Edmonton is seriously unaffordable

As you may have came across in the news, or on the blogs, Demographia released their 5th Annual International Housing Affordability Survey this week. They compare 265 cities from Canada, USA, U.K., and Oceania, and rank them according to their measure of affordability.

Their calculation for that is actually quite simple and straight forward, take the median house price and divide it by the median income for that city. It’s something like the “three times rule” for house buying, where the rule of thumb is you should try not to spend more then three times your annual income on your residence.

Much in line with that they consider anything below 3.0 to be “affordable”, 3.1-4.0 as “moderately unaffordable”, 4.1-5.0 as “seriously unaffordable”, and 5.1+ as “severely unaffordable.”

As you have likely deduced already, Edmonton came in that second last range as of September of 2008… 4.2 to be exact. (Not sure exactly which/whose figures they are using, but for what it’s worth according to the last census (2007) the median household income was $79,300).

Our recent boom is also well represented by the data. Three years ago though Edmonton was nicely in the “affordable” category, with a 2.8. Come 2006 and the onset of the price explosion we quickly vaulted up to 3.5… then further up in 2007, when they came in at 4.3 and left the city in the “seriously unaffordable” grouping. So we’re actually down a modicum for 2008, reflecting the price erosion we’ve been seeing.

So while median income did grow substantially during the boom, they did not keep pace with the growth in real estate prices. Calgary has also seem a similar escalation as Edmonton, in 2004 they came in at 3.0, 2005 at 3.2, 2006 at 4.4, 2007 at 4.8, 2008 again at 4.8. For those interested, here are how the other Canadian markets stack up, from most-to-least affordable.

Cape Breton – 2.1
Thunder Bay – 2.2
Chatham – 2.4
Windsor – 2.4
Moncton – 2.5
Saguenay – 2.6
Saint John – 2.7
Trois Rivieres – 2.7
St. Johns – 2.8
Winnipeg – 3.0

Moderately Unaffordable
London – 3.2
Brantford – 3.3
Sudbury – 3.3
Barrie – 3.4
Guelph – 3.4
Ottawa – 3.4
Quebec – 3.4
Kingston – 3.5
Kitchener – 3.5
Regina – 3.5
Halifax – 3.6
Peterborough – 3.6
St. Catherines/Niagara – 3.6
Sherbrooke – 3.8
Hamilton – 4.0

Seriously Unaffordable
Edmonton – 4.2
Montreal – 4.6
Saskatoon – 4.6
Calgary – 4.8
Toronto – 4.8

Severely Unaffordable
Abbotsford – 6.5
Kelowna – 6.8
Victoria – 7.4
Vancouver – 8.4

Vancouver actually comes in as the 4th least affordable city in the survey, behind only Gold Coast, Aus (8.7), Honolulu, USA (9.1), and Sunshine Coast, Aus (9.6)… which also leaves Vancouver as the least affordable major city surveyed, as none of those other three have populations of even a million.

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