Finances & Money

Vancouver Tops the List of Least Affordable Housing Markets in North America, According to Study

Manhattan and San Francisco maintain their reputations as severely inaccessible real estate markets, although it is Vancouver which leads the way as the priciest housing market in North America.

The findings of the study recently compiled by Point2 Homes may prove as an interesting read for those looking to break into the real estate market in Vancouver. The purpose of the study was to ascertain how long, on average, it would take for homeowners to pay off their properties in 50 of the highest populated real estate markets in the United States, Canada, and Mexico.

A “median multiple” was calculated by dividing the median home sale price by the median annual family income in each market, which establishes the number of years it would take to pay off a home. Wider affordability gaps are found in communities which have higher median multiples, which in turn, extends the time  paying off a home. US dollars were used throughout.

Point2 Homes rated affordability by using information found in The International Housing Affordability Survey. Median multiples of 5.1 and above are considered to be housing markets which are “severely unaffordable,” the survey found. Anything at 3.0 and under is regarded as affordable.

Canada: A Severely Unaffordable Real Estate Market

The Vancouver real estate market significantly contributes to the country’s representation as severely unaffordable. With a median multiple of 17.3, which was calculated on the basis of the city’s median home sale price of $1,108,345 and median family income of $63,944, Vancouver was named as the most unaffordable market in North America.

You have to move down to 13th place to find another Canadian city on the list, Toronto, at 7.5. The gulf between both cities, to put it in perspective, means a homeowner in Toronto could potentially pay off their home ten years earlier than a homeowner in Vancouver.

A little further down the list at 14th place sits Mississauga at 7.4, while 31st and 32st places, occupied by Montreal and Calgary, were rated at 4.2 and 4.1, respectively.

The United States Housing Market: Seriously Unaffordable

Some may be surprised to learn that Manhattan or San Francisco do not top the study’s list of unaffordable housing markets. The reason for this is that Vancouver has a significantly lower median family income than both, which in turn, leads to a higher rating than those areas on account of a greater affordability gap.

Manhattan and San Francisco rank highest in terms of US cities, however, followed closely by Brooklyn at 13.1 and Los Angeles at 12.1. The most affordable real estate market in North America is found in Detroit, in the United States, which has an affordability rating of 1.8, which ranks it lower than Winnipeg in Canada (3.4) and Monterrey in Mexico (2.7).

Canada Heads the List of Unaffordable Countries in North America

Ahead of the United States and Mexico by some distance, Canada takes the top spot in terms of unaffordable real estate with a severely unaffordable median multiple of 7.5. This figure is based on an annual median family income of $64,752 and a median home price of $485,680.

The United States’ real estate market is seriously unaffordable, scoring a median multiple of 4.6. The country’s annual family income of $56,516 coupled with a median price per home of $258,300 means that it sits above Mexico, which ranks at 3.3. With a moderately unaffordable housing market, Mexico’s ratings were calculated on an annual median family income of $12,806 and a median home price of $41,748.

 

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Susan Paige

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