You need to earn more than $129K to buy a home in Ottawa: Report
You need to earn more than $129K to buy a home in Ottawa: Report
ottawa.ctvnews.ca
You need to earn more than $129K to buy a home in Ottawa: Report
The report notes that residents in the capital should be making $129,320 per year -- as of February, 2024 -- to qualify for a mortgage to purchase the average priced home. The income needed to prequalify has risen by $480 from January to February.
The average price of a home in Ottawa was $621,600 in January and $628,500 in February – an increase of $6,900, reads the report.
Every single time.
Average home price aligns with being in the top 10% or so of income, because the entire renting market exists, as well as the entire "living at home" market (or lack thereof)
Average income should align with around the 10% to 15% mark of home prices.
People like to forget that the entire renters market exists, consuming up a very large chunk of earners who aren't actually interested in buying a home atm for various reasons.
And not "I can't afford it" but genuine "I don't want to settle down in 1 place yet" reasons. IE if their job requires moving, or if they don't even plan to live long term at the same location, etc. Keep in mind that the entire demographic of earners includes teenagers living at home working part time while in high school, a huge chunk of the market isn't even close to affording even the bottom 1% of homes, they can't even afford to rent because they aren't at that stage of life yet.
Everytime you see an article talk about the average or median home price, remember that it should line up with around the top 10% or so of earners.
So, then you ask yourself, does someone in the top 10% earning around 129k a year sound close to the mark?
It's a smidge high still, but not that far off.
I agree that average/median/benchmark home price reports aren't very revealing. Individual income vs family income is also a confounding factor.
I disagree with your assertion that only 10% of wage earners ought to qualify for mortgages large enough for home ownership. (Not house ownership, home ownership).
I would even like there to be something within the price range of a person working part time.
That wasn't my assertion.
The top 10% of earners align with the top 50% of homes.
Its a curve though, so yes, there are very much homes for people below that.
Keep in mind the curve of earners starts at literally making zero dollars a year, and scales up to Jeff bezos.
So it's reasonable that the bottom chunk that aren't earning much, if anything, at all can't afford a home.
I would expect in a functional economy a person working full time min wage can rent about 300 Sq ft of private living space or so.
That should be the starting point of the renting line, which already puts you above the bottom 10% to 20% of earners that are making less than that (part time work, or not working at all)
I think it's unreasonable to expect someone working part time to earn enough for a home on their own. That is 100% "you need a roommate or two" territory imo.
The cheapest homes to own should align with a step below average earner.
So if the average earner is making 70k, I'd expect the cheapest/lowest bid homes to be affordable for around 55k to 60k or so a year combined income.
These homes should be in the "40 minute commute" or "fixer upper" territory, or its very small, where it's got a downside but it's a home to call your own.
The average home is going to be easily double to triple the cost of bottom tier of homes, because that's how the math just works and normal to expect in a bell curve.