Can You Afford a Home in These BC Housing Markets?

It’s no secret that real estate affordability continues to be a top concern in the province of British Columbia. Home to the nation’s priciest market – Vancouver – measures to improve supply, cool speculative price growth, and improve purchasing power are a priority among policymakers.

Related Read: How Unaffordable is the Metro Vancouver Housing Market?

In fact, too-steep housing prices are starting to be reflected in the province’s sales activity and price appreciation: according to the latest numbers from the British Columbia Real Estate Association, sales have plummeted 33.2 per cent from 2017, with the average price budging 1.1 per cent, to $685,749. The total dollar value from sales also fell 34 per cent – representing $2 billion – to $3.8 billion, a sharp contrast to the robust 30.2-per-cent increase recorded last year.

Mortgage Stress Tests a Factor

Much of this slowdown has been attributed to the federal mortgage stress test implemented in January, which requires mortgage borrowers to qualify at a rate roughly 2 per cent higher than their actual contract. That’s effectively slashed purchasing power among buyers, reducing the type and size of home they would now qualify for.

Incomes Not in Line with Home Prices

However, according to recent data compiled by Zoocasa, this is exacerbated further by a sharp misalignment between home prices, and what British Columbians actually earn. The findings, which are based on a summary of October 2018 benchmark and average home prices as reported by local real estate boards, the income required to afford the homes, and regional median incomes as reported by Statistics Canada, revealed wide income gaps in the majority of BC housing markets; buyers do not earn enough to afford the average home in a total of 16 markets across the province.

The Vancouver real estate market takes the obvious top spot for least affordable; local median annual earnings clock in at $65,327, a whopping $97,866 short of affording the average home priced at $1,196,350. In fact, there are only four BC markets where homes for sale align with local earnings: Prince George, Kamloops, Campbell River and Langford.

This gap becomes even more acute when the stress test qualification rate (currently 5.34 per cent), is factored into the calculation; doing so pushes buyers’ income gap in Vancouver into the six-figure range, at $135,169, and reduces the number of truly affordable markets to two (Prince George and Kamloops).

Check out the infographic below to see how earnings and average home prices align throughout the province of BC.

Average and benchmark home prices for each region were sourced from the Real Estate Board of Greater Vancouver, Fraser Valley Real Estate Board, Vancouver Island Real Estate Board, South Okanagan Real Estate Board, BC Northern Real Estate Board and the Canadian Real Estate Association. Home prices are from October 2018 for all regions, except for Prince George where September 2018 was the most recent price available.

The income required to afford the benchmark or average home was calculated using the Ratehub mortgage affordability calculator, assuming a 20% down payment, a mortgage rate of 3.33% and a 30-year amortization. The calculation does not include carrying costs such as heating and property taxes.

Median household incomes for each region are sourced from Statistics Canada.

zoocasa-bc-affordability-income-gap

Top 5 Least Affordable Housing Markets in British Columbia

1 – Vancouver
Median household income: $65,327
Benchmark home price: $1,196,350
Income gap: $97,866

2 – Richmond
Median household income: $65,241
Benchmark home price: $1,016,200
Income gap: $73,377

3 – Burnaby
Median household income: $64,737
Benchmark home price: $978,800
Income gap: $68,780

4 – North Vancouver
Median household income: $80,838
Benchmark home price: $1,065,500
Income gap: $64,505

5 – Coquitlam
Median household income: $74,383
Benchmark home price: $941,600
Income gap: $54,059

Top 5 Most Affordable Housing Markets in British Columbia

1 – Prince George
Median household income: $78,427
Average home price: $315,434*
Income surplus: $35,399

2 – Kamloops
Median household income: $73,822
Average home price: $406,912
Income surplus: $18,315

3 – Campbell River
Median household income: $65,086
Average home price: $436,426
Income surplus: $5,533

4 – Langford
Median household income: $80,331
Average home price: $552,431
Income surplus: $4,974

5 – Penticton
Median household income: $54,293
Average home price: $361,468*
Income gap: $9,769

* September 2018 home price
Zoocasa.com is a real estate company that combines online search tools and a full-service brokerage to empower Canadians to buy or sell their homes faster, easier and more successfully. Home buyers can browse real estate listings on the website or the free Zoocasa iOS app.

For more information about this report, please contact [email protected].

About Penelope Graham

Penelope Graham is the Managing Editor at Zoocasa. A born-and-bred Torontonian and quintessential millennial, she has over a decade of experience covering real estate, lifestyle and personal finance topics. When not keeping an eye on Toronto's hot housing market, she can be found brunching in one of the city's many vibrant neighbourhoods. Find her on Twitter at @pjeg14.