As a Royal LePage Realtor I often work the Royal LePage Mall Kiosk located at Woodgrove Mall and while doing so I often gather some unique insights to our local housing market.
When you work our kiosk as a Realtor you never know what’s going to happen. Sometimes you feel like the guy in that old western, standing in the midst of a stampede, all the horses going around you like a rock in the river. Other times I feel more like I’m in an episode of Walking Dead, the last person left standing, waiting for the zombies to come traipsing down the main mall thoroughfare.
One thing for sure however is the look on people’s faces as they peruse our current listings. You can see the look on their face that gives their origin away.
If they look stunned at how high the prices are, they’re from the Nanaimo area.
If they look stunned at how cheap the prices are, they’re visiting from Vancouver.
To some extent I guess, home affordability is in the eye of the beholder.
On the other hand there’s a simple way to calculate and compare affordability between various cities. We do that using something called the Median Multiple.
The Median Multiple is used to indicate the affordability of housing in any given community. The Median Multiple is widely used for evaluating urban markets, and has been recommended by the World Bank.
The Median Multiple is the ratio of the median house price by the median gross [before tax] annual household income. This measure has historically hovered around a value of 3 or less, but in recent years has risen dramatically across the continent.
Owning a Home in Vancouver is Less Affordable Than in Manhattan and San Francisco
When I run the numbers for Nanaimo I get a result that may surprise many but not the the first time home buyers shopping for their first home, in Nanaimo.
Owning a Home in Nanaimo is Less Affordable Than Toronto
If we take the current median Nanaimo house price of $512,000 and divide it by the median gross annual household income of $67,417 (Nanaimo City Annual Report), we get an affordability multiple or Median Multiple of 7.6. Toronto is 7.5, (see chart below).
With a median home sale price of $1,108,345 and a median family income of $63,944, Vancouver is the most unaffordable market in North America, more so than other expensive housing markets such as Manhattan and San Francisco. Its median multiple currently stands at 17.3. Although homes in San Francisco and Manhattan are more expensive than those in Vancouver, with median selling prices of $1,275,000 and $1,207,500, respectively, a lower median income is what makes Vancouver’s affordability index higher than that of the two U.S. cities.
According to The New York Times the affordability crisis was fueled by foreign investments in the real estate sector. The median home sale price has escalated way above the median family income, turning Vancouver into one of the least affordable housing markets in the world.
This has put home ownership out of reach for many first-time buyers, pushing them out of the local market. To make matters worse, even many well-paid local professionals are finding it increasingly difficult to afford housing in their communities.
This worrisome trend isn’t isolated to Vancouver only. House prices in big cities that attract young professionals have risen way above what people could afford on a median income and Manhattan is no exception. While the median family income in Manhattan ($77,559) is considerably higher than the U.S. median ($56,516), it still can’t keep up with the current market asking price of $1,207,500, which is more than 4 times the median U.S. home sale price ($258,300). This has led to a severely unaffordable median multiple of 15.6, securing Manhattan’s position as the second most unaffordable housing market in North America.
The third most expensive market on our list, San Francisco boasts the highest median income in the U.S. ($92,094), almost twice as much as the national median. But even though San Francisco residents earn the most, it would still take 13.8 years’ worth of the median wage to pay off the mortgage in this overheated housing market, given that the median home price here is $1,275,000 – the most expensive selling price in North America and quadruple the national median price.
Hi, I’m Jeff Wood and I love living in Nanaimo! And I love helping people make their move!
My wife and I moved to Nanaimo from Richmond in 2015, after raising our two kids there. We brought along our two precocious Border Collies; Jake and Cochise, who are sure they moved to Doggy Disneyland in the process. We live in Upper Lantzville and love it!
Before becoming a Realtor, I was a professional investor owning 8 multi-family properties with 24 tenants. I also spent 20 years as an Executive Headhunter, finding talented people for Fortune 500 clients in the USA and Canada. In that role, I functioned regularly as a professional negotiator, working with both sides to create a win win scenario. I also helped candidates relocate to start their new jobs and thus I have a lot of relocation experience.
Now as a realtor I apply all of these hard earned skills to the benefit of my clients, whether they’re buying, or selling, delivering results that move them!