[溫哥華本地新聞] What can you afford? New housing affordability index index, affordable, provides, specific, housing

tiffiant

Headlines regularly tell people that Vancouver is among the least affordable cities in the world. But often they don’t tell the full story — that while the city of Vancouver is a pricey place to be a homeowner, the suburbs still have home prices that are affordable to most families.
Today, The Vancouver Sun introduces the UDI/FortisBC Housing Affordability Index, a new way to look at housing prices that provides a clearer, more specific picture of affordability across Metro Vancouver. The index was developed by a partnership of The Sun, the Urban Development Institute and Urban Analytics Inc. over the past three months.
Anne McMullin, president and CEO of the Urban Development Institute, said she thinks it may dispel some of the “myths and hysteria” that are sometimes heard about housing.
“It gived us a different read and drills down a bit more to have a better understanding of what affordability is really like in the region,” said McMullin. “There’s no doubt that there are issues of affordability in certain areas. But I think, as a region, the numbers aren’t bad.”
The UDI/FortisBC Housing Affordability Index will be reported by The Vancouver Sun every quarter.
“This is the first one. It will be interesting to see how it goes every quarter and to compare on an annual basis,” said McMullin, whose non-profit institute represents B.C. residential, commercial, industrial and institutional developers.
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, Delta, Coquitlam, Port Moody, Port Coquitlam) and Outer Metro (Surrey, Langley, North Delta, White Rock, Pitt Meadows and Maple Ridge). Urban Analytics calculated the numbers using average prices for new homes and median prices for resale homes.
“I often think when we talk about affordability, we say Vancouver meaning the whole region. But there are differences within the region. We tend to lump it all into one,” McMullin said.
“This takes out the really high-end, which is just really just a small number of people on the west side of Vancouver or on the West Vancouver waterfront, and looks more at the median prices rather than averaging the high, high prices with the relatively low prices.
“This study, unlike others, brings in not just income and house prices, but also factors in interest rates and amortization and looks at how that affects affordability,” McMullin said. “I think this gives a more accurate gauge of affordability in the region.”
The index shows that the majority of households in outer Metro can afford the payments on all types of homes, both new and resale. It found that as many as 82.9 per cent of households in outer Metro could make the payments on a re-sale wood-frame condo, while 80.4 per cent could afford a re-sale concrete condo.
For inner Metro, the index found that while 64.5 per cent of working households can afford a re-sale wood-frame condo, just 51.7 per cent of working households can afford a new concrete condo. For single-family homes in inner Metro, less than 40.9 per cent of households could afford to make the mortgage payments.
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BiscottiGelato

not comparing prices between markets. Comparing affordability between markets.

US had a market that everybody thinks will never fall. Fell 60-70% for majority of the states
Japan had a market that nobody thinks will fal. Fell 90% and haven't came back for 20 years.

Hong Kong? Vancouver? Based on relative affordability and history, I don't know what to say.

大C姐

Pro real estate propaganda. Haha. If one defines affordability as if you can afford the payment, of  ...
BiscottiGelato 發表於 2013-2-18 13:09

    但係呢，地產係冇得同global market比較。

你係冇得用Vancouver去比Prague嘅樓市，又冇得compare上海同東京。地產帶唔走㗎嘛！

咁所以佢哋只可以同人工比較affordability，同其它城市比較係冇意思。點解過去百幾年New York同London都咁貴，你唔叫啲人搬去New Jersey同Manchester，given the choice....

BiscottiGelato

Pro real estate propaganda. Haha. If one defines affordability as if you can afford the payment, of course lots of people can afford the payment. Otherwise there wouldn't be any houses and nobody would be living anywhere but the street. That's just dumb.

But if you put prices in context of history and compare to other global markets. Then the relative affordability is what people have been talking about. Aka. why buy here and not else-where if you are given the choice.

tiffiant

In Vancouver proper, housing is affordable for a far smaller percentage of the population — the UDI/FortisBC Housing Affordability Index shows that fewer than 32 per cent of households can afford payments on a single-family home, a new or re-sale townhouse or a new concrete condominium. The numbers are a bit more encouraging for other types of housing: 34.7 per cent of households make the $66,017 required to make the payments on a new wood-frame condominium, 35.4 per cent of households make the $65,129 needed for a resale concrete condo, and 49 per cent make the $48,455 required for a $356,000 resale wood-frame condo.

The index defines “affordable” as the percentage of households living in a region who would qualify for the mortgage required to own the property. Typically, a bank wants to see no more than 32 per cent of income going to housing before it provides a person with a mortgage.

Certified financial planner Michael Thorne said the 32 per cent debt-service ratio is a good guideline.

“In most circumstances, about 30 per cent is what I recommend a family target to spend on housing,” Thorne said. “When you start getting up to 40 or 50 per cent of your income, that’s when there are problems.”

Adrian Mastracci, portfolio manager at KCM Wealth Management, said 32 per cent is a reasonable amount for a family to spend on housing, but that it would be tough to do that in Vancouver, with its lofty prices.

Mastracci said most people have to start with a small condo and whittle down their mortgage to build up equity. “Plow any extra money you have against your mortgage and really go to town,” Mastracci suggested. “That is a risk-free investment you can make.”

The UDI/FortisBC Housing Affordability Index treats first-time buyers differently, as most have less money for a downpayment and thus need an insured mortgage. For such buyers, the index assumed a 10-per-cent down payment and a 25-year mortgage amortization (the maximum allowed for an insured mortgage).

Using those assumptions, the index shows that 63.3 per cent of working households in outer Metro earn the $46,384 annual salary required to buy the average new wood-frame, 836-square-foot condominium, while 48.8 per cent are above the required income of $59,760 to buy a similar condo in inner Metro, and less than 32 per cent earn the required $82,649 to afford a similar type of condominium in Vancouver proper. For resales, the percentages were higher; 76.9 in outer Metro, 54 in inner Metro and 37.9 in Vancouver proper.

Home sales are forecast to increase both this year and next, with average prices dropping slightly in 2013 and crawling up again in 2014, the British Columbia Real Estate Association said Wednesday, Jan. 30, 2013.

In 2012, the number of homes that sold for more than $1 million fell by 34 per cent, according to a Sotheby's real estate report

What can you afford and where is it in Metro Vancouver?