While the housing market in Abbotsford appears to be cooling, prices continue to rise, and most detached homes – and now many townhomes – are unaffordable for the average family.
The benchmark price – a number that reflects what is considered a “typical” house – for a single-detached home was $653,800 in July, a 37 per cent increase over the same month last year. According to an online calculator, a family would need a combined income of roughly $135,000 – nearly double the local median income – to be approved for a typical mortgage on such a home.
But even many smaller houses are out of the reach of average residents.
Abbotsford’s median household income – the point where half of all families counted earn less and half earn more – is likely to be around $74,500, when extrapolating from 2014 Statistics Canada data (the most recent available). A family making the Abbotsford median would be approved for a mortgage on a $385,000 home, at most.
Fewer than 10 of the more than 400 homes publicly listed in Abbotsford have an asking price below $400,000. A two-bedroom, 1,200-square-foot home listed for $369,000 in the Poplar area is described as having “a rustic look on the inside.” Another home is “priced to sell” at $389,000 for its 630 square feet in central Abbotsford.
The benchmark price for detached homes has skyrocketed in the last two years. Image: FVREB
While townhomes may be a cheaper option for the average family, they too are becoming increasingly difficult to afford.
From July 2015 to July 2016, the median price for a townhome in Abbotsford rose by nearly 50 per cent to $409,950. That jump can be mostly attributed to the construction of new units, and means half the townhomes being sold also exceed the means of the average Abbotsford household.
The nearly $1,700 monthly payment on mortgages nearing $400,000 means the average Abbotsford family would be spending more than a third of their income on housing – a financial situation at which many consider housing “unaffordable.”
The benchmark price for a townhome has risen 29 per cent over the last year and now sits at $286,400. Approval for a mortgage on such a purchase would require a household income of roughly $55,000. (With a 10 per cent down payment of $28,640, monthly payments would be just under $1,500, including typical property tax and utility bills.)
There are signs, though, that the housing prices may be cooling – at least for single-detached homes.
July was the first month this year that did not break a sales record, with 1,962 sales – a 10 per cent decrease from the same month last year – processed by the Fraser Valley Real Estate Board (FVREB).
The total number of home sales dropped 19 per cent from June, and the month-over-month increase to detached home prices in Abbotsford was the lowest this year, at 1.8 per cent.
Benchmark prices for townhouses and apartments increased substantially, though, by 8.4 per cent and 3.9 per cent, respectively.
“A slowing down in activity is expected during the summer. While it may seem drastic or alarming when compared to months prior, this easing off is welcome as we get further into the year – the pace of the market slows, and inventory has a chance to catch up,” said FVREB president Charles Wiebe, in a statement.
While some have raised concerns that a new property-transfer tax on foreign buyers in Metro Vancouver would send investors to the Fraser Valley, Jock Finlayson, an economist, said the effect would likely be minimal.