Regina — identified in a new study as one of the cheapest places in the world to own a home — may be headed for a boom in the near future, should housing prices continue to soar in other Canadian cities, predicts a senior fellow at the Winnipeg-based Frontier Centre for Public Policy.
“If Edmonton and Calgary do not return to some much better housing affordability situation, I would not be a bit surprised to see a pretty good-sized influx of people from there to places like Regina and Saskatoon,” said Wendell Cox, who assembled the housing affordability survey along with New Zealand based property investment manager Hugh Pavletich. “So as long as your land use policies allow the building industry to respond to the increased demand, I think that Regina and Saskatoon, and Winnipeg for that matter, are likely to have a really improved future in the long run as refugees, frankly, from places like Vancouver and Calgary and Edmonton come.”
The survey, posted today on the FCPP’s Web site, notes Regina has the most affordable housing in Canada at a median multiple of 2.0. That means the price of the average home is twice the average household income.
“This is a measure that is recommended by both the World Bank and the U.N. … Your median house price shouldn’t be more than three times your median household income,” Cox said.
Regina — with a median house price of $115,000 and median income of $57,500 — topped Canadian cities like Winnipeg, Quebec City and Saskatoon, which also have low median multiple figures. In Vancouver, on the other hand, the average income is only $58,100 while the average house costs about $448,800, meaning it costs home buyers 7.7 times their yearly income to buy a house there.
The survey looked at housing affordability in cities in Canada, the United States, the United Kingdom, Ireland, Australia and New Zealand. Overall, Canada has the most affordable housing in the world, at a 3.2 median multiple.
Internationally, Regina tied with Fort Wayne, Ind., and Youngstown, Ohio, for the most affordable housing in the world, all at 2.0. The least affordable housing is in Los Angeles and Orange County, where the average home costs 11.1 times the average household income.
Cox said higher housing costs in cities like Los Angeles, San Diego and Vancouver is in part due to urban planning, with some large cities driving up prices by trying to avoid “urban sprawl.” With urban planners avoiding building on cheaper land outside the current city limits, that means land within the city is at a premium.
“You are seeing a lot of communities — and fortunately Regina, Saskatoon, Winnipeg and a whole lot of places in the United States and Canada are not going through this — but you are basically seeing urban planning raising the price of housing so much by raising the price of land …” he said. “So in the long run, we are going to see a lot lower percentage of people owning their own homes. And I see this as the principle threat to the economic future of countries like Canada and Australia and the United States.”
Cox said unless the situation changes in some urban areas, the number of people who can afford houses is going to drop rapidly. And that has potentially huge ramifications for those cities.
“Cost of living is a crucial element in the long-term competitiveness of a city or an urban area …” he said. “When companies are thinking about where to expand, housing affordability is very important … So what that says I think in the long run is places like Regina, Saskatoon, Winnipeg, Dallas, Fort Worth and Austin and the like, that are able to keep their housing affordability at a reasonable level, are able to begin to grow faster.”
Cox said one of the main reasons the six nations studied have become “affluent” over the past century is due to the increasing ability of citizens to buy their own homes. That is now under threat.
“Home ownership has been a mechanism for bringing all sorts of people into the economic mainstream …” he said. “I’m for as many people being affluent as possible and the fact is the only way people can be affluent in large numbers is if their housing isn’t very expensive.”
Of the 159 international cities studied, 42 are affordable — all in North America — while 59 are severely unaffordable.