For Sale sign (Canadian Press files)

Want to buy your first home? Move to Kamloops or Prince George

Kamloops, Prince George, Campbell River and Langford are the only other markets in the study without gaps between required and actual income in owning a home.

A new housing affordability study is painting a grim picture for the majority of B.C. residents, where just four markets remain in reach compared to the average income.

Those four markets are Prince George, Kamloops, Campbell River and Langford, which are the only four places within the province with a positive gap between the salary required to purchase an average home and actual household incomes.

The Vancouver real estate market takes the obvious spot at the other end of the spectrum, holding top spot for the least affordable city in B.C. There, local median annual earnings clock in at $65,327, a whopping $97,866 short of affording the average home priced at $1,196,350.

That’s according to a new study of 20 B.C. Markets that was put together by real-estate search and data website Zoocasa, which revealed wide income gaps in the majority of B.C. housing markets.

This means, buyers do not earn enough to afford the average home in a total of 16 markets across the province.

The findings are based on a summary of October 2018 benchmark and average home prices, the income required to afford the homes and regional median incomes as reported by Statistics Canada.

A lack of affordability across the province comes as no surprise as B.C. is home to the nation’s priciest market – Vancouver. Measures to improve supply, cool speculative price growth and improve purchasing power are currently a priority among policymakers.

In fact, according to Zoocasa, 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, decreasing 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.

Much of this slowdown is being attributed to the federal mortgage stress test implemented in January, which requires mortgage borrowers to qualify at a rate roughly two 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.

This is also exacerbated further by a sharp misalignment between home prices and what British Columbians actually earn.

This gap becomes even more acute when the current stress test qualification rate of 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 just two – Prince George and Kamloops.

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

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

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@carmenweld
carmen.weld@bpdigital.ca

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