Photo: Mohammadali F./Flickr
Home prices were on the decline all year in the Vancouver market and housing is now at its most affordable level since 2015. You won’t find many average Vancouver house hunters celebrating though.
In a recent report, RBC said that while affordability “continued to brighten” for buyers in the Vancouver area, owning a home is “still way out of reach for the average local buyer.”
RBC Senior Economist Robert Hogue wrote that the bank’s quarterly affordability measure fell to 77.3 percent for 2019’s third quarter, down two percentage points since the previous reading and the lowest reading since late 2015.
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The bank tracks housing markets across Canada and releases a quarterly assessment of their affordability based on a calculation that looks at average home ownership costs as a percentage of the median household income in each city. A reading of 77.3 percent means the average cost of homeownership is equal to 77.3 percent of the median household income for the Vancouver region.
Looking at 34 years of historical data, the long-term average of the RBC affordability measure for Vancouver is about 60 percent. However, the measure has not sunk this low since the global financial crisis more than a decade ago. It peaked well above 80 percent through 2017 and early 2018 before steadily declining to its current level.
Vancouver has held the unenviable distinction of “Canada’s most unaffordable market” for years and even this recent gradual decline in property prices hasn’t affected the market’s stranglehold on this title.
The new year has not brought with it any encouraging signs that more substantial affordability relief is on the horizon for average homebuyers in the region. In fact, it’s brought the opposite.
“[U]nfortunately for [homebuyers], odds are the market won’t get much more affordable in the period ahead. A strong rebound in activity since spring will soon put prices on an upward trajectory,” wrote RBC’s Hogue.
As the year drew to a close, signs have indeed already emerged that the home price decline trend is beginning to reverse. In a news release earlier this month, Real Estate Board of Greater Vancouver President Ashley Smith noted that homebuyer confidence began returning to the market through the summer and spiked through the fall, leading to above average home sales in the region.
And now with sales rebounding, prices are beginning to follow suit. According to the latest data, prices for all major housing types tracked by REBGV (detached, condo apartment and attached) increased in December over the previous month.