SOURCE: Vancity Credit Union

Vancity Credit Union

June 06, 2017 08:00 ET

Report: Growing unaffordability hits suburbs hardest

COAST SALISH TERRITORY/VANCOUVER, BC--(Marketwired - June 06, 2017) - A new report by Vancity has found that over the past year, housing affordability in most municipalities in the Lower Mainland and Greater Victoria has gotten worse, decreasing in some by as much as 38 per cent.

The report, Home Stretch: Comparing housing affordability in B.C.'s hottest markets, tracks the affordability of 30 municipalities over a one-year period ending on February 28, 2017.

The areas most affected by a drop in affordability were suburban municipalities outside of Vancouver where buyers have traditionally looked for more affordable housing options. While the overall affordability of residential properties sold in Vancouver worsened by just three per cent for the year ended February 28, 2017, affordability dropped by:

  • 38 per cent in North Vancouver District
  • 31 per cent in Delta
  • 29 per cent in Langley Township
  • 24 per cent in Mission
  • 23 per cent in Abbotsford and Maple Ridge and
  • 17 per cent in Sidney.

Only two of the 30 municipalities -- Richmond and White Rock -- saw affordability improve over the same period, increasing by one per cent overall.

The affordability of each municipality is calculated using overall median housing prices and median incomes (the report also calculates affordability according to housing type).

The widespread decrease in affordability came despite a cooling of sales in the Metro Vancouver market in the latter half of 2016 following the introduction of a 15-per-cent property transfer tax on foreign nationals' purchases of residential real estate within Metro Vancouver.

The report shows this cooling was seen most at the top end of the market, where the average number of properties in Metro Vancouver that sold each month for $4 million or more (mostly detached homes) decreased by 68 per cent in the eight months following the introduction of the new tax. At the market's lower end, the number of units that sold for less than $500,000 (most often condo apartments) declined by 38 per cent.

The numbers in this report identify trends that were happening even before the onset of this spring's home buying season. Unlike monthly real estate metrics, the report uses comprehensive data available from Landcor Data Corp. based on actual sales of new and resale properties, year over year. Processing this data, which is based on the transfer of land titles, takes about two months to complete and provides the most accurate picture of house price trends.

The report also found some pockets of affordability throughout the region, especially for those seeking to purchase an attached home or condo apartment.

At the end of February 2017, the two most affordable municipalities to purchase a condo apartment were Chilliwack at $174,500 with a 12.6% gross debt service ratio (GDS*), and Sooke, where the median price was $219,000 (13.1% GDS). Sooke was also the most affordable place to purchase an attached property at $321,500 (19.2% GDS), followed by Mission at $315,000 (23.1% GDS).

Using the median household income for their region** compared to the median price of all property types (detached, attached and condo apartments), here are the 10 most- and least-affordable municipalities overall for the year ended February 28, 2017, ranked by GDS ratio.

Most affordable  ***Median price  GDS  Least affordable  ***Median price  GDS
1. Langley (City)  $271,250  18.4%  1. West Vancouver  $2,821,500  191.8%
2. Sooke  $405,000  24.2%  2. Lions Bay  $1,425,000  96.9%
3. Victoria  $429,950  25.7%  3. North Vancouver (District)  $1,360,000  92.5%
4. Esquimalt  $449,450  26.9%  4. Oak Bay  $1,045,000  62.5%
5. Chilliwack  $385,000  27.9%  5. Delta  $855,000  58.1%
6. New Westminster  $430,250  29.3%  6. Bowen Island  $780,000  53.0%
7. Sidney  $495,000  29.6%  7. Vancouver  $715,000  48.6%
8. Pitt Meadows  $450,000  30.6%  8. North Saanich  $800,000  47.9%
9. Port Coquitlam  $470,950  32.0%  9. Squamish  $535,000  42.8%
10. Abbotsford  $472,870  34.6%  10. Langley (Township)  $625,000  42.5%

*Gross debt service ratio (GDS) is the percentage of a household's gross monthly income required to cover mortgage costs, property taxes and maintenance (such as strata fees and heating).
** Median household incomes for Vancouver, Victoria, Abbotsford-Mission and Chilliwack CMAs were used.
***Based on all sales for the 12 months ending February 28, 2017, using real estate data from Landcor Data Corp.

"Buyers looking for affordable housing options used to be able to look to municipalities around Vancouver to find affordable options. While pockets of affordability still exist, they are disappearing as prices in the Fraser Valley and other parts of B.C. continue to rise." - Ryan McKinley, Vancity's senior mortgage development manager

Additional information
Backgrounder: Vancity's investment in affordable housing

About Vancity
Vancity is a values-based financial co-operative serving the needs of its more than 523,000 member-owners and their communities in the Coast Salish and Kwakwaka'wakw territories, with 59 branches in Metro Vancouver, the Fraser Valley, Victoria, Squamish and Alert Bay. With $25.6 billion in assets plus assets under administration, Vancity is Canada's largest community credit union. Vancity uses its assets to help improve the financial well-being of its members while at the same time helping to develop healthy communities that are socially, economically and environmentally sustainable.

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