It’s no secret that Vancouver is an expensive place to put down roots, particularly when it comes to home ownership in the city.
Now, a new report from RBC highlights not only how expensive it is to buy a home, but how much it now costs to manage a home once purchased.
In the report, RBC said its Housing Affordability Measures show the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes, and utilities based on the average market price for single-family detached homes and condo apartments.
According to the report, which looked at housing affordability measures, managing the costs associated with home ownership in Vancouver now accounts for 88% of median household income.
And while RBC said higher interest rates deteriorated affordability in all markets across Canada, the situation was particularly dire in Vancouver – already Canada’s most expensive housing market – thanks to “a re-acceleration of home prices in the past three quarters, which amplified the effect.”
It was factors like this, said RBC, that returned affordability to a sharply deteriorating track after a short period of reprieve in late-2016 and early-2017.
In fact, the situation is now extreme enough to be considered what RBC said is a “crisis” level.
“It’s increasingly hard to dismiss concerns that housing unaffordability is at crisis levels in Vancouver,” said RBC.
The bank said its aggregate measure for the area last quarter set “yet another” all-time high for any market in Canada.
And things could get worse if — or when — interest rates rise further.
Noting that home resale activity “plunged” by 25% in the first quarter of this year, RBC offered a blunt view on the situation.
“Clearly, current price levels are an impossibly high hurdle for many would-be buyers to clear,” it said in the report.
So is there any hope to be had in all of this?
Well, kind of.
The recent cooling in the market may take (upward) pressure off prices in the coming months,” said RBC.
But don’t get too excited yet.
“This is unlikely to do much to ease affordability tensions,” the report added.