Saskatoon Pricey Pick

Media Appearances, Housing Affordability, Frontier Centre

Saskatoon’s ranking in an annual survey of affordable places to live across the globe has tanked. The Fourth Annual Demographia Housing Affordability Survey, which is publicly released today, ranked 227 cities in Canada, the U.S., Australia, New Zealand, Britain and the Republic of Ireland by comparing residents’ incomes and housing prices.

Last year’s survey found Saskatoon the 15th most affordable city of those ranked. This year, its position plummeted to No. 77 on the list, tied with Limerick, Ireland, with house prices rising to about 3.5 times a family’s gross income.

The survey considers homes in the urban centres affordable if the city’s median house price is less than three years’ median income.

That positions Saskatoon as the 11th least affordable Canadian city, making home ownership further out of reach than in Ottawa, Quebec City, Halifax or Winnipeg.

The result, which may shock few, has bumped Saskatoon out of cities considered “affordable” to well down the list of “moderately unaffordable” locales.

“I can’t say it was a surprise,” Kent Smith-Windsor, executive director of the Greater Saskatoon Chamber of Commerce, said Sunday.

“One of the selling features of Saskatoon had been affordability. We felt that we were living on borrowed time and a lack of economic success.”

Statistics Canada reported Saskatchewan as having the greatest year-to-year increases in house prices in Canada.

In 2007, the price of an average Saskatoon house rose 50 per cent, selling for an average $250,000.

House prices being too expensive for the average resident is bad news, the survey points out.

“These higher costs have serious social implications,” the authors write. “In the markets where extraordinary inflation has occurred, living standards are not likely to be sustainable. Further, many ethnic-minority households, with their generally lower incomes are likely to find the dream of home ownership put out of reach.”

Home ownership, on the other hand, creates wealth, greater financial security and independence, the authors say.

Vanessa Charles, co-chair of the Saskatoon Anti-Poverty Coalition, says the effects of those high prices have trickled down to impact some of the most vulnerable people in the city. She says 2007 was an especially trying year for poor people in Saskatoon.

“It’s really unfortunate,” she said. “People who live in poverty even had difficulty when the prices were lower. Now it’s just impossible to look at purchasing a home.”

As investors began condominium conversions, the vacancy rate dropped and rental rates ballooned. Now, many poor are spending money on rent that used to pay for food and clothing, Charles said.

She worries some landlords are taking advantage of the tight rental market to squeeze money out of some of the city’s poorest residents.

“I think they’re boosting up their rents as high as they can go,” she said. “What is the landlord doing to make up for that raise in rent? I think in a lot of cases, it’s just greed.”

As in previous years,theDemographia survey still ranks Regina as affordable, saying it is the fifth most affordable city in Canada and 12th cheapest of the 227 studied.

The study’s authors argue high housing costs result from a lack of supply, and say municipalities should open up more lots for development on city fringes and remove unreasonable infrastructure charges for buyers.

Coun. Pat Lorje said the city has moved aggressively since last summer to increase the housing supply for both renters and owners.

“We are determined as a council not to get into the kind of unplanned growth that some people say happened in Calgary,” Lorje said.

The city has bumped its budget for affordable housing projects from $500,000 to $2.5 million a year, she said, and now supports about 500 affordable housing units in the city.

The biggest cost in the city’s 2008 budget is land development. About 40 per cent is devoted to servicing new lots in Willowgrove and Hampton Village, extending water and sewer lines to the Stonebridge subdivision and planning for future developments in the city’s east and northeast.

Lorje disagrees with the study’s authors that rapid expansion on the city’s fringe will make houses affordable again.

“You only have to ask the average taxpayer . . . if they want to have runaway taxes,” she said. Residents with an environmental conscience will not support urban sprawl, either, she said.

“This is a model that we’ve tried and it’s quite clear that it doesn’t work,” she said.

What Saskatoon needs are more new developments in areas already serviced by the city, or, “infill,” especially of new rental housing units, she said.

However, Smith-Windsor said part of what drove house prices so high is the city’s wheels of bureaucracy churning too slowly in response to the burst of demand for housing.

“You have to take things like productivity way more seriously than they have,” he said.

Many newcomers opted to purchase houses in small towns and commute to Saskatoon rather than shell out the inflated prices, he said. Saskatoon needs a “dramatic” increase in the number of lots for development and sale, he said — perhaps as many as double the current number.

The good news is that Saskatoon is seeing unprecedented conversion and redevelopment of old buildings and lots in the city’s core.

“We’d very much like to see an acceleration, for example, of (development of) the city yards,” Smith-Windsor said.