RBC just release a report on housing affordability in canada. There’s a story in the Globe and Mail:
“In the third quarter, â€œAlberta and British Columbia had the sharpest erosions in affordability, driven largely by double-digit annual price gains,â€ the Royal Bank division said Tuesday. â€œHowever, Alberta’s soaring price gains still leave the province below past affordability stress points.â€
Housing in Calgary and Edmonton remains more affordable than in Toronto, Montreal and Vancouver, relative to incomes.
â€œVancouver, however, is entering uncharted waters as it sets new records for poor housing affordability in two out of four classes, and the other two will likely do so later this year,â€ the report says.”
See? Vancouver is number one in lack of housing affordability with a record-setting level of unaffordability. I’m sure that comes as a big suprise to everyone here.
“The RBC Affordability Index measures the proportion of pre-tax household income needed to service the costs of owning a home.
The higher the index, the more costly it is to afford a home. For example, an Affordability Index of 50 per cent means that homeownership costs, including mortgage payments, utilities and property taxes, take up 50 per cent of a typical household’s monthly pre-tax income.
The most affordable housing class remains the standard condo, with an index of 27.5 per cent.
A standard townhouse is next at 31.4 per cent, followed by a detached bungalow at 39.4 per cent. A standard two-storey home is still the least affordable housing type in the country with an index reading of 44.8 per cent.”
So those numbers are for all of canada, what do the numbers look like for affordability in just the west, specifically in Vancouver? Ah, here we are:
“RBC Affordability Index for a detached bungalow for Canada’s largest cities is as follows: Vancouver 68.2 per cent, Toronto 43.9 per cent, Montreal 36 per cent, Calgary 34.6 per cent and Ottawa 30.3 per cent.”
68.2 percent of the average pre-tax income.. I wonder why they use pre-tax income? It’s not like you can write off your mortgage here like you can in the states.