Canada’s priciest cities are growing even less affordable for their populations.
A nighttime aerial view of downtown Vancouver is seen in this stock photo. MICHAEL WU / EYEEM VIA GETTY IMAGES
MONTREAL ― Statistics Canada’s latest dive into the money Canadians are making has some seemingly bad news for residents of Toronto and Vancouver: The median incomes in these cities fell in 2018.
That doesn’t necessarily mean people there are seeing their paycheques shrink: Rather, the vast flow of migrants in and out of these cities is changing who lives and works there.
But it does mean that these cities’ high and rising costs of living are becoming an even bigger burden for the people living there.
What’s going on with incomes?
According to Statistics Canada’s latest Canadian income survey, released this week, after-tax incomes of families and unattached individuals rose 2.7 per cent in 2018, to a median of $57,100.
“Market incomes” ― meaning what people earn in the job market, not including taxes and government transfers ― rose 0.8 per cent.
But in Greater Toronto, both market incomes and after-tax incomes fell, by 0.9 per cent and 2.9 per cent, respectively. In Greater Vancouver, market incomes fell 8.8 per cent, while after-tax incomes declined 4.4 per cent.
Why is this happening?
The Toronto and Vancouver job markets have been strong recently, with the number of people employed in Toronto up a massive 5.2 per cent in the past year, and up 0.4 per cent in Vancouver. Clearly, these are not bad job markets, or bad economies.
The answer may lie in migration, and in our changing lifestyles. In Vancouver, it seems more people are living alone.
The data suggests “the population is shifting to include more (people living alone) ― this could reflect population aging and/or increased numbers of students and other younger, unattached people,” TD Bank economist Brian DePratto wrote in an email to HuffPost Canada.
Also, faced with soaring housing costs, many Toronto and Vancouver residents are picking up and moving to more affordable locations.
“If higher-income families are moving out to perimeter cities, it could pull the Toronto median down while boosting the rest-of-Ontario level,” Bank of Montreal senior economist Robert Kavcic said.
A recent study from Ryerson University’s Centre for Urban Research and Land Development found that Toronto lost more than 5,200 millennials to other parts of Canada between 2018 and 2019, while Vancouver lost nearly 1,700. Ottawa, Victoria and rural areas in southern Ontario were the big winners from that shift, taking in the largest numbers of millennials from other parts of the country.
But the big cities need not worry about losing population ― increased immigration levels mean their population growth has accelerated.
“These flows still represent a small share of (Toronto’s) overall millennial population,” senior researcher Diana Petramala wrote. “The region is still the fastest growing region across the country, owing to immigration.”
Higher immigration levels may also be responsible for some of the fall in median income. Because immigrants are on average younger than the Canadian average, and because they often can’t find work in their fields, they tend to earn less than the average for locals.
House prices make even less sense
Regardless of the reasons, the income data suggests that Toronto and Vancouver are growing even less affordable for their populations.
The average resale price for all home types has jumped by 12.3 per cent in Greater Toronto over the past year, while the home price index for Greater Vancouver shows the city is recovering from a home price slump, with prices up 1.4 per cent in the past six months.
With that, a nine-month period of improving home affordability has come to an end, National Bank Financial reported earlier this month ― and worse is yet to come.
“We doubt that a further improvement in home affordability is possible at this point as we see interest rates levelling off and home prices should accelerate given tight supply in the resale market,” economists Kyle Dahms and Matthieu Arseneau wrote.
“Indeed, the national active listings to sales ratio is at its lowest since 2007, a level generally associated with worsening affordability.” SOURCE