Real Estate News 24

Real Estate News 24

Kelowna housing still ridiculously unaffordable

Kelowna housing still ridiculously unaffordable

Beth McCandry

Despite a recent dip in prices, a home in Kelowna is still ludicrously unaffordable.

The ReMax Canada Housing Affordability Index, released today, outlines the scary numbers.

To buy a home at the current average sale price in Kelowna of $943,000, an individual or family with a median after-tax household monthly income of $5,788 would have to pay $4,535, or an astounding 78.35% of that, on mortgage.

Typically, paying 33% of after-tax income on a mortgage is considered comfortable.

However, paying 78% means the proud new homeowners will be house poor with little left over for life’s other expenses, which are also hefty in this runaway-inflation era — car and gas, utilities, groceries, insurances, education and entertainment.

</who>Elton Ash is the Kelowna-based executive vice-president of ReMax Canada.” class=”img-responsive” src=”https://www.kelownanow.com/files/files/images/Elton%20Ash%20314K(5) .jpeg” style=”margin: 5px;”/></p> <p>The Kelowna figures are also based on a household putting a 20% down payment, or $189,000, on that $943,000 home and having a $754,000 mortgage to pay off. </p> <p>Kelowna’s median monthly income of $5,788 is based on the current after-tax annual household income of $69,457.</p> <p>After-tax numbers are used because, although you may make more, the tax is usually taken off your paycheque right away, so the after-tax leftover is what you actually have to spend.</p> <p>The average price of a home right now of $943,000 is based on all home sales in Kelowna be they a single-family house, townhouse or condominium.</p> <p>Actual benchmark selling prices of those three categories are down slightly from April’s record highs because the market is cooling as inflation and mortgage interest rates rise.</p> <p>In Kelowna, those benchmarks are currently $1,112,400 for a single-family home (down from a record $1,131,800 in April), $763,800 for a townhouse (down from a record $829.00 in May) and $537,200 for a condo (down from a record $557,000 in April).</p> <p>Despite a couple of months of slight slips, the current average aggregate sales of $943,000 is 21% more than the $778,000 a year ago.</p> <p>Kelowna’s housing market is not expected to crash because for the remainder of 2022, selling prices are forecasted to only go down 2% more.</p> <p><img alt=This home on Hall Road in Kelowna is listed for sale for $997,000, a little more than the average sale price so far this year of $943,000 (based on an aggregate of single-family, townhouses and condominiums).” class=”img-responsive ” src=”https://www.kelownanow.com/files/files/images/home%20on%20Hall%20Road.JPG” style=”margin: 5px;”/>

Kelowna’s statistic of a household paying 78% of after-tax income on a mortgage ranks the city as the fourth most unaffordable in Canada.

That’s behind Vancouver where a household pays 112% (based on home price of $1.3 million and annual after-tax household income of $67,500), Toronto at 101% ($1.25 million and $72,000) and Victoria with 85% ($1 million and $69,500).

Technically, it’s impossible to pay more than you make in a month on a mortgage.

So, households with average incomes can’t swing a mortgage in Vancouver and Toronto unless they put more than 20% down, are gifted money from extended family or rent out part of the house as a mortgage helper.

43% of potential buyers are staying where they are because high prices, higher interest rates, higher cost of living and a shortfall of income have priced them right out of the market.

Cities close to Kelowna’s unaffordability include Hamilton and Barrie where it takes 76% of after-tax monthly income to pay the mortgage.

The most affordable cities in the country are Red Deer, where a $357,000 home requires 26% of after-tax monthly income to service the mortgage based on after-tax annual income of $79,600, Regina at 27% and Brandon with 28%.

Support local journalism by clicking here to make a one-time contribution or by subscribing for a small monthly fee. We appreciate your consideration and any contribution you can provide.