November 21, 2019
What You’d Need to Save to Buy a Home in Metro Vancouver on a Median Income
The Metro Vancouver housing market has long held the notorious distinction of being the priciest in Canada; steeply rising home prices and fears of speculative activity have prompted action from both the provincial and municipal governments in recent years, including a foreign buyers’ tax, empty-homes tax, as well as a levy on homes owned by those who do not pay income tax in the province.
And it would appear these measures have been somewhat effective; combined with the federally-implemented mortgage stress test, these taxes have chilled sales, price growth, and MLS listings in Vancouver over the last two years. While buyers are now starting to return to the Vancouver market, prices still remain below year-ago levels: according to the Real Estate Board of Greater Vancouver, the benchmark home price for all residential properties hit $992,900 in October, down -6.4% year over year. Detached houses now fetch a benchmark of $1,410,500, a decline of -7.5%, while apartments cost $652,500, down -5.9%.
How Affordable is Vancouver Real Estate for Median-Income Buyers?
However, despite improved affordability in the Vancouver market, has the property ladder become any more accessible to middle-class buyers? How feasible would it be for a household with the median income to afford the benchmark-priced home in their local municipality?
To find out, Zoocasa sourced benchmark home prices for both detached houses and apartments in 16 municipalities across Metro Vancouver. The study then calculated the maximum mortgage amount a median-income household in that city would qualify for if they were purchasing the benchmark home in their region. The study then calculated the remaining required down payment, as well as the timeline required to save those funds, assuming households put away 20% of their income each year.
Mortgage calculations were based on the federal mortgage stress test rate of 5.19% and a 25-year amortization, as well as carrying costs of 1% for property taxes, and $100 monthly for heating bills.
Buyers Would Save for Centuries for Detached House in Some Neighbourhoods
Based on the findings, there are no municipalities in which a median-income household could afford Metro Vancouver houses for sale without having to save for at least two decades for the necessary down payment. In fact, in the three priciest luxury neighbourhoods including Richmond, Vancouver West, and West Vancouver, where benchmark home prices range between $1.5 – $2.9 million, it would actually take more than 100 years to come up with the needed funds.
While this isn’t a realistic scenario for home buyers – those facing such a gap between their mortgage qualification and desired home purchase would instead seek out housing options better aligned with their incomes – the numbers reveal just how large the disparity is between median-income household affordability and home prices in some Metro Vancouver municipalities.
Even municipalities with comparatively more affordable detached house benchmark prices were far beyond reach for median-income earners; in Maple Ridge, North Delta, and Pitt Meadows, where benchmark house prices range between $804,200 – $881,900,
Vancouver Condo Apartments Still Accessible for Median-Income Earners
The good news is that there are still several municipalities that offer affordable entry-point housing for median-income earners; those looking to purchase Vancouver condos could hope to do so on a savings timeline of less than five years in North Delta, Maple Ridge, and Port Coquitlam, where the benchmark price ranges from $372,100 – $437,400.
However, those looking to purchase multi-family housing won’t find many entry-level options in the region’s most expensive markets; with benchmark prices between $648,967 – $1,048,800, it would take between 31 – 40 years to save a down payment large enough to purchase a unit in Burnaby, Vancouver West, and West Vancouver.
Top 3 Most Affordable Metro Vancouver Municipalities for Houses
1 – Maple Ridge
- Benchmark price: $804,200
- Median income: $86,178
- Maximum mortgage: $342,736
- Down payment required: $461,464
- Years to save: 26.8
2 – North Delta
- Benchmark price: $886,800
- Median income: $92,300
- Maximum mortgage: $364,700
- Down payment required: $522,100
- Years to save: 28.3
3 – Pitt Meadows
- Benchmark price: $881,900
- Median income: $86,912
- Maximum mortgage: $335,833
- Down payment required: $546,067
- Years to save: 31.4
Top 3 Least Affordable Metro Vancouver Municipalities for Houses
1 – Vancouver West
- Benchmark price: $2,912,000
- Median income: $65,327
- Maximum mortgage: $66,183
- Down payment required: $2,845,817
- Years to save: 217.8
2 – West Vancouver
- Benchmark price: $2,523,300
- Median income: $89,808
- Maximum mortgage: $120,854
- Down payment required: $2,402,446
- Years to save: 133.8
3– Richmond
- Benchmark price: $1,501,600
- Median income: $65,241
- Maximum mortgage: $129,786
- Down payment required: $1,371,814
- Years to save: 105.1
Top 3 Most Affordable Metro Vancouver Municipalities for Apartments
1 – North Delta
- Benchmark price: $372,100
- Median income: $92,300
- Maximum mortgage: $367,635
- Down payment required: $18,605
- Years to save: 1
2 – Maple Ridge
- Benchmark price: $350,400
- Median income: $86,178
- Maximum mortgage: $346,195
- Down payment required: $17,520
- Years to save: 1
3 – Port Coquitlam
- Benchmark price: $437,400
- Median income: $84,096
- Maximum mortgage: $382,200
- Down payment required: $65,610
- Years to save: 3.9
Top 3 Least Affordable Metro Vancouver Municipalities for Apartments
1 – West Vancouver
- Benchmark price: $1,048,800
- Median income: $89,808
- Maximum mortgage: $328,243
- Down payment required: $720,557
- Years to save: 40.1
2 – Vancouver West
- Benchmark price: $754,100
- Median income: $65,327
- Maximum mortgage: $235,404
- Down payment required: $518,696
- Years to save: 39.7
3 – Burnaby
- Benchmark price: $648,967
- Median income: $64,737
- Maximum mortgage: $246,955
- Down payment required: $402,012
- Years to save: 31
Methodology
Benchmark detached house and apartment prices were sourced from the Real Estate Board of Greater Vancouver and Fraser Valley Real Estate Board.
Median total household incomes were sourced from Statistics Canada.
The maximum mortgage affordability is based on buying at the benchmark price on a median income, the mortgage “stress test” rate of 5.19%, a 25-year amortization, and carrying costs of 1% in property taxes and $100/month for heating.
About Zoocasa
Zoocasa is a full-service brokerage that offers advanced online search tools to empower Canadians with the data and expertise they need to make more successful real estate decisions. View real estate listings at zoocasa.com or download our free iOS app.
For more information about this report or to set up a media interview, please email [email protected]