Restrictions, not affordability, hurting Vancouver, says broker

Restrictions, not affordability, hurting Vancouver, says broker

Restrictions, not affordability, hurting Vancouver, says broker
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.
 
“It depends on what the first-time home buyers want to buy,” says Gina Best, broker/owner of Mortgage Alliance West. “If they are looking at a house, they have had their hands tied by the government and have to look at under a million.”
 
According to the RBC survey, Vancouver remains the least affordable city to buy a house in Canada while home ownership in Toronto is becoming more difficult.
 
“The Canadian housing market cooled significantly in the past year,” Craig Wright, chief economist at Royal Bank of Canada, said in a statement. “There is mounting evidence that activity is no longer weakening.”
 
Not true, says Best, who continues to see market slowdown.
 
“I completely disagree with this,” she says. “Just before the rules came down, I did a first-time home buyer who bought a house for over a million dollars with 5 per cent down and their debt service was about 38 per cent.”
 
Times have changed, but so have the expectations of some first-time buyers.
 
“Those home buyers here are not looking for the single family home right away,” says Best. “They understand that they are starting with the first step; then they move up the ladder.”
 
According to the report, the costs of owning a detached bungalow in Vancouver take up 82.3 per cent of a typical household’s income, up 0.1 percentage points from the previous quarter. In Toronto, that figure is 53.8 per cent, up 0.8 points, according to a housing affordability report for the first quarter produced by Canada’s largest lender.
 
But the biggest contributing factor to a sluggish market is the media, says Best.
 
“The biggest problem we have is the media and the perception that the general population gets about what is going on,” she says. “All these doom-and-gloom stories about the housing bubble bursting are creating consumer uncertainty.”
7 Comments
  • Reed 2013-05-27 8:52:26 AM
    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.
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  • Paolo Di Petta | dipettamortgage.com 2013-05-27 10:27:33 AM
    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.
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  • Paul 2013-05-27 10:46:57 AM
    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.
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