Wealth a bigger factor than income in Vancouver home sales, new study suggests

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Money, not annual income, is fueling the purchase of expensive homes by some of the lowest-paid workers in British Columbia, a new study shows.

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The difference between home prices and local wages is in the province, with homes in the Vancouver area selling for more than $1 million over the years.

Now, new data shows that a specific Buyers in the lowest-income quintile, with an average annual income of $29,800, spent an average of $499,000 on a home in 2018, according to the Canadian Housing Statistics Program (CHSP) report.

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In comparison, someone in the middle quintet with a median income of $97,600 spent an average of $490,000 on a home, according to the study, which analyzed property assessments, land-registry data and tax filings.

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“The difference between property prices and income in some areas indicates that sources other than income can play a significant role in homeownership,” the report said. Annik Gaujan, senior analyst at CHSP, said the data suggests that many home buyers are either taking huge mortgages or using savings and money to make purchases.

The study attempts to provide a measure of housing affordability by analyzing the purchase price of the property against the buyer’s income. High The price-to-earnings ratio, the greater the financial burden the buyer takes on.

Since CHSP is dependent on cooperation For the data by provinces, it analyzed only three provincial real estate markets: BC, Nova Scotia and New Brunswick. The study is not a comprehensive look at the country, especially because it does not include the two largest markets: Ontario and Quebec.

Study found that BCs had more than double the average price-to-income ratio of 5.4 Ratios in Nova Scotia and New Brunswick.

The highest average price-to-income ratio was found in West Vancouver, followed by Richmond. There, buyers spent 17 times and 12 times their income, respectively.

What is surprising about the CHSP data is that buyers in the lowest-income quintile were able to afford in BC. In the second-lowest quintile, a buyer with a median income of $65,500 spent an average of $450,000 on a property. In contrast, in the top quintile, a buyer with a median income of $223,000 spent an average of $673,000 on a home.

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For Bottom Quintile, Ellen Weintraub, a mortgage broker based in the Toronto area, said that an average-income buyer can’t buy a home until they own a home. A huge down payment. but he said people Those who make $30,000 a year usually don’t have significant savings.

“Even if they can borrow $300,000, how can they make their monthly payments and food, utilities, their income is $2,500 a month gross?” Weintraub, director of Mortgage Outlets Inc., said.

The CHSP study noted that its income measurement does not capture assets accumulated through previous home ownership, savings or financial support that are not on property title, such as a parent.

Laura Martin, chief operating officer, mortgage brokerage Matrix Mortgage Global, said that often the biggest barrier to entry for home buyers as expected is having enough money to afford the down payment.

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