Photo: Harshil Shah/Flickr
People hunting for affordable housing in areas near Vancouver may have to look elsewhere, as the cost of living in surrounding suburban municipalities has increased significantly from February 2016 to February 2017, suggests a new report by credit union Vancity.
Even though the city’s overall affordability worsened slightly over that time period, many of the neighbouring municipalities saw more dramatic declines in affordability.
“We’re noticing that those municipalities that used to kind of be a bastion for people’s affordability is no longer the case with affordability declining between 20 and 30 per cent in some of those municipalities,” Ryan McKinley, Vancity Senior Mortgage Development Manager tells BuzzBuzzNews.
Vancity’s report, published Tuesday, tracked the affordability of 30 municipalities in the Lower Mainland and Greater Victoria over a one-year period ending on February 28th, 2017. The study also observed affordability based on property type (detached, attached and apartment).
Vancity establishes a region’s affordability by using median household incomes and the median price for all property types to determine the gross debt service ratio (GDS). The GDS ratio is the percentage of a household’s gross monthly income required to cover housing costs, including mortgage payments, property taxes and maintenance.
Taking the top spot for least affordable city for all property types was West Vancouver with a median price tag of $2.8 million, which would require a whopping 192 per cent of the median household income to cover housing expenses.
Following West Vancouver was Lions Bay and the district of North Vancouver, with a GDS ratio of 97 and 93 per cent, respectively.
The Canada Mortgage and Housing Corporation (CMHC) recommends that no more than 32 per cent of household income should be used to cover housing costs.
With the median price of all properties sold in Metro Vancouver rising 9 per cent from February 2016 to February of this year, affordability in the region declined 3 per cent over the same period.
Over the past 12 months up to February 28th, 2017, the median cost of detached homes in Metro Vancouver soared 18 per cent to $988,000 — the greatest price increase out of all property types.
In July 2016, single-family homes in the region reached a staggering median price of $2.7 million — a cost that would require 182 per cent of the region’s median household income to purchase.
A month after this peak, the provincial government implemented a foreign-buyer tax for the region in an effort to cool the market.
Not only are detached properties becoming increasingly unaffordable in the region, all property types have a GDS ratio higher than CMHC’s suggested 32 per cent.
At the end of February 2017, attached homes had a median price of $1.1 million requiring 75 per cent of a median household income to cover housing expenses.
By comparison, apartments are the most affordable dwelling in the city with a median price of $550,000 and a GDS ratio of 37 per cent, but still overpriced for average families.
However, there is a glimmer of hope for homebuyers looking for relief in the region’s pricey housing market.
Ranking as the most affordable municipality overall was the City of Langley, with a median price of $271,250 and a GDS ratio of 18.4 per cent.
Interestingly, the Township of Langley, which is adjacent to the City of Langley, made the top 10 list of least affordable municipalities with a median price of $625,000 and a GDS ratio of 43 per cent.
McKinley attributes the price difference to the types of housing available in both areas.
“The city has a lot more attached and condo dwellings and the township has a lot more single-detached, so it really underlines how much that makes a difference in overall affordability,” says McKinley.
Following the City of Langley on the most affordable list were Sooke and Victoria with a GDS ratio of 24 and 26 per cent, respectively.
Out of all 30 municipalities tracked, only Richmond and White Rock each saw a one per cent increase in affordability, which could be linked to the type of new homes being developed.
“Those two municipalities have been putting more and more attached housing and condo housing online over the past while, the municipalities are getting more dense,” says McKinley.
“The more attached properties, the more condos, as opposed to single-detached homes there are, the more affordable the overall median price becomes,” McKinley adds.
In the Lower Mainland, attached homes become more affordable in Surrey, with affordability increasing going east through the Fraser Valley, says the report.
Homebuyers can find affordable apartments anywhere east of Boundary Road, which is the border between Vancouver and the rest of the region.
There are pockets of affordability in the Lower Mainland but McKinley says homebuyers may have to sacrifice square footage for neighbourhood.
“People may have to start reconsidering what they see as a home in their future and maybe start considering attached or condo properties in order to maintain a location that they find desirable,” says McKinley.