “No” when offered more money, but do you ASK for more money? Now this works the best when you’re going into a job fresh; don’t be afraid to negotiate even though you are so excited to get that job that you may be afraid asking for more cash could hinder you right out of the gate. If you are already in a job, you probably have an annual performance review where you will get a bit of a bump if only to keep current with inflation. It’s during these periods that you need to be ready, and here are some tips to help.

Learn Your Value – Talk to people and research how much people make in your field. Now you can go about this by asking your colleagues what they make, but be careful with this, some people can get touchy about how much they make and some employers may take issue with these types of questions. Getting hauled into HR won’t look good if you plan on asking for more money shortly after. What you can do instead is ask people in the same field and living in the same area what their compensation is. Researching online at Salary.com and Glassdoor.com are also good resources for figuring out what you’re actually worth.

Success Folder – You’re good at your job, right? Sure you are! People love you! Use it! Each time you receive praise from a client or a boss, save proof of this to your success folder. If it’s an email, save it. A voicemail or verbal compliment, transcribe it. These things can add up and next time you have a review you have tangible evidence of the positive impact you have had by doing your job the best way you know how.

Come Up With Your Own Number – Some companies will offer a standard bump, or your manager may say to you offhand what they are planning on giving you as a pay raise this year. Don’t let that be the final word. Request a sit down and illustrate why you deserve the raise you do. It’s easy to be passive, make sure you are active!

Practice Negotiating – Sitting down with the big BossMan or BossWoman can be stressful. We’ve all been there. It feels like you’re being pulled into the principal’s office for something you’ve done wrong. So, in order to get over these jitters find someone who knows something about business and management and practice with them. They can tell you how you are coming off and what you may be doing wrong.

These are easy, zero sacrifice ways of making your financial dreams easier to obtain. They may seem stressful, but keep in mind…no one has ever been fired for asking for a reasonable raise, especially when you have the data to back it up!