The results of the 9th Annual Demographia International Housing Affordability Survey are out and Kitchener is rated moderately unaffordable. The survey uses a median multiple which is calculated by taking the median house price and dividing by the median household income. For the 3rd Quarter of 2012, Kitchener had a median sale price of $282,000 and a median household income of $71,900. Therefore, the median multiple for Kitchener is 3.9. Out of 337 markets studied across the world, Kitchener ranked 210th on affordability. In Canada, Kitchener was 23rd out of 35 markets ranked.
Where did some of the other cities rank? With a median multiple of 9.5, Vancouver, not surprisingly, was judged the 2nd most unaffordable market in the world after only Hong Kong. Likewise, Toronto and Montreal were severely unaffordable at 5.9 and 5.1 respectively.
Some cities have higher median house prices but are more affordable because their median household income is higher. Among these are Calgary, Edmonton, Guelph, Oshawa and Ottawa.
So where are the bargains? Any market with a median multiple below 3.0 is rated affordable. Frederickton and Moncton, NB tied for first in Canada at 2.3. In Ontario, Windsor and Thunder Bay were rated affordable with scores of 2.5 and 2.8 respectively.
Finally, a couple things to note. I suspect Waterloo and Cambridge were included in the survey results. Also, the report notes that when these surveys began, Canada was among the most affordable housing markets in the world. Since then, affordability has declined as income growth has failed to keep pace with rising house prices brought about by low interest rates post 9/11. Should prices in Kitchener continue to climb without an increase in household income, this market will cross over into the next category which is seriously unaffordable. In this context, one can see why our Finance Minister enacted policy changes with CMHC to curb price growth. You can read the full report at http://demographia.com.
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