November 22, 2018
Here’s How Much You’ll Need to Earn to Buy a Home in Alberta
Good news for home buyers in wild rose country: Housing affordability is relatively healthy in all markets across the province, as wages have kept pace with home values.
According to recent data compiled by Zoocasa, an Albertan earning at least the median household income would be able to afford a home in any of the province’s 25 major markets.
To determine home affordability in each city, Zoocasa sourced the average home price as reported by local real estate boards, and calculated (assuming a 20-per-cent down payment, a 30-year amortization, and mortgage rate of 3.33 per cent) how much a borrower would need to earn in order to qualify for a mortgage on that home. That calculation was then compared to actual median incomes earned in each municipality as reported by Statistics Canada.
Alberta Affordability Outranks BC, Ontario
The findings are in sharp contrast to the affordability picture in the priciest provincial housing markets. For example, using the same criteria, only four of 19 markets can be considered affordable in neighbouring British Columbia, with all located away from large urban centres: Prince George, Kamloops, Campbell River, and Langford. In the Vancouver real estate market – BC’s most expensive – home buyers face an income gap of $97,866 when purchasing the average-priced home with the median income.
Ontario buyers fare better in 19 out of 28 markets, though a total of nine – located within the Greater Toronto Area – remain beyond the realm of affordability with the most expensive market, Richmond Hill, commanding an income gap of $47,972, followed by Toronto with a gap of $41,282.
Most Expensive Markets Still Affordable
In comparison, even home buyers in Alberta’s most expensive urban markets can swing the average home price on a median income with cash left over. In Canmore, a luxury mountain community where the average home costs $696,421, a buyer earning the median of $98,906 would have a $3,908 surplus after qualifying for their home purchase. Calgary real estate buyers would have considerably more, with a $33,409-surplus with an income of $97,334, and an average home price of $468,634. That balloons further to $37,558 in the Edmonton real estate market, where the median income is $87,225, and the average home costs $364,102.
Check out the infographic below to see how much income a buyer would need to earn to afford a home in each Albertan housing market.
Top 5 Most Affordable Housing Markets in Alberta
1 – Fort McMurray
Average Home Price: $374,360
Required Income: $51,066
Actual Median Income: $195,656
Affordability Surplus: $144,590
2 – Beaumont
Average Home Price: $408,391
Required Income: $55,708
Actual Median Income: $134,443
Affordability Surplus: $78,735
3 – Cold Lake
Average Home Price: $248,888
Required Income: $33,950
Actual Median Income: $110,575
Affordability Surplus: $76,625
4 – Sherwood Park
Average Home Price: $420,070
Required Income: $57,302
Actual Median Income: $124,239
Affordability Surplus: $66,937
5 – St. Albert
Average Home Price: $414,668
Required Income: $56,565
Actual Median Income: $119,905
Affordability Surplus: $63,340
Average home prices for each region were sourced from the Calgary Real Estate Board, Realtors Association of Edmonton, Lethbridge and District Association of Realtors, Medicine Hat Real Estate Board, Central Alberta Realtors Association and the Canadian Real Estate Board. Home prices are from October 2018, except for Camrose, Red Deer and Sylvan Lake where September 2018 figures were the latest available.
The income required to afford the average home price was calculated using the Ratehub mortgage affordability calculator (www.ratehub.ca/mortgage-affordability-calculator) assuming a 20% down payment, a mortgage rate of 3.33% and a 30-year amortization. The calculation does not factor in carrying costs such as property taxes and heating.
Median household incomes for each city are sourced from Statistics Canada.