Home ownership in the city of Victoria is a goal that, for many, may already be a dream that will never be realized.
According to Mike Grace, with The Mortgage Group, the median price for a detached home in Greater Victoria is currently $698,264, but that number does not reflect the price in Victoria’s core neighbourhoods.
“Realistically, if you want to buy a family home in Victoria, you’re looking at a starting price in the low $800,000s,” he said. That’s bad news for a significant portion of the city’s population.
Assuming that $800,000 purchase price, and also allowing the buyer has the 20 per cent down payment and no other debt, the annual household income to qualify for the mortgage would be $99, 725, according to Grace. If the buyer has only the minimum five per cent down payment, that annual household income requirement rises to $135,000.
Given that StatsCan cites the median household income in Victoria at $84,430, the disconnect is obvious. Saving for a down payment is also a major issue, as the 0.5-per-cent vacancy rate in Victoria have pushed up average monthly rental rates to well over $1,000 for a one-bedroom apartment. It means renters regularly commit more than 35 per cent of their income to housing, making saving more difficult than ever.
“Typically, in order for a mortgage to be insured, no more than 39 per cent of monthly income can be dedicated to household carrying costs (including mortgage, property taxes, utilities and strata fees where applicable),” said Grace.
It’s a situation, he said, that often demands buyers come up with a much higher down payment. Many lenders are trending toward moving down payment requirements to 20 per cent on the first $1 million of a mortgage. With all the factors taken into consideration, Grace is seeing an increasing number of families who simply cannot afford to purchase a home.
“Market realities are forcing people to adjust their expectations or make life choices that match what they can afford. It’s also forcing people to pay closer attention to their personal finances. People need to trim excess spending where possible and not take on any extraneous debt if they ever hope to own a home in Victoria.”