Income required to buy average home in Vancouver jumps $25,000 in eight months

The family income required to buy the average home in Vancouver rose by more than $25,000 during an eight-month stretch in 2023.

That’s according to new calculations by Ratehub.ca, which took the average home price in several major Canadian cities and looked at mortgage rate stress test requirements to establish the minimum yearly income needed to qualify with a 20% downpayment.

Ratehub estimates a yearly household income of $246,900 is now required to secure a mortgage for the average home in Vancouver.

That’s up from the $221,580 income from Ratehub’s March 2023 calculations — a $25,000 difference.

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Needless to say, the income requirement to buy the average home is increasing far faster than anyone’s salary is rising in the equivalent timeframe.

Part of the income requirement increase is due to home prices edging up in the region since spring, with the average home costing 3.5% more than it did in March, according to Ratehub. For November 2023, it pegs the average home at just under $1.2 million.

Interest rate hikes and harder stress tests are adding to the income requirement, too. The Bank of Canada hiked its key rate throughout 2022 and into 2023, making it much more expensive to borrow money for a mortgage than it was just a few years ago.

What’s more, prospective buyers must pass a stress test where they prove they can still make payments even if interest rates continue to increase. Now, they have to qualify at 8.5% interest for a mortgage with a 6.5% interest rate.

Home prices are softening in parts of Canada, but the cost of buying them is more expensive than ever thanks to these higher rates.

It’s not all bad news, though. The income required to buy the average Vancouver home actually decreased slightly from October to November 2023 — by $1,666.

But it’s still far more than what the average Vancouver family makes. According to the Canada Mortgage and Housing Corporation, the average family income in Vancouver is $96,423. The median is $73,000.

So to qualify to buy the average home in Vancouver, you’d need to make two and a half times what the average family makes. No wonder home ownership feels so out of reach for so many people.