Has housing affordability improved in Vancouver?
The fourth quarter of 2013 saw a slight improvement in housing affordability in Metro Vancouver, once again due to slight drops in interest rates at some banks, statistical analysis provided to The Vancouver Sun shows.
During the whole of 2013, affordability has become slightly worse for single family houses, particularly in the city of Vancouver and its inner suburbs. In the outer suburbs, affordability levels for all types of housing have remained consistent for the year.
“The numbers are showing that we’re not seeing huge swings up and down, we’re not seeing a bubble and a burst. It’s very stable,” said Anne McMullin, president and CEO of the Urban Development Institute. “Developers are coming up with creative ways to make their homes affordable to people who may not necessarily be able to get into the market.”
She said developers are responding to the stable market with innovative projects, such as a new project by Adera, known as “mingles,” which are condominiums designed for people who want to share a mortgage, but not a bathroom or a bedroom. The first of these projects, called Prodigy, will be launched this spring at the University of B.C.’s Wesbrook Village.
Construction will start this summer on BosaSPACE, homes that adapt with movable furniture built into the suite. For example, some homes have a floating TV panel that slides out of the way to open up a guest bed area, or a kitchen island that slides out to become a desk or a dining room table.
“I think we will see more and more innovation that allows people to live in a smaller place, with all of the amenities of a larger space,” McMullin said. “The designs are starting to change to address the issue of affordability.”
The other change that McMullin noted is the transformation of shopping malls from stores surrounded with large concrete parking lots into gathering places that include shopping, public spaces, restaurants, housing, office space and access to public transit.
New concrete condominiums in Vancouver are slightly more affordable than they were last year, due to an increase in the number of concrete condominiums available for sale, the data shows.
At the same time, new condominiums in the inner suburbs are slightly less affordable than they were a year ago.
Many of the major banks have dropped their best five-year fixed rates down to 3.69 per cent — the average five-year, fixed-rate interest rate from the largest banks for the purposes of this index is now at 3.67 per cent, down from last quarter’s 3.79 per cent.
The data also shows that new home prices have remained relatively steady across the board, while both concrete and wood-frame condominium prices are down slightly for all areas, while townhouse and resale single family home prices increased slightly throughout the region.
The index defines “affordable” as the percentage of households living in a region with the income required to qualify for the mortgage needed to own the property. Typically, a bank wants to see no more than 32 per cent of income going to housing if it is to provide a mortgage.
In Vancouver’s suburbs, more than half of the population can afford to buy either a house, a townhouse or a condo and stay in the same community, the UDI/FortisBC Housing Affordability Index for the fourth quarter of 2013 shows.
The UDI/FortisBC Housing Affordability Index breaks Metro Vancouver into three areas: the city of Vancouver, Inner Metro (West Vancouver, North Vancouver, Burnaby, New Westminster, Richmond, South Delta, Coquitlam, Port Moody, Port Coquitlam) and Outer Metro (Surrey, Langley, North Delta, White Rock, Pitt Meadows and Maple Ridge).
In Vancouver proper, the minimum annual income required to purchase a new unit is $68,636 for a wood-frame condominium. For a single-family home, the minimum required annual income is $163,867.
For resale properties, the numbers are a bit more encouraging: the minimum required income for a resale property is $50,078, which would qualify a buyer for a wood-frame condo.
In Inner Metro, the minimum income required to buy a re-sale wood-frame condo is $37,716, while it is $108,130 for a single family home in the same area.
In Outer Metro, the minimum income required to buy a resale townhouse is just $28,263, while a family earning $64,655 could afford to purchase a detached home.
Source: Tracy Sherlock, Vancouver Sun
