Homeowners in Vancouver are putting almost all of their income into paying down their mortgage – and the affordability crisis isn’t much better outside the major B.C. city – a new housing report suggests.
The Royal Bank of Canada analyzed data and found that Victoria homeowners spend seven of every 10 dollars towards supporting their mortgage.
The report notes that the Bank of Canada’s decision to fight inflation with higher interest rates has made B.C.’s already expensive housing market even more unaffordable, with B.C. and Ontario leading the country.
The report shows that homeowners in Vancouver needed almost 96 per cent of median household incomes before taxes to cover the cost of their mortgages in the fall of 2022. This included principal and interest, property taxes and utilities at current market prices.
That figure makes Vancouver Canada’s least affordable city and probably one of the most expensive cities anywhere in the world, the report says.
Anyone willing wanted to buy a typical home in Vancouver must earn at least $268,000 annually to qualify for a mortgage in Vancouver in the third quarter of 2022 — an increase of 34 per cent from the same time a year prior.
Victoria’s unaffordability has also hit a new high, or low, depending on your perspective. Homeowners in the provincial capital needed almost 72 per cent of their household incomes to cover the costs of homeownership, a record high and almost 10 points above the Canadian average of 62. In Victoria, buyers need at least $216,000 to qualify for mortgages.
Higher interest rates have discouraged potential buyers and real estate sales have cratered in many communities. In B.C., home resales dropped 43 per cent and RBC forecasters predict that dropping prices will eventually make homes more affordable.
“Still, headwinds will remain stiff in the near term,” the report reads. “Affordability issues aren’t likely to reverse quickly.”
B.C. Liberals pounced on the report.
Karin Kirkpatrick, shadow minister for housing and MLA for West Vancouver-Capilano, said the report clearly shows that affordability in B.C. is only getting worse, despite promises from the province.
“People should not need to earn $268,000 a year to afford a good home, but this is the new reality under David Eby’s NDP,” she said.
“With their inability to truly address the housing crisis, this NDP government has effectively ended the dream of homeownership for an entire generation.”
A statement from the housing ministry to Black Press Media points to a part of the RBC report blaming the Bank of Canada for making it “a lot harder to buy’? homes while acknowledging the issue.”
“The escalating cost of housing in our province and across the country continues to be concerning and our government is focused on this challenge,” the statement reads, adding that it will “take a period of sustained action” by all levels of government to ensure everyone has access to a home they can afford to rent or buy.
“We are making the largest investment in housing supply in B.C.’s history – $7 billion over 10 years – and working with partners to deliver 114,000 affordable homes. More than 36,000 homes are already completed or underway throughout the province.”
Critics say these goals are not ambitious enough and that the government is falling short of them anyway.
2022 also saw a record 51,000 new home registrations, including over 14,000 purpose-built rental homes – the most since BC Housing started collecting figures in 2002, the province noted.
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