You may already know the astronomically high prices of Vancouver homes, but just how much does one need to earn to realistically afford one?
Well the Vancouver housing affordability has been looked at once again by the National Bank of Canada, and the new report looks at the market across the entire country.
On average, it shows that prices across Canada have gone up this year alone. Vancouver housing sits at the top of the list, making it again the least affordable city in Canada.
A Look At Vancouver Housing Affordability
An annual household income of $253,000 is needed to afford an average house that is worth at least $1.47 million.
However, higher prices means that a higher down payment will be needed. Therefore, to afford a down payment of more than a quarter million would take a considerable amount of time to accumulate. To afford just the down payment it would take 411 months (34.3 years) of savings with a saving rate of 10%.
If you are looking at condominium homes, there is more affordability compared to single dwelling homes. However, you are still needing a handsome down payment of at least $132,000.
Over the past year home prices increased by 5.8%, including 6.5% for single-family dwelling houses and townhouses, and 2.8% for condominiums.
Beyond The Down Payment
Even with a hefty down payment, handling the mortgage payment means it taking up a large portion of the homeowner’s incomes.
This would be about 84.7% of the pay cheque (up 5.4% from the previous quarter) for single-family dwelling houses and townhouses, and 37.7% for condominiums (up 1.6% from the previous quarter).
Compare that to the national rate of 45% for how much of your incomes goes to a a typical mortgage payment.
The report does indicate that even though income growth used to improve affordability in the past, that is simply no longer true in 2021. The price of homes and mortgage rates are outpacing income growth for most people.
Although it’s not surprising that Vancouver is still the most expensive city to live in, in Canada, you may be surprised to learn that affordability had actually gone up since last year.
However, with recent changes in the market, who knows what will happen in the near future. You can see the full report here.
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