Vancouver, BC: The illusion of wealth

Vancouver, British Columbia, Canada, is a picturesque city, teaming with expensive cars, multi-million dollar houses and hi-rises, and stores like Versace and Burberry. To a tourist or casual onlooker, it has all of the makings of a wealthy city, a beacon of prosperity, and a shining example of the success of capitalism.

Well, I am here to tell you that it’s a façade, a farce, a ruse, and one that has been so convincingly sold over the last 20 years that its own citizens have paid $4.25 per glass, plus PST, to drink the Koolaid. Not only that, they perpetuate the myth by their own actions.

Salary

Despite having one of the most expensive costs of living on the planet, Vancouver’s median wage ranks the lowest of the major provincial cities (finally falling behind Toronto and Montreal). The median salary (most common) in Vancouver is $42,000 (before taxes). At first blush, this sounds like a substantial amount of money. However, when the average yearly rent is $16,500, you pay $6,100 in EI, CPP and Income Tax, food costs are $6,000 minimum, a phone, internet and TV are $2,400, a $1,500 transit pass or battling the highest gas prices in Canada, your salary starts to look a little less opulent.

Vancouver living, by the numbers:

Average mortgage payment: $1600/mo (up 0.85% from 2015)

Average rent is $1360/mo (up 4.25% from 2015)

Median salary in Vancouver is $42,000/yr (up 2.6% from 2015)

Average debt in Vancouver is also $42,000 (up 7% from 2015)

Average student loan debt in Vancouver is $29,000 (up $2,000 over last 4 yrs)

Poverty line in Vancouver a reported $30,000

Debt

This is perhaps the most telling statistic that shows Vancouverites are living beyond their means, and not just by a little bit, they are WELL beyond their means. In a happy, or perhaps cruel, twist of fate, the average Vancouverite is $42,000 in debt (which matches their yearly income!). Even more staggering is that this amount rose by 7% (or almost $3,000 over the last year alone). This means that they are not only NOT paying off their debt, they continue to spend at an alarming rate. And for what? To keep up with the Jones’? Despite salaries being some of the lowest in the country, there is still some room to pay down debts. One must then assume that necessities, such as rent and groceries will command a good portion of each pay-cheque. After these, however, it seems as though keeping up appearances comes in a close 2nd. Making payments on fancy cars, meals out, bar-hopping, purchasing designer clothes; all of these things are associated the cost of living in a ‘world class city’. Vancouverites have now moved into the most dangerous of grounds: being comfortable with debt.

Prime Minister Trudeau's plan to tackle student debt

In fairness, Vancouverites, and today’s youth are being set up to fail. The average student loan debt in Vancouver is $29,000. Assuming a healthy payment of $500 per month (which I guarantee is more than most new grads can afford), it will take them 10 years to pay off these amounts alone. What's that? My math doesn't add up? Well that's because there is interest being added to that $29,000 for every day you can't pay it off. Post secondary institutions in BC are making money off of students, hand over fist, and contributing significantly to the debt culture that has arisen.

Housing

Vancouverites love to blame overseas buyers for driving up the market price of real estate. Without question, this has added to the crisis, however, first time buyers settling for a $500,000, 650 square foot apartment, are part of problem. The only true voice that consumers have comes from their wallet, and by purchasing (are rather the bank purchasing) these units you are contributing to absurd pricing.

The Bank of Canada has determined that thanks to surging home prices and stricter down-payment rules for insured mortgages that took effect in the middle of February, the typical first-time buyer in Vancouver would need to save 10 per cent of their pre-tax income for 132 months – or roughly 11 years – to be able to afford the minimum down payment on a typical house. If you are lucky enough to be able to afford a down-payment and get a decent mortgage, the average mortgage payment in Vancouver is $1600 per month...and that's for an apartment, if you want a house with your very own blade of grass (which are rare to begin with), you can double that. For the rest of us who are either unable or unwilling to buy into the housing hysteria, the average rent cost in Vancouver jumped 4.25% in the last year to reach $1360 per month.

Vancouver is a city with an identity crisis. We want to be the pinnacle of capitalist prowess. We want to own the nicest homes, drive the nicest cars, and work the best jobs. But the reality is that we are a city indebted. We are living beyond our means. Whether or not we are being set up to fail is irrelevant. The fact is that you are either part of the problem or part of the solution. If you own an apartment on mortgage, own a car on lease, and your debt is as much as your salary…that’s a pretty big problem.

For tips on how to keep your food costs down, follow this link and get a shopping list to eat for under $200 per month!

#psychology #makemoremoney #performance #wellness #babyboomers #business

Brendan Rolfe
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