Hesperia – Why is the City involved in developing attainable housing and just what is attainable housing?
The City of Vernon says it recognizes a need for attainable housing to ensure the availability for the community work force. It states that attainable housing includes secondary rental suites, townhouses, row houses and condominium apartments that are priced in a range that are accessible to those earning moderate family incomes up to $100,000 per year.
Fair enough. But what does that mean? Let’s look at the Math – and let’s admit right of the bat that we will make some broad assumptions:
1. 2 wage earners per housing unit
2. Wage parity for both partners... pick yourself up off the floor.. It could happen here – Really.
3. 35 hour work week
4. No overtime
5. Gross earning...
In this scenario –
$100,000 per year divided by 2 - $50,000 each
That means each person earns
$4,166.47 per month ($50k divided by 12) or $961.54 per week ($50k divided by 52- because you hopefully will be paid during that 2 week vacation)
This means if each person works 35 hours per week they would need to earn $27.47 per hour to hit the target of $50,000 per year, AND have a partner earning the same amount.
Ok WHERE are THOSE Jobs you are asking... but that is a topic for another day. Let’s stay focused on our scenario...
I asked my Local Expert Mortgage Specialist Pamela Owen from RBC what our hypothetical homebuyers would qualify for in today’s market for a mortgage with their $100,000 income. Here is her response:
So at the average income of gross- $100,000 per yr, with 0$ down, using the 4 yr fixed rate sale of 5.59%, assuming property taxes of at least $2000/yr, and 50$/month for heating costs, and assuming $700/month in other debt pmts-- which is realistic as the average Canadian household has at least 2 credit cards, 1 credit line, and a car/truck loan--- then those clients would qualify for a purchase price of $450,000.
This doesn't include using any extra money that they could draw in if they had a basement suite for rent. If they did, then their purchase price could go up even more. (This example is over 40 yrs.)
With 5% down, this puts the purchase price up to $465,000 over 40 yrs.
Over 25 yrs, the same household could afford a purchase price of $400,000 with 0$ down, and with 5% down, this would put them in a home valued at $430,000 over 25 yrs.
I have tried several times – but I just cannot do it. I cannot put those numbers and attainable in the same sentence.