Rising but still affordable

The B. C. Northern Real Estate board is offering up an invitation for British Columbians looking for affordable housing to think about a move north.

The housing boom and mass migration to the southern cities of BC is sending the affordability ratio skyrocketing for Vancouver and environs with 73 per cent of a median household income needed to cover off the costs of home ownership, northern BC’s ratio is 31.7 per cent, which at the end of the day would leave home owners with a bit more money in their pockets, though perhaps a less valuable property as far as an asking price, in most cases come selling day.

Prince Rupert proves to be more affordable than most in the North with a ratio of 25 per cent up 7 per cent from the days of 2003 when properties were selling lower than they are today, in 2003 the average selling price of a Prince Rupert home was 90,000 where the latest numbers for 2007 suggest an average price of of160, 000.

An interesting note from a second study quoted in the Daily News article, comes from a study from CMHC which examined apartment rentals and construction across the province. An expanding economy in the south leading to fewer vancancies with a decline province wide in the construction of new rental units, a particularly stark situation in Prince Rupert where no apartment buildings have been built in recent times.

The Daily News provides some number crunching details from the Real Estate board as part of a story from Thursday’s paper.

Area still one of B.C.'s most affordable
Province is nation's most expensive but Northwest offers value for money
By Leanne Ritchie
The Daily News
Thursday, April 24, 2008

Pages one and three

The escalating cost of housing in the Lower Mainland and other parts of B.C. is not translating into a problem for Northern residents, according to the B.C. Northern Real Estate Board.
For 2007, the Housing Affordability Index (HAI) for northern British Columbia was 31.7 per cent compared with 73.8 per cent for Vancouver. The index estimates the proportion of pre-tax median household income needed to cover mortgage costs, municipal taxes and fees, and utilities for single-family homes.

"Rising prices made housing less affordable in Northern B.C. in 2007. Since 2004, average house prices have increase 72.6 per cent, yet owning a home in Northern B.C. consumes a much smaller portion of household income than it does anywhere else in the province, especially Vancouver, where the burden of home ownership is substantial," said Rory Conroy, who prepared the report for the B.C. Northern Real Estate Board (BCNREB.)

BCNREB commissioned this study after RBC Financial Group released the results of their cross-Canada housing affordability study, which showed that B.C. was the least affordable place in which to buy a house.

BCNREB reports that the costs in northern B.C. are about 31.7 per cent of family income compared to 68.5 per cent for the entire province.

In Prince Rupert, the cost of owning a home took up an average of 18 per cent of pre-tax income in 2003 and this has increased to more than 25 per cent in 2007.

However, 2003 represented a low point for the average house price. In 1998, the average house price dropped from $129,000 to a low of $90,00 in 2003 and back up to around $160,000 in 2007. Terrace and Kitimat have both seen similar swings in housing prices.

The index shows that the typical household in Vancouver will spend almost 74 per cent of its pre-tax income on home ownership while the typical household in northern B.C. spends less than 32 per cent of its pre-tax income on home ownership.

This positive difference in affordability has persisted despite double digit increases in sales and prices of single-family homes in northern B.C.

Meanwhile, a study released late last year shows there are fewer apartments for rent in Prince Rupert compared to 2006 and that rents have gone up.

According to a Canadian Mortgage and Housing Corporation (CMHC) report released this fall, vacancy rates in Prince Rupert decreased from 20.5 per cent in October 2006 to 15 per cent in October 2007, while the average price has increased from $537 to $561, during the same period.
In October 2007, Prince Rupert had 94 vacant apartments and 629 rented apartments.
According to the report, it was B.C.'s growing economy, expanding employment and high levels of migration that caused fewer apartment vacancies across the province.

On the supply side, there have been very few new apartments built across the province this year - with none at all built in Prince Rupert.