That question is occupying a lot of brain capacity these days and leading to considerable angst among homeowners, would-be homeowners, politicians, and anyone concerned with where our society is headed.

The Fraser Valley Real Estate board’s monthly stats that came my way last week do nothing to ease the angst.

In Surrey, the average price of a detached home in October was $1,699,046, up 34.8% from a year earlier. For a townhouse, it was $807,468 (up 26.1%), and for an apartment, it was $485,660 (up 17.3%).

Abbotsford was a little better. The average price of a detached home was $1,242,817, but up a steeper 38% from a year earlier. For a townhouse, it was $653,220 (up 33.8%), and for an apartment, it was $407,992 (up 27.2%).

While it’s still cheaper than Surrey (and much better than Vancouver), the sharper increases reflect the increased pressure exerted on peripheral areas as the core metropolitan areas become unaffordable.

This pressure does not end at Abbotsford, but continues on through Chilliwack, to Hope, and throughout BC. Kelowna and Kamloops are mirroring these trends, with their outlying areas (like Logan Lake and Merritt) also experiencing massive price increases as people move further and further from the Lower Mainland to find something still within their affordability range.

It’s happening all over Canada, not just here; in fact, we’ve actually fared better than some major cities in Eastern Canada.

What is that affordability range, you wonder? Well, traditionally, it was always considered to be about 3 or 3.5 times a person’s (or family’s, if there are more than one income involved) gross annual income. With low interest rates, that number expanded to as much as 6 times. But then our government implemented the “stress test” to shield people from rising interest rates. So, now we can qualify clients at only about 4.25 to 4.5 times their gross annual income (assuming a 90 or 95% mortgage). That means, to qualify for an average detached home in Surrey, you will need an income of about $380,000. To qualify for an average apartment in Abbotsford, you will need an income of at least $90,000.

Rightly, people are asking: Who can afford to own a home anymore? Has your income increased by 30+% in the last year? If not, you’ve fallen behind. It wasn’t much different the previous year, so the income growth required to match the housing price growth, compounded for two years, is closer to 70%.

Why has the price escalation been so radical? Economists and governments point to the shortage of supply. It’s a simple rule of economics: supply shortage makes prices go up; supply surplus makes prices go down.

Politicians have noticed, as we saw in the recent election campaign. They promised all sorts of goodies to attract the votes of those hard-done-by with the price escalation. But isn’t it a bit late? Isn’t it a case of “closing the barn door when the horse is already out of the barn?

But it also begs the question of why there is such a supply shortage. It didn’t used to be that way.

Clearly there are a multiplicity of issues: limited land availability (especially here in BC), the increasing costs of materials and labour to build, the cost of red tape to build, the backlog of building permits (with municipal governments grossly understaffed–the stories I’m hearing from builders are unbelievable!), the removal from housing supply by off-shore investors who keep their properties vacant instead of in the rental market, and even the added costs of environmental concerns.

The increased housing demand due to the pandemic has been a big factor, too, as increased demand, just like shortage of supply, pushes price up.

Governments can influence the market somewhat, but they can’t make a huge dent in the prices, at least not without killing the economy. Will housing prices go back those roughly 70% they’ve grown over the last two years? Never! If they retreat more than 10% we’d likely call it a crash. And I strongly doubt even that will happen.

It means we’ll have to adapt.

We’ll need more people (with incomes) occupying the homes. If we want detached homes, we’ll likely have to team up with others, to buy jointly. For some ethnic groups, this is already a part of their culture, for others, a harder adjustment to make.

We’ll need more and more shared living arrangements, even in apartments, to be able to afford the rents that must be at least partially correlated with the prices.

It means we’ll have to build more and more amenities into the new styles of housing because fewer families will have their own yards.

It means families will likely be smaller, with more and more people choosing not to have families, at all.

It also means we’ll have to lower our expectations.

But humans have always proven to be an adaptable species, so I’m convinced we can conquer this challenge, too.

At least, that’s how I see it . . .