Keeping company with the likes of Los Angeles, Belfast, Northern Ireland, and Sydney, Australia, Kelowna has shown up on a list of “severely unaffordable” housing markets.
“This year, we expanded our survey to include more Canadian cities, so Kelowna debuted as the 13th least affordable in the world,” said analyst David Seymour of the Winnipeg-based Frontier Centre for Public Policy.
The independent think-tank helped put together the fourth annual Demographia International Housing Affordability Survey, which compared the median residential price in a city with the median household income to come up with a median multiple rating.
Kelowna‘s median house price of $446,300 and its median household income of $52,200 results in a rating of 8.5 (that means the price is 8.5 times more than the income).
Anything 5.1 or more is considered “severely unaffordable.”
“That‘s amazing,” said Bert Chapman, a real estate agent with Premier Canadian Properties in Kelowna and president of the Okanagan Mainline Real Estate Board.
“We‘re in great company with Los Angeles and Honolulu, but it also means we have a serious problem with affordability and entry-level housing.”
Los Angeles tops the list as the city with the least-affordable housing. Its median house price is $588,400, and its median household income is $51,100, earning it an 11.5 rating.
Median house price is defined as the midpoint between the highest-priced and lowest-priced home in a city.
It‘s usually lower than the average price, which is calculated by dividing total sales volume by the number of sales.
That‘s why, in this survey, Kelowna‘s median residential price (taking into consideration all single-family home, townhouse and condominium sales) of $446,300 is lower than the $500,000 average single-family home price commonly used.
“I‘m not passing judgment, but our market is extremely busy, even if it is considered severely unaffordable,” said Chapman.
“The customer who we are dealing with (wealthy baby boomers attracted to Kelowna for its lifestyle, natural beauty and weather) is different from the buyer on a budget,” Chapman said.
However, he said the local real estate board is lobbying the government to allow for more affordable housing.
The lack of affordable housing is preventing many workers from moving to Kelowna and exacerbating the labour shortage.
“The crucial issue in affordability is not just desirability, but lack of a suitable supply of land to build on because municipalities make development too expensive or slow it by not releasing enough land,” said Seymour.
The survey ranks 227 cities in Canada, the United States, the United Kingdom, Australia and New Zealand.
Kelowna‘s 8.5 ranks it as the most unaffordable city in Canada, ahead of Vancouver (No. 15 with 8.4) and Victoria (No. 22 with 7.3).
Kelowna is even considered more unaffordable than such international centres as London, England (No. 18 at 7.7), Melbourne, Australia (No. 22 at 7.3), and New York City (No. 28 at 7.0).
The most-affordable city of the 227 surveyed is Thunder Bay, Ont., with a median multiple ranking of 1.8.
The median residential price in Thunder Bay is $107,800, and the median household income is $58,500.
To put that in perspective, a Kelowna homebuyer pays off the equivalent of a house in Thunder Bay and then has to do it four times again because higher residential prices mean larger mortgages, higher interest rates and longer amortizations.
