A new report says the minimum income required to afford the average home price in Vancouver dropped a bit between June and July.
While that may sound like good news, the figure is still quite high, and well over what most households are making.
According to Ratehub.ca, you need to earn an income of $226,680 to be able to qualify for a home that is $1,197,700, which is what the company lists as the average price of a home as of July 2024.
That’s down $5,020 from a month prior, when you needed to make $231,700 to afford a home priced at around $1,207,100.
Ratehub.ca says this is the minimum annual income required, also providing mortgage and stress test rates.
One factor behind the drop, as may be evident from the figures, is that home prices have come down slightly. Ratehub.ca says rate cuts have also “effectively lowered borrowing costs.”
“According to the July data, the average five-year fixed mortgage rate dropped to 5.29%, compared to 5.47% in June, with the mortgage stress test lowering to 7.29% in kind. As a result, the income required to qualify for a mortgage fell by more than $5,000 in Canada’s most expensive housing markets,” the company said Monday.
While Ratehub.ca says “it’s been a slow spring and summer market” for the country’s most expensive cities, it adds the Bank of Canada is anticipated to cut its Overnight Lending Rate into the three- to 2.5-per-cent range by next year, according to the Canadian Real Estate Association (CREA).
That, the CREA says, will lead the way for a more “active” market.
“At this point, many markets have a healthier amount of choice for buyers than has been the case in recent years, but the days of the slower and more relaxed house hunting experience may be somewhat numbered,” CREA Chair James Mabey said.
In July, the BC Real Estate Association said that home sales in the province had dropped 19 per cent year-over-year. It explained the biggest drop in home sales was in the Fraser Valley, with unit sales down by 32 per cent year over year in June, for a total of 1,255 sales.
Greater Vancouver also saw a large drop in sales, with a total of 2,418 transactions closing for a decrease of 18.5 per cent compared to the same time last year.
And though the number of homes changing hands across the province declined, the BCREA said prices still rose, albeit not by much.
“The average MLS residential price in BC in June 2024 was up 1 per cent at $998,159 compared to an average price of $988,632 in June 2023. The total sales dollar volume was $7.1 billion, an 18 per cent decline from the same time the previous year,” the BCREA said.