Analysis of Influencing Factors of Housing Affordability Crisis in Vancouver

Vancouver, renowned for its natural beauty and livability, is experiencing an ongoing and severe housing affordability crisis. This paper delves into the factors behind skyrocketing housing prices and seeks to understand the unique aspects of this market that contribute to the affordability crisis. Drawing upon data from 2005 to 2022, the study explores various determinants, including labor market, interest rates, social housing, economic growth, foreign money, and zoning regulations. The analysis reveals that the unaffordability of housing in Vancouver is not solely attributed to a specific reason, but a combination of issues behind the market and nonmarket forces in the housing market that ultimately created the imbalance between the income level and housing prices. The Housing Affordability Index is used to measure housing affordability, which considers the median income of a typical household in Vancouver as a parameter. Besides, this study highlights the critical role of foreign money inflow and zoning regulations through which the demand composition and the supply shock create a market failure.