There’s a familiar joke in my province that “B.C.” stands for “bring cash”. The sentiment is fueled by the far-above average house prices in most of the major urban centres in British Columbia. According to the CBC the average house price in Canada is about $330 000 whereas Vancouver is about $610 000. Prices are above Canadian averages in smaller B.C. urban centres like Victoria, Kelowna and Kamloops as well. Affordability hits Canadians hard, especially in B.C. The joke is that average Canadians can not afford to buy houses. For example, Stats Canada lists the average wage in Canada as $22.21 as of September 2009 or approximately $40000 per year. According to the CMHC’s affordability calculator, a person making this wage can expect (with a 5% down payment; $100 per month heating cost; $250 dollar debt repayment; $150 property tax and assuming 4% over 30 year amortization) to be able to afford about a $200 000 house. I admit that I was generous with the numbers as often people have more than $250 debt especially with credit cards, line of credits, and car payments. With higher debt, the affordability drops significantly. This affordability is about $130 000 less than the average house price in Canada. Where I live, in Kamloops, $200 000 will usually buy you a small apartment or mobile home. This may be adequate for an individual but often these are too small for families who need 3 or more bedrooms. To make up for this both parents work usually work to buy a starter home or townhouse.

This is not new news to anyone. Most people are aware of the crunch and that two people need to work to pay a mortgage. However, are most people aware of how the government’s policy with CMHC may be contributing to this affordability crisis?
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