Vancouver housing is now so expensive that only households with incomes in the top 1 percent can afford a detached home in the city
Josh Sherman
Livabl
Vancouver housing is now so expensive that only households with incomes in the top 1 percent can afford a detached home in the city.
So suggests a new study by RateSupermarket.ca.
According to the study, a household needs to earn $240,000 annually just to afford a benchmark, or typical, detached house in the city.
And that’s after the housing correction has shaved about $140,000 off the benchmark detached home price in 12 months.
In April, the benchmark price of a detached house was about $1.4 million, so you can imagine how strained affordability was before prices collapsed.
RateSupermarket makes a number of assumptions to come to its conclusions.
The rate-comparison site assumes debts of $10,000, a $300 monthly payment for a car lease, an amortization period of 25 years and a five-year fixed-rate mortgage with an interest rate of 3.25 percent.
“From there, we plugged in Gross Household Income in $10,000 increments until we could afford the benchmark house price in each city,” reads a RateSupermarket blog post detailing the findings.
In Canada, the 99th percentile — so, the top 1 percent — of household incomes is $200,000 and up, according to the 2016 Canadian Census.
The study, which RateSupermarket acknowledges is just a “rough guide,” suggests that Vancouver houses are out of reach for all but the highest earners in the country — but what about condos?
Well, prospects are much brighter.
At a benchmark price of $656,900, condos are affordable for the 25th percentile of earners, meaning a considerably more modest income of $45,000 is enough.
That’s actually below the average Canadian individual income of $46,700, according to Statistics Canada.
And if current price trends continue, Vancouver area condos are only going to get more affordable.
The benchmark condo price in April was flat compared to March and down 6.9 percent from a year before, according to the Real Estate Board of Greater Vancouver.
That should be welcome news for homebuyers, at least.
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