Owning a home in Prince George grew more onerous in 2021, says a report from the B.C. Northern Real Estate Board.
The costs of mortgage payments, municipal taxes and fees, and utilities for the average single-family home stood at 32.3 per cent of before-tax median household income, up from 30.6 per cent in 2020, according to the BCNREB's annual report on housing affordability indicators.
Canada Mortgage and Housing Corporation suggests a threshold of 30 per cent for housing affordability. However, Prince George real estate agent and BCNREB director Bob Quinlan says the measure is not hard and fast.
During the 15 years he was a mortgage broker, Quinlan said banks would approve mortgages provided principal, interest, taxes and heat amounted to no more than 35 per cent of gross income and no more than 40 per cent once all personal debts, including debt from credit cards, was taken into account.
"If they get that 25 per cent down, they don't have to follow CMHC guidelines, they follow the bank's guidelines," he said and added the so-called stress test still comes into play. It requires prospective buyers to show they can afford the greater of two percentage points above the contractual mortgage rate or the five-year benchmark rate published by the Bank of Canada.
A typical single-family home sold for $458,804 in 2021, a year-over-year jump of $50,861, according to numbers derived from the Multiple Listing Service for the city.
Things have not improved since then as the average price reached nearly $520,000 during the first quarter of 2022.
With the Bank of Canada recently boosting its prime rate by a half-percentage point and expected to increase it a further half per cent in the months to come, Quinlan predicted prices will start to level off.
"But it's going to take awhile yet for interest rates to take hold," he said.
Quinlan said "fear of loss" or "fear of not getting into the market" combined with the low interest rates has been driving the upward trend in house prices in Prince George and across the country.
"The interest rates have been causing people to say 'OK, I can get into the market' and then it's all been this frenzy, this feeding frenzy, which has been happening this last couple of years," he said.
Variable rates remain a better deal but those days could be numbered with further hikes to the prime rate looming.
"It depends on whether you can sleep at night on as to whether you can take a variable rate or not," Quinlan said.
For the northern B.C. region as a whole, the index stood at 27.8 per cent, up 1.7 percentage points from 2020. Average sale price was $406,535, up 13.5 per cent.
At 51.8 per cent, 100 Mile House had the highest index. The community was home to a 21.6-per-cent increase in average sale price, the greatest jump in the region, rising to $410,600.
Next highest was Terrace at 33 per cent. That community recorded the highest average price at $467,492.
In contrast, the burden in Fort St. John was the most affordable at 19.6 per cent, up a scant 0.4 points from 2020, "largely due to slow growth in house prices."
Looking at other communities, affordability stood at 32.2 per cent in Prince Rupert, 29.4 per cent in Quesnel, 29.3 per cent in Williams Lake, 29.2 per cent in Smithers and 21.5 per cent in Kitimat.
For the first time, no community in the study recorded average prices below $300,000 and five were above $400,000, compared to just two in 2020.
At $340,028, Quesnel was home to the lowest average price. Second lowest was Williams Lake at $377,584.
Home ownership in all northern B.C. communities remained "very affordable especially when compared to the Vancouver region" where it stood at 93.1 per cent.
Mortgage costs are based on the average house price with a 25 per cent down payment and amortized over 25 years at a five-year fixed rate mortgage which, in turn, is based on Bank of Canada monthly data for a five-year conventional mortgage.
Median income is drawn from the census conducted in 2015 and adjusted by the growth rate for average weekly earnings for British Columbia as obtained from Statistics Canada.