“Affordability” is a slightly more complicated beast. There are a number of ways that one can examine affordability. One of those methods compares the median* income for an area against the median home price. Demographia, an organization that tracks changes to affordability uses what they call “median multiples.” The median multiple is derived by dividing the median income into the median price. As seen on the following chart, Canadians can expect to pay roughly 3.6 times the median income for a home priced at the median. So, even if prices are rising affordability can improve if incomes are rising at a faster pace.
Clear enough? Good!
After three successive years of slightly improved affordability, Saskatoon slipped back into the ranks of what Demographia considers “seriously unaffordable” as the median multiple for the area increased from 4 to 4.3, its highest point since 2008 when it had reached 4.6.
Regina showed the largest erosion moving from 3.3 to 3.8 but still managed to maintain a “moderately unaffordable” rating from Demographia.
The picture improved somewhat in Vancouver, which holds the distinction of being the second most unaffordable market in the world, as the median multiple falls from 10.6 to 9.5 over the course of the year.
*The median defines the centre point where half of all values are above and half are below that point. For instance, if the median income for an area were $50,000 then half off all income earners would earn more than that and half would earn less. In the case of home values, it’s the point at which half of all sales occur above the number, and half occur below.
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