A typical Vancouver household would have to allocate up to 92.5% of its pre-tax income for mortgage payments and other home ownership costs to afford a market-priced detached bungalow, according to an RBC Economics report released this morning.
The Housing Trends and Affordability report released this morning found that escalating housing prices in Vancouver further eroded the city’s already-low affordability in the second quarter of the year.
“I would characterize it, generally speaking, as pretty much the worst affordability levels that Vancouver has seen since our measures started in the mid-1980s,” said Robert Hogue, a senior economist at RBC.
The report found that the Greater Vancouver Area experienced the sharpest deterioration in affordability among Canada’s major cities in the second quarter. For detached bungalows, affordability decreased by 10.4 percentage points.
Hogue noted that RBC is predicting a downward correction.
“The fact that prices are increasing is not surprising – it’s the magnitude of the rise in Vancouver that does not seem to be supported by other market fundamentals,” he said, noting that home resales have been falling since winter.
“We would expect some partial reversal of the increases that we saw at the start of this year. They are not sustainable in our opinion.”
Jenny Wagler
Twitter: JennyWagler_BIV