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Mortgage Broker News | 27 May 2013, 12:00 AM Agree 0
According to a recent RBC Economics Research study, Vancouver remains the least affordable city in Canada to buy a home – something that isn’t stopping first-timers prepared to lower their expectations, says one broker.
  • Reed | 27 May 2013, 08:52 AM Agree 0
    Can we have a person in the mortgage industry write these articles? The stat that everyone is throwing around ("the cost of owning a detached bungalow in vancouver takes up 82% of a typical household income") is a ridiculous and meaningless statistic.

    First of all, its the cost of buying, not the cost of owning. But specifically the average bungalow in vancouver has been owned for decades, and has no mortgage on it, and will be torn down when it sells to build a multi-unit building. And the average household DOES NOT BUY a bungalow. They rent and are protected by rent controls.

    Its irresponsible reporting to just re-vomit some report and call it journalism.
  • Paolo Di Petta | dipettamortgage.com | 27 May 2013, 10:27 AM Agree 0
    Hey, remember when not paying $1M+ for a home was normal? HA!.... Tough crowd, huh?

    How is "cost of ownership" a meaningless statistic? If cost of ownership is 82%, then that means there's only 18% of income for everything else. I'd say both of those numbers are EXTREMELY important for a variety of reasons.
  • Paul | 27 May 2013, 10:46 AM Agree 0
    How can people survive with 82% of a typical household income goes to own a home ?

    Totally meaningless statistic.

    Most of my clients only have 65% LTV mortgage, some up to 80%, very very few of them over 80%.

    Housing is difficult to afford, this is generally true in all big cities.

    I don't see any people jump into the market doing 95% LTV mortgage without thinking if they can afford later. May be a few but definitely not many.
  • Reed | 27 May 2013, 10:50 AM Agree 0
    @ Paolo - I was distinguishing between the cost of ownership vs the cost of buying - they arent the same thing, and the statistic is relevant to the cost of buying. Everyone who bought prior is not represented in the statistic. And since the average person in vancouver doesn't own a bungalow (and couldnt get a mortgage at those ratios anyways), its doubly and triply irrelevant.

    But it sure gets lots of airtime.
  • Paolo Di Petta | dipettamortgage.com | 27 May 2013, 11:00 AM Agree 0
    I think both are meaningful statistics in their own right.

    Additionally, they point to a bigger problem - housing right now just isn't affordable to people getting into the market.

    We've already tried the approach that subsidizes purchases using FTHB tax credits and RRSP usage, but that didn't work - that only caused the market to skyrocket and become less affordable. Now, it's time to tackle this problem from a different angle and to try figure out how to cool the market off so that salaries can catch up.
  • Bryan Jaskolka | 01 Jun 2013, 04:51 AM Agree 0
    And Reed, where did we get your statistic from, shall we ask? No, that 82% of income cost comes from OWNING not BUYING. It includes things like property tax, utility costs, maintenance costs, etc. That stat comes from RBC, who has analysts and experts collecting and comparing this data all the time. No it's not bad to branch out and see what other people are saying, but it is bad to totally discredit someone, swoop in with your own statistics and comments, and then not have anything to back them up. The author, who I'm certain is in the mortgage industry, has clearly identified their source, so what's your beef? Mine is that you're name-calling before taking your ball and going home.
  • Reed | 01 Jun 2013, 07:56 AM Agree 0
    Hi Bryan. I know I'm right, but you can check for yourself. The report: http://www.rbc.com/economics/market/pdf/house.pdf

    "The RBC Housing Affordability Measures show the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes, and utilities on a detached bungalow, a standard two- storey home and a standard condo (excluding main- tenance fees) at the going market prices."

    Note it is at the going prices, which is my point. They also use the posted rate as the measure for mortgage rates. If you think that is reasonable, I'm sure your clients would like to hear about it. :)
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