It just keeps getting harder and harder to afford a home. That’s the bleak outlook from National Bank Financial’s most recent housing affordability report released on Thursday.
According to the report, housing affordability decreased in the fourth quarter of 2018, for the 14th consecutive quarter. A non-condo mortgage payment in Toronto now represents 76% of someone’s income. In Vancouver? 101.5%.
That number is difficult to fathom. “In this city, our measure for the non-condo segment have crossed the psychological threshold of 100% as it would now require 101.5% of pre-tax median household income to pay for a representative home,” the report reads.
The average non-condo home price in Vancouver costs $1,318,768. Assuming a savings rate of 10%, the report says it would take a household income of $242,096 to make the mortgage payments on a house at that price and 415 months to save up enough for the down payment.
Four hundred and fifteen months to save for a down payment. That’s 34-and-a-half years.
In Toronto, where the average home price is $902,916, it would take homebuyers 111.9 months — or around nine years — to save up the down payment. Following Toronto is Victoria, where the average home costs $850,469, and would take someone 10 years to save up for a down payment.
Hamilton comes in behind Victoria, at an average home price of $598,274, which would take someone four years to save up the down payment.
Hamilton home prices have seen their own surge in the past five years, as people fleeing the high cost of living in the GTA are flocking to the city and driving up home prices by as much as 70%, according to the Canadian Real Estate Association.
Vancouver is no doubt the sore thumb sticking out among all the major cities across the country when it comes to housing affordability. It’s now replaced Sydney, Australia, as the second-least affordable city in the world, according to the 15th annual Demographia International Housing Affordability Survey.
And it has some dirty laundry, too. The city has been under heat recently as a covert police study found that more than $1 billion was laundered through Vancouver real estate in 2016, which is part of the reason behind the outrageous surge in the city’s home prices over the past few years.
In September 2018, the B.C. government unveiled plans to launch a review into how provincial and municipal loopholes made that possible.
The National Bank study found that the worst deteriorations in affordability in the fourth quarter of 2018 were in Victoria (+4.0 basis points), Toronto (+3.0 points) and Vancouver (+2.2 points).
The only markets that showed any improvement were Calgary (−0.3 points) and Edmonton (-0.1 points), two cities that have been mired in an economic downturn due to the low price of Canadian oil.