The price to buy a house in Victoria remains high and still seems to be climbing, though much slower than before.
For the few months the median price for a house in greater Victoria has hovered at around $510 000 and the average price has been in the $570 000 range. Condos are closing in on $300 000. What this means is that the cost to buy a house has become unrealistic for many people. The first time home buyer has to look at the bottom end of the condo market.
You can get into an older 2 bedroom condo for about $220 000. Assuming you get a low equity mortgage, you are looking at payments of about $1500 a month. Add to that another $100 a month in property tax and $200 in condo fees, you will be paying about $1800 a month for this place. A couple where both are making about $45 000 a year means a take home pay of about $5500 a month. The $1800 is about 1/3 of their take home pay each month.
If you want to get into the cheapest house available, you are looking at about $370 000 to buy anything. This would mean a monthly mortgage payment of $2500 a month over 25 years - if you go to 40 years you can reduce this to $2200 a month. Add to this your property taxes and other municipal fees and you get to a monthly housing cost of $2600 to $2900 a month. This speaks to the need to have a take home income of $7500 to $9000 range or a gross annual income of about $70 000 each for a couple.
This places houses outside of the range of new buyers in this region.
Meanwhile the rental market in this city has become dire. There are simply many more potential renters than houses to rent. Rents are rising and landlords have no trouble getting people willing to pay the higher rents. To rent a house is going to cost you about $1800 a month in this city if you can find one. Yes, this makes it affordable for a working couple, but it really does not work for single earner families.
Getting a job paying $12 an hour is easy in this city. You would earn about $22 000 a year at that rate. The rent for a house would be almost that much. You can rent an apartment for somewhere in the range of $700 a month. If you rent something like that and are earning $12 per hour, you are left with about $1000 a month to spend.
Housing is a problem and will remain a problem in this city unless there is a dramatic increase in the amount of housing stock available. I can see all the signs that the real estate market has topped out. I expect it will begin to decline over 2008 and take a bigger drop in 2009. This might open up the market in the city.