How young Vancouver buyers are crashing the real estate party
How young Vancouver buyers are crashing the real estate party
He put 10 per cent down on the $265,000 two-bedroom suite in Langley, B.C. He only needed his parents’ help because the bank was antsy about him being so young. They lent him another 10 per cent, which he repaid. (His parents, with four other children and no Vancouver west-side house to cash out of, don't have money to burn.)
Mr. Kennedy, who has since married, is now looking for a slightly larger place to buy, a townhouse, with plans to rent out the original condo.
“It was a lot of work,” says Mr. Kennedy, who paid rent to his parents while he was saving for his first down payment. “There’s definitely sacrifices. I budgeted. I didn’t eat out. Some could say I missed some life experiences. But if you have that [home ownership] as your goal, anything is possible.”
Mr. Kennedy, as it turns out, is not as rare as many might think.
A recent analysis of home-ownership rates in Canada done by Vancouver-based Urban Futures shows that the proportion of young homeowners increased from 2006 to 2011, a period when prices appeared to be climbing out of reach in many urban centres, including Toronto, Calgary and Ottawa.
“The headlines that portray the current younger generation as being more challenged than previous younger generations to enter the owned side of the housing market are balanced by the data that show continued increase in home ownership rates among young age groups,” the report said.
Home-ownership rates among younger people in B.C.’s Lower Mainland went up more than the national average. Vancouver homeowners in the 20- to 24-year-old age bracket increased four percentage points, to 25 per cent, in those five years – putting young Vancouverites near the top of the list among Canadian cities in proportion of homeowners under 25. The rate went up to 37 per cent from 35 among those 25-29. It stayed around 50 per cent for the 30- to 34-year-olds.
As a result, about a third of people under 30 in the Lower Mainland own homes. That’s about 10 percentage points lower than in Calgary, but the same as the proportion in Toronto, says Andrew Ramlo, a director at Urban Futures.
UBC’s Sauder School of Business professor Tsur Somerville says part of the reason for Vancouver’s high rate of young homeowners is that the proliferation of condos and townhouses here gives them a lower-priced product to choose from compared with other cities that are dominated by houses. And they likely feel more pressured to buy early, because, like everyone else in the city, they worry they’ll be priced out if they don’t buy now.
Mr. Ramlo acknowledged that some of the home-ownership patterns in Vancouver are puzzling, given the disparity between incomes of young people and house prices.
An analysis of local incomes released last week by researcher and urban planner Andrew Yan, who works with Bing Thom Architects, showed that 25- to 55-year-olds with BAs in Vancouver make about $41,000 a year, $10,000 a year less than the median for Canada and $20,000 less than in top-paying Ottawa. The spread was even worse for people with master’s degrees– as though employers realize people are so desperate to be in Vancouver that they can pay them less.
“The relationship between incomes and prices of homes has totally broken down here,” Mr. Ramlo said. He, like others, said part of the explanation has to be that parents, who benefited from the last several decades of real-estate appreciation, are transferring their wealth to their children.
But that’s not all. It’s clear from talking to young people who are buying homes in the expensive Lower Mainland that they’re also strategizing how to crack the market on their own.
Siblings or friends will buy an apartment together until they’ve built up enough equity to sell and take their proceeds to buy their own dwellings. They’ll buy a condo in a suburb that’s affordable and rent it out to build up equity, while they continue to live in the central city. They’ll definitely make do with less space.
Because it’s equally clear that they’ve decided they’re going to buy in, no matter what. Despite what many say about the young being driven out of the Lower Mainland, they’ve decided they’re not leaving.
“People I know here couldn’t imagine going somewhere else,” said Kent Maier, 31, who just closed this month on a near-$400,000 condo a few blocks from St. Paul’s hospital downtown. Mr. Maier, a federal government employee and his partner, Fabian Gutierrez, an immigration consultant in training, came from Edmonton a year ago and say they are never returning to that city, no matter what the house prices are there. “Most people I know are buying or planning to buy. Prices are high but they’re not going to change and you might as well get in.”
For Jordan O’Donnell and husband Chris Richards – she works as a specialized tutor, he is a social-media consultant at the Vancouver airport – buying became an emotional decision about moving to a new life phase.
“This was the first step of being an adult,” said Mr. Richards, 30, who said he and his 29-year-old wife chose Richmond because that’s where they grew up and where their parents still live.
They saved enough for most of the 20-per-cent down payment needed for their $300,000 townhouse – “a real fixer-upper, 43 years old, near Garden City and Williams” – and got over the hump with the help of Ms. O’Donnell’s father. (That saved them extra costs that get tacked onto a mortgage with a less-than-20-per-cent down payment.)
Some young homeowners have become slightly evangelical about the need for others to realize it’s possible if they stop being so clueless about money.
Eesmyal Santos-Brault, a green-building consultant, bought his first condo 10 years ago when he was 28 and working at a non-profit for near minimum wage.
He didn’t think he’d even qualify for a mortgage, but his mother, a real estate agent, told him just to try. She also offered to lend him the $7,000 he needed for the minimum down payment on a Commercial Drive condo.
“She kept pushing me even though I was saying: ‘I can’t qualify, I’m poor, I’m just a kid.’” To his surprise, he found the bank would indeed lend him money.
“I keep telling all my artsy, environmental friends that they should do this,” says Mr. Santos-Brault, who has since bought a townhouse in Strathcona while renting out the condo.
And he worries that people – those in certain fields who believe they’re above talking about money or who come from lower socio-economic backgrounds – are handicapped by the attitudes they’ve inherited from their families or social circle.
“They don’t know anyone who owns, they don’t understand money, they just don’t think it’s possible. I keep telling them: “It’s a conspiracy to keep you as renters. Then you can pay someone else’s mortgage.’”
Follow Frances Bula on Twitter: @fabulavancouver
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