Owning a home now costs 87 percent of middle-class incomes in Metro Vancouver

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      Middle class people in Metro Vancouver are reportedly spending way above half of their incomes on their homes.

      A new report by the Chartered Professional Accountants of B.C. (CPABC) says that households earning in the range of the median income are spending at least 87 percent of their incomes on housing.

      “The affordability indicator for Metro Vancouver spiked by 14.5 percentage points (ppt) in 2016 to an annual average of 87.1%, even with the implementation of a foreign buyers tax,” CPABC stated in its annual economic report released Thursday (September 28).

      “Consequently, for households that earn around the median pre-tax income in Metro Vancouver, 87.1% of their earnings would be spent on the cost of housing,” the organization continued in its B.C. Check-up report.

      The association also noted that housing prices in Vancouver as well as Victoria “continued to skyrocket, which had a negative impact on home affordability and fueled rising consumer debt per capita”.

      “As a result, it appears that BC worsened as a place to live,” CPABC wrote in the report.

      In addition, the association noted, “Buying a home in Metro Vancouver or Victoria is becoming an impossibility for many.”

      In a media release, Lori Mathison with the CPABC stated that the “deterioration of housing affordability in southern B.C. is discouraging potential homebuyers”.

      “With the average worker earning less than $55,000 a year, it is difficult for individuals to become homeowners and maintain a decent lifestyle,” Mathison explained. “While measures have been taken to cool the real estate market over the past year, we are still seeing a steady increase in real estate demand and prices. This will further impact southern B.C.’s livability.”

      Based on Statistics Canada figures, the median income in B.C. in 2015 was $79,750.

      In August this year, the price of a typical home in Metro Vancouver was $1,029,700.

      According to the Real Estate Board of Greater Vancouver, the August price represents a 9.4 percent increase over the same month in 2016, and a one percent increase compared to July 2017.

      In the media release, CPABC also noted increasing consumer debt, which includes housing loans.

      “Mortgage loans comprise approximately three-quarters of consumer borrowing in B.C.,” the association stated. “With climbing mortgage loans, overall consumer debt per capita in B.C. also increased by 5.0 percent to $62,395 in 2016, the highest level in Canada.”

      Mathison with CPABC warned that British Columbians are “vulnerable to sudden changes in their income”.

      Mathison stated in the release, “Should interest rates go up or our economy see a reversal of fortunes, it will likely lead to an increase in the number of defaults and consumer insolvencies.”