I was asked by a Twitter pal to discuss what’s affordable for someone making an income of $60-70K a year.
Okay, so affordability in this context is going to mean what a buyer can qualify to buy, i.e. what the lender considers they are able to afford. I was hoping to get a breakdown of specific numbers from a mortgage broker pal but he’s off on a cruise so I talked to York Polk, another mortgage broker I work with from time to time, and he says the rough rule of thumb is that you can afford four times your gross income. That assumes no major debts or other obligations, but it’s a guideline.
Let’s start with $60,000 a year. Using this rule of thumb, you might be able to afford a $ 240,000 home, depending on your debt load. That would put you in a condo, because other than mobile homes (there is one listed in Stittsville currently at $ 239,900), there is nothing freehold in that price range in Ottawa and hasn’t been for years. And currently, there is not a single condo priced in the $230- $240K range in Ottawa — there is one in Pembroke listed at $ 239,900.00 on Matheson with condo fees of $ 425/month. So if you earn $60K a year, Ottawa is pretty much unaffordable right now.
Let’s look at a gross income of $ 65,000 a year, which pushes you up to $ 260K according to this rough guide.
You are still looking at a condo. There are five currently on the market: let’s look at one bedrooms first. (I won’t give specific addresses: if there is any particular unit you’re interested in and you don’t have a realtor, you can contact me and I can provide more information. If you are working with a realtor, and have a signed buyer representation agreement, please don’t: I am unable to respond to your questions under our legislation as you already have representation, and would have to redirect you to your agent.)
There is a one bedroom on McArthur listed at $ 259,900 with condo fees of $ 522/month. Lovely renovated unit with one underground parking. Nice balcony view.
There is a 1 BR/1 BA unit on Ellesmere Road, listed at $ 248K with condo fees of $ 427/month that include heat and hydro. There is underground parking.
There is a one bedroom in a low rise building on Brittany listed at $249,900, ground floor unit, the condo fees are low at $218/month but there is no parking (there are lots of transit stops nearby, though).
In terms of two bedroom units, there is a 2 BR/1 BA on Ohio Street, in Billings Bridge, priced at $245K with condo fees of $ 542/month and one parking spot. The flooring has been torn up and it needs some work for sure.
There is a 2 BR/2BA unit in a high rise building on Brittany listed at $ 259,900. The condo fees of $627/month include heat and hydro and there is underground parking. Nice layout – needs updates.
And finally, there’s an updated unit on Jasmine Crescent listed at $249,900 – 2 BR/1 BA, condo fees of $ 597 a month include heat and hydro. There is one surfaced parking space and a locker.
Your realtor can tell you about these areas, walkability, safety etc. Some of these units are priced on the low end because there are special assessments: these are charges above and beyond condo fees imposed on owners due to unexpected repairs. Again, talk to your realtor. They can also inform you about amenities in some of these buildings – usually, the more amenities, the higher the condo fees. One thing all these units have in common, at this price, are shared laundries.
So, at 65K in gross income, there are some options, but slim pickings. What about at $70K a year, which qualifies you for a property of up to $280K, again, assuming you don’t have any significant debts?
There are twelve units listed for sale in Ottawa in this price range. All but two are in the same buildings referred to above, and vary from one to two bedroom units so I’m not going to go over each one. The other two are on Arrowsmith.
But there is a 3 BR/2 BA stacked unit on Fenerty in Katimavik priced at $279,900. . There one surfaced parking spot . The condo fees are high: $711/month. But it does have in suite laundry, and it looks quite nice.
So, as you can see, if you earn $60-70K in Ottawa, there are only 17 units that you might be able to afford listed currently. That’s in a city of a million. Many of these could use some updating: one needs all new flooring because it’s just exposed concrete currently.
On top of that are the special assessments in several as I mentioned. Some areas are safer than others; again, best to talk to a realtor. There’s no point buying a unit that you can’t sell later on because the area is not considered safe. Nor do you want to buy a unit in a poorly managed building. Special assessments can be a one-off charge because of unexpected costs due to the pandemic or they can be part of an ongoing problem, again, talk to your realtor.
I’m not sure what the federal and provincial governments can do to make housing more affordable for buyers in these income ranges. We have limited supply and tremendous demand, and that’s certainly a big part of it, but the high interest rates also make it hard for buyers to qualify: they have to qualify for financing at 2 points above the contract rate the bank is offering, even though it looks like interest rates have peaked and may be coming down. Many simply can’t meet that threshold.
All we can do, I guess, is hope that those interest rates come down quickly, because I don’t see any new buildings on the horizon that would accommodate these particular buyers. It’s no wonder that young first time buyers are considering moving to other provinces where homes are more affordable, and that’s our loss. The US allows buyers to write off their mortgage costs against income. Maybe that’s something the federal or provincial government can consider, because there’s something wrong when people who are working hard and making a reasonably good income are priced right out of the market.
Kiss and Sell 