No kidding, Kelowna is ridiculously unaffordable
Elton Ash doesn’t mince his words when describing this crisis.
“Living in Kelowna is prohibitive,” said the Kelowna-based executive vice president of ReMax Western Canada.
“And bad government policy doesn’t make it any better.”
This week, ReMax, the world’s best-known real estate brand, released its Housing Affordability Report for Canada.
Vancouver is Canada’s most priceless housing market, followed by three cities in second place – Kelowna, Victoria and Toronto.
This three bedroom, three bathroom semi-duplex in the Lakeview Heights neighborhood of West Kelowna is for sale for $ 659,000, which is close to the Kelowna average retail price of $ 671,700. “Class =” img-responsive “src = “https: // www.kelownanow.com/files/files/images/townhouse(3).JPG” style = “margin: 5px;” />
All of this is relative, of course.
People who have owned their homes for years love high prices because their home is now worth a lot more, and so is its net worth.
The report is based on the affordability or prohibitiveness of what percentage of monthly household income is required to meet monthly mortgage payments.
In Kelowna’s case, that’s 47%.
Above 33%, you are considered “house poverty”, the term for people who own a house but are financially troubled due to excessive payments in relation to their income.
It also means that after paying for the necessary groceries, clothing, shelter, transportation, insurance, and taxes, there is little cash left for fun.
Victoria and Toronto are also at 47%.
The only city higher is Vancouver at 50%, where the average house price is $ 1.2 million and the median household income is $ 99,475.
Mississauga and Brampton come in second with 46% and 42% respectively.
In the middle are Windsor with 24%, London, Ontario with 28% and Oshawa with 29%.
The cheapest in the country are St. John’s, Newfoundland at 11% (where the median house price is $ 308,000 and the median household income is $ 116,000), Regina at 12%, and Winnipeg at 13%.
The formula for calculating the percentage is complicated.
In the Kelowna case, it’s based on the average retail price of $ 671,700 and an average household income of $ 79,428.
That equates to a household income of $ 6,619 per month, of which $ 3,125, or 47%, is required to pay the monthly mortgage.
The calculation assumes that the total mortgage is $ 537,630 (the cost of $ 671,700 minus a 20% down payment of $ 134,340) funded at 5% interest over a five year term and amortized over 25 years.
This was the methodology for the report.
People can potentially reduce the financial burden by paying only 5% less (if you’re a first-time buyer), getting a lower mortgage rate for a shorter term, and opting for a 30 year payback.
According to the report, what makes living space unaffordable for people are wage deficits (26%), fear of rising interest rates (18%), fear of “house poverty” (16%), personal debt is already too high (11%) and the Failed mortgage stress test (11%).
To get into their home, a third of Canadians are willing to be creative, especially younger and first-time buyers.
For example, 21% are willing to rent part of their apartment, be it a basement suite or bedroom, 13% are considering pooling money with family or friends to buy a house, and 7% are open to some type of cooperative or shared apartment with a like-minded stranger.
“What this tells me is that the desire to own a home in Canada is great and Canadians are making it happen,” said Ash.
“Given some of the unaffordable challenges, Canada has the highest home ownership rate in the developed world at 70%.”
Ash said the City of Kelowna did a good job trying to make housing more affordable by providing incentives for developers to build rental apartments and rededicate apartment blocks and four-plexes in the city center.
However, he said the provincial and federal governments need to do more and Canada needs a national housing policy.
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