Homeownership is becoming more difficult for many British Columbians. In fact, there are apparently only four areas in British Columbia that are affordable when calculated against total household income. Many residents won’t be able to afford to buy a home in the province, especially with the federal real estate law that governs the financial stress test.
The City of Vancouver has always been known as being one of the most expensive places to purchase real estate, but most all places have now earned that distinction. A recent study compared the minimum income needed to buy a home in major areas in the province with median earnings basing findings that most purchasers would be putting 20 per cent down. The study made calculations using a 30-year amortization using the lowest interest rate available.
When using 20 markets, the only affordable places are Campbell River, Kamloops, Langford and Prince George. To pass the stress test a buyer must prove he or she can afford a mortgage at the rate charged by the Bank of Canada regardless of whether a lower rate can be secured elsewhere. It narrows the playing field. When recalculating numbers using the stress test, the only affordable areas of the province dwindled down to Kamloops and Prince George.
British Columbia residents who have managed to save 20 per cent or more for a downpayment and who have passed the stress test may be in line to start searching for a home. Before setting up showings, it may be wise for a potential homebuyer to become familiar with at least some level of real estate law and knowing what to expect in the homebuying process. A lawyer can provide an outline of what exactly homebuying entails legally — everything from contractual obligations to closing costs.