RentSeeker.ca, a Toronto-based listing service that tracks rental opportunities across the country, recently released a telling, and damning, infographic about housing affordability in major Canadian cities
RentSeeker found the average home in Ottawa costs $359,759, requiring a household income of at least $76,145 to make a purchase. This puts Ottawa in the reasonable range of major centres with a needs multiplier of 4.7.
Further, considering the average median income in Ottawa was $98,100, according to Statistics Canada’s most recent data from 2012, prices in Ottawa may in fact be much more reasonable with the actual price to income multiplier at 3.7, using RentSeeker’s data.
In Gatineau, the picture is noticeably better. The average home costs $219,623, requiring a household income of least $49,322. The median average was $84,500 as of 2012.
But head to cities like Toronto and Vancouver and the picture looks out of whack.
According to RentSeeker, in Toronto the average home costs $630,858. That requires an income of at least $126,530, but the median average in 2012 was only $71,210, according to StatsCan.
In Vancouver, the average home costs $810,600. Minimum income required: $152,145. Median average income: $71,140. This must mean families in this market are behaving differently.
Where are households with below-average income going to live?
Supply and demand is not the only factor in these big-city pricing trends. More stringent regulatory standards and homeowner expectations may also be playing a part.
For example, Vancouver recently implemented new building code requirements intended to make homes more livable for people with special needs, and sustainable over the long term.
According to Bob De Wit, CEO of the Greater Vancouver Home Builders’ Association, this drives up the asking price of new homes. By his measure, it will now cost $25,000 to $40,000 more to build the same house in Vancouver than it would in, say, Burnaby, B.C.
Developers face increased costs in terms of regulation and land dedication for green space that have resulted in no increase in the number of new houses per acre, notwithstanding the fact lot sizes are much smaller than they were a couple of generations ago.
This standards creep is a problem for developers and builders who have to meet new standards while at the same time providing a product the market can afford to buy.
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