Mortgage Restrictions, not Affordability, is Hurting Vancouver According to Some Brokers
Forget about million-dollar homes and sellers that will cling to their properties until they can get the highest price for them. The problem in Vancouver isn’t the high prices that are popping up all over the country; it’s mortgage restrictions that are limiting home buyers’ options, says one broker.
“If they are looking at a house, they have had their hands tied by the government and have to look at under a million,” says Gina Best, broker and owner of Mortgage Alliance West. But it does depend on what type of home they’re willing to choose.
“It depends on what the first-time home buyers want to buy,” she continues.
According to the survey, the costs of owning even a bungalow in Vancouver will consume 82.3 per cent of a household’s income. Not only is that considerably high, but it continues to rise. That percentage is already up 0.1 percentage points from last quarter.
The survey also pointed towards the problem in Toronto, where ownership takes up 53.8 per cent of a household’s income. And that’s up 0.8 per cent from last quarter.
Some think though that this cooling we’re seeing is just the beginning. And that buyers will be even harder hit before we begin to see an improvement.
“The Canadian housing market cooled significantly in the past year,” says Craig Wright, chief economist at Royal Bank of Canada. “There is mounting evidence that activity is no longer weakening.”
But Best doesn’t think so. She says that while the rules put into place nearly a year ago are making it more difficult; but that home buyers just now need to look at all their options, instead of hanging onto a dream of single family or other type of home.
“I completely disagree with this,” says Best in regards to Wright’s comments. “Just before the rules came down, I helped 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.”
But, she says, while a massive cooling is not coming, buyers are choosing more wisely.
“Those home buyers here are not looking for the single family home right away,” she says. “They understand that they are starting with the first step; then they move up the ladder.”
She also says that when it comes to pessimistic ideas about the future of the real estate market, the media certainly isn’t helping.
“The biggest problem we have is the media and the perception that the general population gets about what is going on,” she continues. “All these doom and gloom stories about the housing bubble bursting are creating consumer uncertainty.”