For Vancouverites, the high cost of real estate is no joking matter.
In a city where half the population rents, the option to buy a home and lay down some good old-fashioned roots is simply not available to a lot of people.
That option isn't currently available to high-school teacher Petr Pospisil and girlfriend Ola Rogula. To illustrate the high cost of property in Vancouver, they created a website game called Crack Shack or Mansion? that has, over the last three weeks, become a hugely popular online quiz for Vancouverites and beyond. The quiz is a tongue-in-cheek critique of what $1-million will get you in Vancouver. More often than not, it gets you a house in serious need of repair.
Mr. Pospisil and Ms. Rogula, a lab technician, created the game for their friends, but didn't expect it to grab so much attention, including media overseas.
It seems simple enough. The user clicks through a slide show of houses and has to decide which one is a drug house and which one is a Vancouver home with at least a $1-million price tag, based on mid-April listings. Most users quickly realize that they can't tell the difference.
"I went on MLS [Multiple Listings Service]and I wanted to see what $1-million gets you," says Mr. Pospisil, who is 26. "I couldn't believe it. You couldn't tell the difference between the $1-million places and rundown places in Detroit," he said.
Finding accurate images of drug houses in the United States was the hard part. Finding Vancouver homes for more than $1-million was easy. One drab Vancouver house with crab grass and a concrete pad for a backyard comes with a price tag of $1.78-million.
The quiz started on a blog and was bouncing around Facebook within hours. By the end of the first week, it had received more than 300,000 views.
"After many years of just accepting that prices have gone up and up, it got people talking about it, and reflecting on what's going on," says Mr. Pospisil.
Point taken. Vancouver's so-called $1-million babies are another city's junkyard dogs.
"What it actually teaches you is the reason things are expensive is because of their land value, not the structure," says Tsur Somerville, a University of British Columbia professor who studies real estate.
Our high land value explains why Mr. Pospisil had to go looking in American cities for pictures of low-cost drug houses, says Prof. Somerville.
Even Vancouver's real drug houses are sitting on expensive land.
It isn't easy to be a middle-class landowner in Vancouver. While most cities' house prices in the last year underwent a correction, Vancouver prices rose again. And although the market is expected to soften once interest rates go up this year, the Vancouver market isn't expected to fall off enough to make houses suddenly affordable to the majority. With its scenic backdrop, mild climate and central location, Vancouver is always at risk of becoming a rich person's playground.
The city's lack of affordability also caught the attention of Illinois-based Wendell Cox, who once sat on the Los Angeles County Transportation Commission and who now compiles studies on land-use policy. He's made a career out of opposing "smart growth," and "New Urbanism," and has a lot to say about Vancouver's house prices. Mr. Cox is employed by private and public companies, and has done consultant work in Canada.
"I guess you could consider me being on the right side of the political spectrum, at least with respect to urban planning," he says.
He too saw the Crack Shack or Mansion? quiz online. He blames the high cost of real estate on efforts to contain sprawl and dwell on urban density.
"I think it is a terrible mistake to force [urban density]to happen, and it creates all sorts of problems which you guys are seeing first-hand in the ungodly housing unaffordability you face," says Mr. Cox, who lived in B.C. as a child.
Mr. Cox is the public-policy consultant behind a survey that ran in The South China Morning Post last week, and was quickly picked up by other international media. The article showed a chart that rated Vancouver as the second most unaffordable city out of 272 metropolitan centres in six countries, including the U.S., Britain, Ireland, Australia and New Zealand. Hong Kong ranked first.
The sixth-annual survey, originally published in January, divided median house prices by gross annual median household income to get an affordability rating, using figures from government agencies.
Vancouver's median home price of $540,900 was divided by median household income of $58,200.
It showed Vancouver as a "severely unaffordable" housing market - nothing new to locals. But Mr. Cox's solution to the problem is contrary to popular thinking, and local academics question his findings.
"You ought to allow the city to expand," says Mr. Cox. "Do you want virtually everybody living in rentals all their lives? Frankly, a lot of kids in Vancouver who are growing up there at the moment won't own their own homes unless they're inherited."
He says he's not opposed to dense urban areas - he just thinks Vancouverites should be given more options to live outside the city.
His view flies directly in the face of Vancouverism, an internationally lauded planning technique that aims to populate the urban core with mixed-use development, leading to increased transit use and less need for freeways leading away from the city. It's a technique largely devised by former planning director Larry Beasley that is being copied by other cities around the world.
"Over the last 20 years, a lot of planning agencies around the world have decided there's this demon called urban sprawl," says Mr. Cox.
"There is an awful lot of land on which development is not permitted. Vancouver's high prices are a function not of mountains and water, but a function of planning restrictions that do not allow development to occur.
"The minute you ration land, you drive up its price. It's a basic law of economics. Shortage drives up prices."
Mr. Beasley takes issue with that argument.
"What is a gross and misleading simplification is that the answer to higher costs is to extend suburban sprawl," says Mr. Beasley, on the phone from Dallas, where he is advising on urban design. "It is not. Full stop.
"I think it is true that our housing is expensive, but the reason for that rests primarily on the fact that any successful city is going to experience high demand in a very footloose world, and therefore more demand and supply and will push prices up.
"The answer does rest in more development, but the answer also rests in the modern world in the quality of the city that you create.
"Don't just look at the cost of housing to the consumer, but the cost to the public.… If you proceed with urban sprawl, you may get supply, but you also start to sustain other public costs, which have to be at some point echoed back to the taxpayer."
Vancouver already has twice the density of Seattle, says Mr. Beasley. But the city could be even more efficient with the current conversion of areas like Southeast False Creek from industrial to mid-to-high density development.
In terms of the actual survey, Prof. Somerville, who has studied it, says it's flawed because it doesn't take into account low interest rates. Affordability has more to do with monthly payments than a house-price-to-income ratio. As well, housing stock in Vancouver differs greatly from that of say, Hong Kong, where people live in much smaller apartments. It's comparing apples to oranges.
Prof. Somerville is also finishing a study that has found the city's surrounding mountains, water and Canada-U.S. border have more to do with high land values than protected land such as the Agricultural Land Reserve, which restricts development.
Besides, he says, Vancouver has always been unaffordable.
"There is a very classic economic theory that argues that a place that has a high amenity location - things that people will want to be near - will tend to have higher land prices and lower wages.
"What city does that sound like?"
It sounds like Vancouver, and renter Mr. Pospisil doesn't plan on giving up on it any time soon.
"I like the city, and renting is not a bad thing," he says. "But I don't think I would ever get that far into debt for a place here."
Besides, the city's high prices have landed Mr. Pospisil a new hobby. He's just released a sequel to the Crack Shack or Mansion? quiz.
Special to The Globe and Mail