The difference between household income and what homebuyers can actually qualify for in Vancouver continues to widen — making homeownership increasingly out of reach for many.
According to a new report from Ratesdotca, a provider of digital insurance and financial services, the gap in Vancouver between what the average household can afford and what they actually need to earn to purchase an average-priced home is the highest in Canada — a staggering $121,053.
Victor Tran, mortgage and real estate expert at Ratesdotca, says the current economic climate is discouraging for would-be buyers:
“The current economic environment is not encouraging for many would-be homeowners, who may be uneasy taking on a large debt such as a mortgage in uncertain times.”
While sluggish sales have softened prices in some parts of the country, markets like Vancouver remain resilient, with prices staying elevated due to ongoing demand and limited supply. Tran believes that meaningful price drops are unlikely in traditionally desirable cities like Vancouver.
Using data from Statistics Canada and wage growth projections from Normandin-Beaudry, Ratesdotca calculated the maximum mortgage an average Vancouver household can afford. That number was then compared to the income actually needed to buy a home at the average market price.
In Vancouver, where the average home price is $1.2 million, a household would need to earn over $250,000 annually to qualify. But in reality, the average family can only qualify for a mortgage of about $600,000 — leaving a massive affordability gap.
“In Vancouver, this gap represents more than an entire income for many households,” the report said.
Key Findings from the Report:
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Vancouver has the worst affordability gap in the country, with a shortfall of $121,053 between what’s needed and what’s realistically affordable for the average household.
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Housing in Alberta remains more accessible, with Calgary showing an $18,643 income surplus and Edmonton leading with a $50,604 surplus.
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High housing costs in Vancouver have triggered migration trends. The city has seen a significant loss in population, with residents moving to more affordable regions — a pattern also seen in Toronto and Montreal.
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Condos are more affordable than detached homes, but the situation is still bleak. In Vancouver, the income gap to afford a condo remains substantial, although better than for single-family homes.
Tran explains the gap has grown significantly in Vancouver over the last five years, largely due to limited land availability and soaring demand. And even with more development or zoning changes, affordability will remain a major issue unless household incomes rise or buyers come up with significantly larger down payments.
“Unless people can come up with a higher down payment, their income can only qualify for so much,” he said.
“It’s difficult to find a new job with a substantial income jump, so it really comes down to how much more money can be put into that down payment.”
Despite the challenges, Tran believes the market will continue to move — just not for everyone.
“Unfortunately, a large percentage of the population in Vancouver won’t be able to enter the market. Many young people in their 20s and 30s are starting to give up on the dream of homeownership.”
The silver lining? Rents are starting to decline slightly, providing some relief for those staying out of the ownership race.
“There’s nothing wrong with renting,” Tran says. “If we look at countries in Europe and Asia, it’s totally normal to rent for life — people are generally happier and not tied to overwhelming debt.”