Let's put this in perspective.
Financial experts recommend a family not spend more than 28% of its after-tax income mortgage payments.
Yet in Kelowna, a typical mortgage on a typical home for a typical family would devour 61.8% of after-tax income.
However, for the most part, this shocking fact is moot.
That's because a typical family would never qualify for a mortgage that would eradicate almost two thirds of their take home pay.
Therefore, this reality of utter unaffordability is for illustration purposes only -- to show how ludicrously expensive housing has become in Kelowna and how regular people are frozen out of home ownership.
The data comes from the just-released report 'Home Ownership and Rent Affordability in Canadian Census Metropolitan Areas 2014-2023' from the conservative think tank Fraser Institute.
The numbers the Fraser Institute used come from Statistics Canada, real estate boards and mortgage lenders.
In 2023, a typical Kelowna family was bringing in $66,550 in after-tax annual income.
That's $5,545 per month.
In the same year, the composite benchmark selling price of all types of housing (single-family house, townhouse and condominium) was $667,400.
The monthly mortgage payment for that $667,400 home is $3,430, the aforementioned 61.8% of the $5,545 after-tax monthly income.
The 20% mortgage downpayment for that $667,400 home would be $133,480, representing
24.1 months of after-tax income for that typical Kelowna family.
A family might be able to have lower mortgage payment if they qualify for a first-time homebuyer deal of 5% down and stretch the repayment amortization from the standard 25 years to the new maximum of 30 years.
Today, the benchmark selling price of a typical single-family house is just over $1 million, a townhouse $700,000 and a condo $490,000.
That means a typical family with $66,550 in after-tax annual income would have a tough time qualifying and paying for a mortgage on a condo let alone a townhouse or single-family home.
"Home ownership has slipped away from most Canadians," said Austin Thompson, the senior policy analyst with the Fraser Institute who co-authored the affordability report.
"The only way a typical family in Kelowna is buying their first home is if they really search for a cheaper, lower-quality home or if they get a large cash gift from parents or grandparents."
For people who already own a home and want to sell and buy a bigger and better place, they have more options.
Especially if they've owned the home for a decade or so and they're sitting on a whole pile of home equity.
Compare those 2023 Kelowna numbers to the 2014 data in the report and you get:
- Median annual after-tax family income in 2023 of $66,550, in 2014 $50,190
- Composite benchmark selling price of home (single-family, townhouse and condo) in 2023 of $667,400, in 2014 $332,000
- Monthly mortgage payment in 2023 of $3,430, representing 61.8% of after-tax income, in 2014 $1,408 or 34%
- Months of income needed for downpayment in 2023 was 24.1, in 2014 it was 15.9
Thompson said all levels of government could be doing more to make housing more affordable.
"Reducing red tape for developers, allowing more density and reducing fees and taxes that developers pay and have to pass onto homebuyers would all help increase supply and affordability," he said.
The Fraser Institute report ranked the most unaffordable cities based percentage of after-tax monthly income a family would have to pay to support a typical mortgage.
Kelowna was 13th most unaffordable on that list with 61.8% after No. 1 Vancouver at 112%. Toronto's 110%, Abbotsford with 97%, Oshawa at 92%, Hamilton's 77%, Victoria and Barrie at 75%, Kitchener with 74%, Chilliwack's 72%, Brandford and Guelph at 70%, St. Catharines and Peterborough with 68% and Windsor at 63%.
The two closest to Kelowna were London and Kamloops with almost 62% each.
Calgary is at 45%, Edmonton 32%.
The most affordable of the 36 cities ranked were Fredericton at 27.2% and Regina and Trois-Rivieres at 28.2%.
See the full report here.
Thumbnail photo by Ana G. Mendivil on Unsplash
