Considering Moving to Greater Vancouver?
You need to earn more than $147,000 a year to purchase a home in the Greater Vancouver area, where the average home price has now surged past the $1 million mark. That is according to the latest real estate reports coming out of the Vancouver housing market.
Joannah Connolly, editor of Real Estate Weekly, says to not believe the hype that moving to Vancouver is unaffordable. According to Connolly, the market reports and surveys are slightly flawed and do not paint the entire picture. Yes, it is expensive. Nevertheless, she claims, moving here can be affordable when you consider the following factors.
First up, when looking at the comparison of the median price of a house with the average household income, there is a large chunk of high-end homes bought by international investors, in particular Chinese investors. These are not the average Vancouver resident and they do not have the average Vancouverite income. These super luxury home prices are skewing the average home price. Connolly points out that either that segment of the market needs to be removed or the income of those international buyers needs to be included as well, to better represent market reports.
Secondly, Connolly points out that equity is in play with purchases. Not all buyers are brand new moving to the local market. Many buyers may have bought into the market ten, fifteen, or more than twenty years ago. The average buyer is not a first-time buyer and they have already enjoyed the benefit of seeing their existing home price increase over the years. They are taking out a mortgage on a portion of the property, not the whole amount, due to the equity that they have built over the years.
Thirdly, the final factor that homebuyers should consider is that interest rates are at historic lows. In 1987, the typical home mortgage was more expensive to service than it is now. This means that a mortgage payment on a typical home in 2014 is only slightly more than a mortgage payment that for a home in the late 80s or early 90s. Future rate increases are always something to consider, but unlikely to reach historic highs compared to today’s historic lows.
Many people want to move to Vancouver because it is a very desirable city; it always has been and always will be. When you consider what you can really afford, there are options that exist. The price of moving into single-family homes is always going to be high, due to the geographical constraints of Vancouver, as land is scare and lots are often the most valuable portion of a real estate property. For new buyers, buying small and buying and moving into outlying areas will give them the opportunity to get on the property ladder and move their way up over the coming years. Nevertheless, moving into condominiums and townhomes remain a very affordable option for young and new buyers looking to get into the market, and a foot in the front door.
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