There are many ways of defining affordability, but in a practical sense – most people who have a mortgage are limited by how much money they can afford spend each month. From that point of view, I thought that it would be interesting to analyze Victoria housing prices and the corresponding expected monthly payment for an average-priced house.
A previous poll showed that HHV readers equally prefer a fixed versus variable rate mortgage. The 2015 Spring Mortgage Report from CAAMP shows that 72% of Canadians prefer at fixed-rate mortgage. With this in mind, I updated the detailed data set compiled by Leo (HHV’s previous administrator) to determine for Greater Victoria between the years of 2000 and 2015:
- Single Family Home Price (annual average)
- Single Family Home Price [2015 dollars] (annual average)
- Monthly payments [2015 dollars] (20% down-payment, 25-year amortization)
The monthly payments are calculated based on the prevailing average 5-year fixed mortgage rate published through Statistics Canada (CANSIM v122497).
In terms of the monthly payment required a purchase in 2008 was the most expensive year to buy. Since then, the least expensive year to buy was 2014. However, in the past six months prices have been surging up and even with astonishingly low rates, the corresponding monthly payment has increased from $2631.89 (2014) to $2693.95 (June 2015). That $62/month increase may not seem like much, but after 25 years it adds up to $18,600.
[By the time you read this post, I’ll be away on a cruise to Alaska for a week – so this will be the only blog topic until I return. If anyone is interested in writing a future blog post, please let me know via the contact page.]