You and your partner are planning to buy a home in the Tri-Cities.
But your housing wants will determine your income needs — meaning if one number is bigger, the other has to be, too.
And the difference between buying a compact condo or a spacious detached house could be as much as $12,000 per month in household income, according to the Real Estate Board of Greater Vancouver’s monthly home price index.
In fact, numbers analyzed by The Tri-City News show that someone looking to buy a single-family home in Coquitlam, Port Coquitlam or Port Moody now have to earn a household income of at least six figures.
The Canada Mortgage and Housing Corporation states in its affordability guidelines that monthly housing costs, including heating and property tax, should not exceed 32% of gross monthly income.
Calculations made by The Tri-City News did not include property tax or heating costs and assumed a 5% downpayment on a 25-year amortization with a 4% interest rate on a five-year fixed mortgage.
The results found that someone looking to buy a single-family detached home in Coquitlam — which, according to the REBGV benchmark index, cost $861,200 in June — would require a monthly mortgage payment of $4,303.
In order to meet CMHC’s affordability guideline, that household would have to earn, before taxes, at least $13,453 per month, or approximately $161,437 per year.
When property tax and heating costs are included, the monthly income would need to be even higher to meet the 32% threshold.
In Port Moody, where the benchmark index price for a single-family detached home is more than $1 million, a homeowner with the same criteria would have to pay a monthly mortgage of $5,025. That mortgage requires a household income of at least $15,703 per month, or about $188,437 per year, to meet CMHC’s guidelines.
Port Coquitlam is the cheapest Tri-City municipality when it comes to real estate affordability but purchasing a single-family detached home in the city still requires at least a six-figure income. The benchmark price index for a house in PoCo is $662,100, making it necessary for a purchaser to have a before-tax household income of $10,337 per month, or approximately $124,050 per year to cover the $3,308 monthly mortgage.
But those looking to enter the housing market can still do so with more modest means, providing they are able to modify their expectations.
By following the same criteria used for the single-detached homes, a townhouse can be purchased with a considerably lower household income.
In Port Moody, for example, where the benchmark price for a townhouse is $447,400 — the highest in the Tri-Cities for that category — a 25-year mortgage with 5% down at 4% interest means a monthly payment of $2,235. In order to meet CMHC’s 32% threshold, a family income of $6,984 is required, which works out to $83,812 per year.
The number is even lower in Coquitlam, where $6,468 is required each month, or approximately $77,625 per year, to cover a monthly mortgage of $2,070.
In PoCo, a monthly household income of $6,468 or $74,437 per year is enough to cover a monthly payment of $1,985 to meet the affordability guideline.
Not surprisingly, someone buying an apartment in the Tri-Cities has an even easier time of meeting the CMHC guideline.
In Port Coquitlam, for example, a person can purchase the average apartment — the benchmark price index is $236,300 — with an annual household income of approximately $44,244. Coquitlam, where the average condo value is $272,700, a family with an annual household income of $51,075 could purchase a property with 32% of their monthly income. Apartments in Port Moody are higher in price, costing an average of $354,900. But the $1,773 mortgage payment can still be covered with a monthly income of $5,540, or $66,487 per year, in order to meet the CMHC guidelines.
gmckenna@tricitynews.com
