Michael Kane
Sun
CREDIT: Steve Bosch, Vancouver Sun Buyer Leanne Harry outside soon-to-be-completed building that will contain her $220,000, 536-square-foot condo.
Housing affordability in British Columbia has reached its worst level since 1995 with no relief in sight, the Royal Bank says.
With prices rising faster than wages, it now takes 53.7 per cent of the median or mid-range pre-tax family income to service the costs of owning a detached bungalow. A standard two-storey home is even higher, taking a full 61.3 per cent of pre-tax family income.
At an average price of $403,000, such two-storey homes are out of reach of many British Columbians with incomes near the $45,000 median, according to the bank’s latest affordability study released Thursday.
“B.C.’s economy is booming and more and more people are being drawn to B.C.’s revival,” said RBC economist Allan Seychuk.
“We expect the province’s affordability to further deteriorate going forward as interest rates creep up and limited availability of land remains a problem.”
In Vancouver, where average prices have jumped by about $25,000 in the past six months, the cost of the average two-storey home has risen to $471,000 while bungalows are $427,000 and townhouses are $325,000.
That leaves condominiums as the only option for first-time buyers like Leanne Harry, 34, who will be slapping down her deposit today on a 536 sq. ft. one-bedroom condo under construction at East 11th and Kingsway.
Harry, who is single, is spending about $220,000 in a market where the average condo cost only $215,000 in the first quarter, despite a $75,000 price increase in the past three years. That’s less than half the cost of a detached home and only two-thirds the price of standard townhouse.
Excluding maintenance fees, the Royal says an average Vancouver condo absorbs just 29 per cent of median monthly income compared to 42.7 per cent for a standard townhouse, 56.2 per cent for a detached bungalow and 62.1 per cent for a standard two-storey house in the city.
Harry, who spent nearly five years saving her 10-per-cent down payment, says about half of her friends are in the housing market, and some will be moving into her new building.
“The other half just simply can’t afford it. I don’t even know if it is on their radar.”
Despite the country’s highest prices and worst affordability, there is no let-up in demand for homes in the Greater Vancouver region, thanks largely to continuing low mortgage rates, said Kevin Lutz, regional manager of the Royal’s mortgage specialists.
“The market this year is stronger than last year at this point in time,” he said. “The number of mortgages that we are doing has increased.”
Like last spring, the supply of homes is in decline, pushing up prices. In the first quarter, sales rose by 11.5 per cent while new listings went up by less than one per cent, pulling Vancouver sharply back into a seller’s market from balance last year.
The Royal’s study says B.C.’s elevated prices for bungalows and two-storey homes raise the Canadian averages enough that all remaining provinces have indexes below the national average.
Affordability for a detached bungalow in Canada’s other largest cities comes in at 42.8 per cent in Toronto, 34.8 per cent in Montreal, 32.5 per cent in Calgary, and 32.1 per cent in Ottawa.
MEANWHILE, IT GETS HARDER TO AFFORD A HOME:
Vancouver‘s unaffordability is so severe that it has skewed national numbers, as prices in the city have jumped by about $25,000 during the past six months. Below is the median percentage of pre-tax income needed to buy a detached bungalow in each city: