Andy Yan adds another term to the housing lexicon. From the Vancouver Sun:
Yan, who is director at Simon Fraser University’s City Program, looked at the impact of transportation costs on housing affordability.
In the City of Vancouver the average cost of transportation over 25 years — assuming two per cent inflation per year and that nothing changes to improve the current situation — works out to be $298,459, according to Yan.
By comparison, if you live in the Township of Langley, the 25-year cost of transportation would be $563,755.
Across the Metro Vancouver region, if you add in amortized 25 year average annual transportation cost estimates, the percentage of homes with a cost of over $1 million rises significantly from 43 per cent to 92 per cent.
In areas such as Vancouver, the North Shore, Burnaby and Richmond, adding in such transportation costs increases the percentage of home values, but it’s in Coquitlam, New Westminster, Surrey, Delta, Port Coquitlam and the township and city of Langley where the contrast is most pronounced. In Coquitlam, the percentage of home valued over $1 million goes from 22.4 per cent to 97 per cent if you account for estimated amortized transportation costs. In the township of Langley, the percentage rises from 4.8 per cent to 90 per cent.
“This is only looking at the (straight) cost of transportation, not even the time,” said Yan.
He continued: “There is ‘phantom affordability’ too, if you will. This idea that you can drive (further from the city) until you qualify (to buy a home) doesn’t take into consideration that as home mortgages (cost less) transportation mortgages (in some areas) go up.”
Yan said this is precisely the direction seen in some U.S. cities, where the areas hardest hit by affordability woes have been the outskirts and suburbs rather than the city centres even when they have seen some of the highest home prices.