House prices may have dropped but that didn’t save Kelowna from earning the dubious distinction of one of the most severely unaffordable markets worldwide for the second year running.
Kelowna was ranked the 19th most severely unaffordable city, and was nestled between Santa Cruz, California and the southwest region, of England in the fifth annual Demographia International Housing Affordability Survey.
The study compares 265 markets in Australia, Canada, the Republic of Ireland, New Zealand, the United Kingdom and the United States. In metropolitan areas of each of those countries, they divide median house prices in each region by the median annual gross household income.
That provides them with a “median multiple” which represents how long it takes a person to buy a home if they were to divert their total annual income to the pursuit. Nationwide, it takes about three and a half years, which is affordable by their standard, but in Kelowna it’s a bit more time consuming.
The group which lobbies against smart growth, figures it takes about 6 1/2 years to buy locally because the median annual income is $53,200, while the median cost of a home is $362,100.
Using that measure alone, it appears Kelowna has improved a bit over the last year in terms of affordability. In Demographia’s 2007 survey, the city ranked 13th in the same category, and noted that the median household income was $52, 200, while the median house price was $446,300.
According to Theresa Eichler, the City of Kelowna’s community planning manager, Demographia’s ranking is of limited value.
“All it does is take the median house price and compare that to median household income- it’s one measure, and not a good one,” she said.
Kelowna is unique in that there are a number of asset-rich retirees who make a limited annual income. Using annual income for a measure could skew results dramatically.
While Eichler doesn’t hold the study in high esteem, she did note that housing and land values are dropping in this region, and in years to come that will make room for more affordable housing.
The costs of labour is also falling as the market tightens.
All of Canada’s markets deemed severely unaffordable by Demographica were in British Columbia, including Vancouver, Victoria, Abbotsford and Kelowna. Canada had 10 affordable markets, the largest being Winnipeg (3.0).
The most affordable markets were Cape Breton (2.1) and Thunder Bay (2.2). Other “affordable” markets included Chatham, Windsor, Moncton, Saguenay, Saint John, Trois Rivieres and St. John’s.