Quality of living vs Cost of living

The constant Bull/Bear debate has got me thinking.  How bad do we really have it here in Vancouver?  I read two articles the other day. The first article was a report called Mercer’s Quality of Living. The report takes into account a number of issues such as political & social environment, economic environment, socio-cultural environment, etc…The second article was about the Worldwide Cost of Living.  This is a bi-annual survey comparing prices & products over 130 cities around the world.

Interestingly enough Vancouver was voted the top 3 city in the World to live. On the flip side Vancouver was ranked the 34th in a cost of living survey. To bring that into context. Moscow was ranked 171st in the quality of living report, while ranking 26th most expensive city to live.  Vancouver = higher quality of life+less expensive. Moscow = lower quality of life and more expensive.

Here are a couple selections from the links:

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“Mercer’s overall ranking for quality of living has revealed that Zurich again ranks as the world’s top city, with a rating of 108.1. The city narrowly out-ranks Geneva, which scores 108. Vancouver and Vienna follow in joint third place and score 107.7.”

“Oslo heads the 2007 Economist Intelligence Unit’s latest Worldwide Cost of Living survey…Of the ten most expensive cities surveyed, only Tokyo and Osaka hail from outside Europe. Western European cities make up the priciest places in the survey. Moscow (Russia—26th) is now more expensive than New York (US—28th), the most expensive destination outside Europe and Asia….

…Canada set to out-price the US?

If the dollar stays weak, Canadian cities could become the most expensive in North America as Vancouver (34th) and Montréal (36th=) continue to close the price gap on New York. Vancouver is now only four percentage points cheaper than New York and more expensive than any other city in North America. Montreal has the same cost of living as Chicago (36th=), the second costliest in the US…”

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Obviously the groups ranking the city can be criticised on a variety of grounds, but in big picture terms, how bad a place is Vancouver, and are high property values justified? 

Does someone from Moscow, (or anywhere else, for that matter), that is ranked as expensive to live, but not ranked highly on the livability standard, recognize value here that we ignore or downplay?  Short term market fluctuations aside, do we have a challenge recognizing that what we used to get for less is simply going to cost more in the future? 

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24 Comments

Filed under Aaron Best

24 responses to “Quality of living vs Cost of living

  1. Canadian David Lereah

    Give me a break! Vancouver is closing the gap on NY prices? There is absolutely no sound economic argument behind Vancouvers lofty real estate prices. Like it or not, Vancouver is still an economic backwater, filled with rampant speculation and simply does not posess any of the economic/cultural/demographic characteristics of actual “world-class” cities that Vancouverites like to mention in the same breath as their own.

    I revert to Robert Schiller’s comment that Vancouver is “the bubbliest city in the world” and it does not matter how pretty our scenery is the current market is built on a house of cards.

  2. Johnnyrent

    I can’t think of a better city to live than Vancouver, and I’ve seen more cities around the Continent and the world than most people. Mind you, I’m a second generation Vancouverite so I’m highly biased.

    How bad have we got it in the housing value equation department? Really bad, to the point of absurdity, which is one reason why it will not be sustained. That we are 4% behind New York in housing cost speaks volumes. Relative to the Big Apple we are an economic pimple, a cultural midget, a tiny spec on the world’s radar screen and our incomes pale in comparison.

    Is there a rationale for Vancouver to be more expensive than many other cities in North America. Of course. I’d go as far to say that there is justification for us being more expensive than Canada’s center of the universe, Toronto. Prices have, however, gone way off any plausible dial. They will be slapped back down in the not too distant future at which time we’ll go from bad to bearable (if you’ll forgive the play on words).

  3. Jim

    Aaron:
    Your argument which is couched in terms of seemingly obvious facts, which draw one to conclude Vancouver is underpriced relative to its global desirability, is spurious at best.
    Affordability indexes have as a key component income. So our low incomes raise our unaffordabilty and, to me ,automaticaly lower our desirability as a place to live. I have been to Moscow and you have to be super elite to live even decently there. Put another way, only the calous and greedy could call Vancouver “world class” and “underpriced”, as they drive by the homeless and malnourished, which populate our city streets. When global news stations do their inevitable color commentary on “The Olympic City” will they drive through East Hastings? What wil be the impact on Vancouver property values in the eyes of the world then? Negative I think.

  4. coco

    Higher gas prices will increase costs of goods. Higher property taxes, higher government payroll increases municipal and provincial, a new green tax coming soon to your gas and electric bills, talk of increasing the translink gasoline tax again. Increasing home prices.

    How much can you actually sqeeze the consumer before they stop spending?

    The real estate market is propped up by the little guys, not the million dollar home buyers. If average single family home price rises to a million dollars, there would sure be a lot of unemployed realtors around.

  5. I love those city ranking reports – they’re so arbitrary. I’d like to see a report ranking cities based on how residents named ‘Dave’ respond to telephone surveys about their feelings on Monday evenings.

    The magazine ‘MoneySense’ recently ranked Canadian cities based on three criteria: economic, leisure and real estate – Vancouver ends up on that list as the 69th best city in all of Canada. Thats four whole places above Sarnia! I guess they don’t have the best real estate anywhere like we do!

  6. Jaymo

    What methodology is used to arrive at the relative cost of living? Our affordability index for housing ranks as one of the worst in the world (13th), worse than New York(18th). This study looks at median family income and the median house price.

    The study can be found here:

    http://www.demographia.com/dhi-ix2005q3.pdf

  7. coco

    I sure would like to see those daily sales numbers broken down into the number of condos, townhouses and single family homes sold. Seeing these numbers would speak volumes what type of buyer is actually supporting the market at these price levels and what is actually selling.

  8. aaronbest

    Jaymo: Do you see a common thread among the “25 Most Unaffordable Housing Markets”? The common thread is, they are all destination cities.

    Can you say the same thing about the “Affordable Housing Markets”?

  9. aaronbest

    “The magazine ‘MoneySense’ recently ranked Canadian cities based on three criteria: economic, leisure and real estate – Vancouver ends up on that list as the 69th best city in all of Canada.”

    Pope do you have the link to this story?

  10. aaronbest

    Thanks guys/gals

  11. ..and agent will just sent me the REBGV stats for April:
    http://vancouvercondo.info

    Whaddya know? Look at those prices go!

  12. Jaymo

    When you say ‘destination’ city, what exactly does that mean? Follow the link to and you’ll see that several of those ‘destination’ locales are suffering declines in housing prices despite that vacuous status.

    http://www.macromarkets.com/csi_housing/MSA/los_angeles.asp

    Using terms like ‘destination city’ or ‘world class’ is fine for travel brochures, but can intangibles such as these be used to judge the long term health of the housing market in Vancouver? Can they prop up prices beyond every imaginable economic measure? Don’t get me wrong, I am not a Vancouver basher. I love living here but let’s be honest, it rains a hell of a lot. For the last six winters I have gone on 3 week (or greater) vacations.

    Finally, when seemingly objective studies on the relative quality of life of cities have results that totally contradict each other what use are they?

  13. Joel

    Jaymo,

    Just a note regarding this report:

    http://www.demographia.com/dhi-ix2005q3.pdf

    It doesn’t cover the world, it covers a handful of countries in the English-speaking world. Even some newspapers made the same mistake – calling it a world study – when it came out.

  14. Jaymo

    Thanks for the clarification. Makes one wonder where we would sit in a world report.

  15. aetakeo

    The Globalization and World Cities study group from Loughborough University gives Vancouver 2/12 points in their analysis of “world class” cities. New York, London, Paris, and Tokyo are the gold standard with 12/12. Moscow gets 7 points.

    Of all the possible cities to choose, I question whether any Russian city is currently geopolitically comparable: Russia has also been dealing with post-glasnost corruption that makes the Mafia look like Santa Claus.

    That aside.

    I’ve wandered about on a lot of different real estate boards dealing with cities all over North America, and there’s this regionalistic fervour everywhere you go. I love Vancouver, but I love Guelph, ON too. It’s got different features, but it’s lovely. I love Portland – that’s an awesome city. I love Seattle. Montreal has qualities that should make us feel like the pimply (and commercial) dorky younger sibling. Has anyone seen the beauty in the Maritimes? What about closer to home: the Charlottes, Nelson, the Sunshine Coast, Vancouver Island? These places are fabulous for many of the same reasons as Vancouver, and have their own charms.

    Big cities have economic opportunities that a too-high premium on housing (and everything else) cancels out.

    They also have culture and entertainment: and BC, as everyone rightly points out, has a million outdoor venues for gorgeous skiing and hiking, and a lot of larger towns compete with us for activities and cultural opportunities. Sad, but true.

    Vancouver isn’t New York, economically. It cannot sustain New York’s prices.

  16. Deedub

    The missing factor here is size. Vancouver most certainly can support a distribution of prices similiar to New York – it just can’t support anywhere near as much of it. IE, NYC will have (literally) 10 times as many million dollar homes as GVRD. And with that comes much longer tails as well, giving rise to prices unimaginable locally.

    Vancouver is a great little city. It’s still a couple million people away from critical mass, but there really is an opportunity here for a long-term urban winner. The fact is nobody has a god-given right to live where ever they like – and there is nothing wrong with “most” locals being priced out of Vancouver-proper – just as there is nothing wrong with most locals being priced out of the Upper East Side.

    Bridges and tunnels are there for a reason…

  17. I suppose we can put affordability into context, not only by looking at incomes but taxes as well. For relatively high-salaried workers, the tax rate including GST/PST and the other dings is probably around 50%. I do like living in Vancouver but even with a good job, paying a 500K mortgage (with what’s left) would change my lifestyle to a point from where I can enjoy all that Vancouver has to offer, to sitting in my newly bought home, pissing about being broke. Oops…I don’t own here (I do in Mission…like in “the importance of being earnest I’m a Missionary on the weekends” ), but I guess I enjoy pissing anyway. And I’d like to own here, but not at the price of indentured servitude to a bank. So, Rob, what about that 2 bd plus den cheap vancant yaletown rental?
    PS love the blog. Keep it up.

  18. Geezer

    That’s it, you can’t argue with statistics, I’m convinced. Moscow here I come for the good life, even if your real estate costs way more than here!

    And if the Russians won’t grant me immigration I’m off to one of the 68 other Canadian cities that are so much better than Vancouver – jeez, gimme a break!

  19. robchipman

    Geezer, forget Moscow. Go to Sarnia. Its closer, and apparently almost as good.

  20. VHB

    here is that Loughborough U thing mentioned above.

    There’s Vancouver *way* down the list with Cleveland and Bratislava.

    I like Vancouver fine. Nice place. But anyone who compares it with NY, London, Paris, Tokyo etc is deluding themselves. There is simply no actual economy here, beyond condo construction that is . . .

  21. Deedub

    But anyone who compares it with NY, London, Paris, Tokyo etc is deluding themselves.

    Nobody here did.

    Go to Sarnia. Its closer, and apparently almost as good.

    Ah…so THAT’S where VHB buggered off to! 🙂

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