Richmond is the second “most cost-burdened” city in Canada, according to a new mortgage affordability report, with nearly half of homeowners’ incomes going to mortgage payments.
The report by Point2, which studies real estate trends, examined the 50 most populous cities in Canada and compiled a list of 16 cities across the country considered to have the most unafforable markets, with large percentages of homeowners' incomes going to mortgages.
In Richmond, owners spent 44 per cent of their income on monthly mortgage payments last year – meaning they would need to earn $55,317, or 52 per cent, more than they currently do to cover their mortgage stress-free, according to the report.
It’s a similar scenario for Burnaby and Oakville, Ont., which place first and third on the list, respectively, with homeowners needing to earn upwards of $50,000 more. In Burnaby, homeowners spent 44.7 per cent of their income on mortgages in 2020, while homeowners in Oakville spent 43.8 per cent.
Other cities in Metro Vancouver included on the list, and where mortgages take up more than 30 per cent of owners’ income, are Vancouver (41.6 per cent), Langley (40.5 per cent), Coquitlam (38.5 per cent) and Surrey (32.2 per cent).
“As our latest affordability study shows, the increase in income is no match for the surging home prices in the 50 most populous Canadian cities,” the report reads.
In 2010, mortgages in Richmond took up 28 per cent of homeowners’ income, which increased to 34 per cent by 2015 – and the city isn’t alone in seeing that percentage spike over the past decade.
Across the country, 38 of the 50 most populous cities saw mortgage affordability worsen.
And in the last 10 years, the number of unaffordable markets jumped from six to 16. In 2010, only three of the six cities on the list were in the “markedly unaffordable territory,” while the rest – including Richmond – toed the line between affordable and unaffordable, according to the report.
Now, however, the unaffordable list has grown to 16 cities, all of which are “firmly positioned in the mortgage-burdened territory,” the report states.
Income increase also couldn’t match home price growth – for example, 18 cities saw home prices increase between 100 per cent and 148 per cent.
In Richmond, home prices more than doubled – jumping by 109.9 per cent – in the past decade, while wages grew by just 32.1 per cent over the same period, according to Point2. The city with the most significant household income increase is Edmonton, Alta., where incomes are 53 per cent higher than they were in 2010.
“The disparity between galloping home prices and slower-moving incomes means the number of unaffordable cities (where homeowners spend more than 30 per cent of their income to cover the mortgage alone) is going up at an alarming rate,” the report reads.
The benchmark composite price also crossed the $1 million mark in Richmond, Burnaby, Vancouver and Oakville, Ont., since 2010.
At the opposite end of the spectrum, 10 cities across the country were found to be the most affordable last year. For example, in the three most affordable cities – Halifax, NS, Windsor, Ont. and London, Ont. – mortgages take up a little more than 10 per cent of owners’ income.
The Point2 study is based on data from Statistics Canada and the Canada Mortgage and Housing Corporation.