Kelowna housing affordability gap highlighted by national report

Photo: Ratesdotca

Kelowna's unattainable housing market is being highlighted in a national report by ratesdotca, an online mortgage rate comparison website.

Kelowna’s difficult housing market is being highlighted in a national report by Ratesdotca, an online mortgage rate comparison website.

“Kelowna, once more affordable than major cities, now surpasses Calgary and Ottawa in home prices,” the report released last week reads.

“Its lifestyle appeal—warm climate, lakes, and urban amenities—has drawn retirees and remote workers, a trend accelerated by the pandemic. By 2021, single-family homes averaged $1 million, cementing Kelowna among Canada’s priciest markets.”

With an average home price pegged at $1,076,544, they say the required income to own that average home is $234,000.

What’s more troubling, however, is that the median family income is listed at $120,142.

That’s what Ratesdotca calls an “affordability gap” of $113,858.

The Okanagan city is not alone in its struggles, the report highlighted that Vancouver and Toronto face similarly large affordability gaps. Families in Vancouver fall short by $121,053..

In Toronto a family now needs a yearly income of $232,000 to afford a $1,061,900 home (the average price of a home in the city). However, the typical Toronto family only qualifies for a maximum mortgage of $574,000. This leaves most families with scrambling to make up an income shortfall of up to $100,000 if they want to buy a house.

Conversely, housing in Alberta and Quebec remains more accessible. In Calgary, they found an average home cost is $572,400, which requires $129,000 in income to afford. The median family income in that city is $147,643, leading to an income surplus of $18,643.

“This comes from land availability and concerted efforts to diversify the city’s economy beyond oil and gas,” Ratesdotca, surmised in the report.

Edmonton boasts an even bigger surplus with the average home price pegged at $397,400, meaning an income of $91,000 was needed to afford that house. The median family income in those areas is $141,604, boosting the surplus to $50,604.

Montreal has an average home price of $542,900, meaning the required income is $122,500 to afford that home. The median family income is $122,946, amounting to a surplus of $446.

Ratesdotca reached their conclusions by looking at the average median economic family income for each city, using 2022 data from Statistics Canada and adjusting for annual wage growth percentages based on estimates from Normandin-Beaudry.

Then they followed insured mortgage guidelines, including a minimum down payment of five per cent on the first $500,000 and 10 per cent on amounts above that.

Calculations are also based on a qualifying stress test rate of 6.7 per cent, assuming an average five-year fixed mortgage rate of 4.7 per cent, plus an additional two per cent for the qualifying rate.

For condos, property taxes, heating, and condo fees are factored in. Other factors include a credit score of 680+, no debts, and a 25-year mortgage term.