The Real Estate Report
Shedding light on the stats, facts and subtleties of Lower Mainland real estate
You need only listen in on the chatter at your local microbrewery to get a sense of the role that real estate plays in our lives in B.C: as a topic of conversation, it’s second only to the weather. Economists mention how much it contributes to employment and gross domestic product; the planners talk about issues related to zoning, land use, and density; the engineers cite the associated need for services and infrastructure above and below the ground; and the real estate agents and developers collect data on current per-square-foot values. And everyone else talks about it in terms of community.
It is these notions of real estate—the land, the buildings, and the infrastructure that supports it all—that knit us together into what we call a community. From the local microbrew, coffeehouse, community centre or park, real estate is one of the binding factors in our community interactions. Considered more broadly, real estate also reflects our national character as it ties not only our local neighbourhoods together, but our cities and regions together.
Issues related to real estate can also cause great tension. In the Lower Mainland, where 59 per cent of the province’s population lives on less than two per cent of the provincial land base, housing accessibility, affordability and suitability are among the top concerns.
This feature, with Bcbusiness partnering with Rennie’s Intelligence team, was sparked over a lunch between Canada Wide Media founder Peter Legge and Rennie Group. The goal is to provide insight into the current state of the market with an examination of some of the pressing issues concerning housing, densification, rentals and ownership.
Myth-busting: The Flight of the Millennial Data show the net outflow is in fact Gen-xers—and it has been going on for decades
Speculation that Vancouver’s high housing prices are forcing young people out of the city seems to make sense. After all, who but only the highest income earners and those well established in their careers can possibly afford to live in the city?
Surprisingly, Canadian census data show that the truth is stranger than fiction in this housing-demographic narrative. An examination of this narrative using the most recent census data on population by age group reveals which segments of the population grew and which declined. But this can be considered in two different ways: first by the change in the number of people in an age group over the last five years; and second by tracking each five-year age cohort over a five-year period. For example, tracking 30- to 34-year-olds in 2011 who then became 35- to 39-year-olds in 2016.
In Greater Vancouver, the data show all of the under-45 age groups saw net growth when considered on a cohort basis, indicating positive net in-migration to these age groups. Conversely, all of the 45-plus cohorts declined between 2011 and 2016, reflecting a combination of net out-migration and mortality for these older groups.
This is similar to other Canadian metro regions; in addition to Greater Vancouver, millennials continue to flow into Montreal, Ottawa-gatineau, Toronto, Calgary, Edmonton, Victoria and Kelowna, among others. For Greater Vancouver, this is also a pattern that is reflected historically if previous census counts are considered.
With the change in housing prices over the last couple of years—which varies widely across these regions— the uniformity seen in the pattern of mobility both historically here in Greater Vancouver and recently between other metro regions in Canada could lead to the conclusion that home prices have not significantly influenced the regional pattern of mobility.
So what about the city of Vancouver? If the truism were to ring true, we would expect that cohort changes at the city level would differ significantly from the regional profile. Indeed, the data confirm this, with almost all of the under-30 cohorts showing net gains (save for the under-five cohort, which declined slightly) between 2011 and 2016 in the city. In other words, net out-migration of the city of Vancouver’s population is seen beginning at the 30- to 34-year-old cohort—much younger than the regional pattern where it begins with the 45- to 49-year-old cohort. With home prices that well exceed the regional average, this pattern of change could be seen as support for the notion that prices are pushing millennials from the city.
However, a closer look at the data shows that this net outflow occurs not for the millennials (those born after 1984), but for the Gen-xers (born between 1965 and 1983). So it appears that it is Gen-xers who we should be concerned about.
Further to this, the unique pattern of cohort change for the city of Vancouver has been remarkably stable for more than two decades, a period spanning years of both rapid home price increase (2014 to 2016), and relative stagnation (1981 to 1987, and 1994 to 2002).
So what is driving this pattern? While prices will certainly have an impact, the pattern is more likely explained by Vancouver’s unique mix of housing, both in terms of its form and tenure. For example, Vancouver has the secondhighest share of dwellings in high-rise apartment formats in the region at 29 per cent, with New Westminster first at 32 per cent. Present-day Gen-xers, along with their earlier counterparts, may simply be leaving the city in search of housing that can better accommodate the needs of their growing families.
Similarly, the city has the greatest share of rental accommodation in the region, at more than 50 per cent of all households. This pattern simply may be a product of growing families seeking home ownership and needing to look outside of the city. In some senses, this notion is supported by the regional profile that shows net gains up to the age of 45, as some of these movers would potentially be those moving out of the city into surrounding municipalities in search of housing opportunities not found in the city.
The numbers reveal the plight of future generations as they likely aspire to ground-oriented, owner-occupied housing forms within the older core of this region. And this highlights the need to focus on developing effective local land use, zoning and housing policies to ensure a broad diversity of housing types, tenures and prices are added within the city.
The Demands of Housing Supply in the Lower Mainland Region will need to build 22,000 net additional homes each year to 2021
If housing is fundamentally about people, then housing-market dynamics are about supply and demand. From price increases and multiple-offer scenarios to rents, renovictions and vacancy rates, many aspects of the housing market are influenced by the interplay between how much housing is available and how much is needed.
The Lower Mainland is home to 2.86 million people living in 1.11 million homes. Though the region has grown each year— averaging 34,500 additional people and 14,900 additional occupied dwellings annually between 1997 and 2016—this growth has been uneven, with an average of 26,400 people added in the early-2000s compared to 36,100 added each year in the past half-decade.
Annual immigration to Canada currently sits at just over 300,000 people, and is expected to edge up slightly from this level between 2017 and 2021. In part based on this national outlook, total population growth in the Lower Mainland region that stretches from Squamish to Hope is expected to average more than 47,000 annually over the next five years.
To accommodate the needs of our growing and changing population, the region will need to build 22,000 net additional homes each year to 2021. This additional demand would be 14 per cent higher than any five-year period in the past two decades.
Relative to this level of demand, housing starts and completions can help shed some light on the supply that is expected to come to market in the coming years. For example, in 2017 there will be an estimated 26,700 housing completions which, given the current number of starts, is expected to fall toward 24,200 by 2021. This relates to 21,700 net additional units demanded in 2017, increasing to 22,400 by 2021.
While completions may appear to be high when compared to additional demand over the 2017 to 2021 period, a couple of points must be made. First, completions should on average exceed net additional occupancy demand, as there will always be units built to satisfy replacement demand, or the rebuilding of homes that have reached the end of their functional life. While these units will appear in the starts and completions data, they are simply replacing old dwellings and thus are not adding to the stock of available housing and fulfilling additional demand.
Second, there are periods when completions have fallen well below additional demand. Over the past 20 years, the Lower Mainland’s housing market has gone through two distinct phases of under- building. The most recent spanned 2012 to 2016, a period that coincided with rapidly rising prices and historically low vacancy rates, a consequence of those basic supply and demand dynamics we learned about back in Econ 101. However, with the number of starts hitting 20-year highs in both 2015 and 2016 (an average of 26,700 units in each of those two years), supply is expected to exceed additional occupancy demand in the next couple of years and will, we hope, ease some of the price and vacancy pressures that have developed in the recent past.
So You Want to Buy a Condo Greg Zayadi has some sound advice when it comes to Lower Mainland condos
Greg Zayadi is the senior vice-president of Rennie Group’s Developer Services division. We caught up with him to get his perspective on the condo and pre-sale real estate market in the Lower Mainland—and the notion that local buyers are being excluded.
The new-condo market in the Lower Mainland is exceptionally robust right now. What are the most popular areas for development?
The simplest answer is anywhere that you see good planning policy meeting rapid transit. Our market has been undeniably changed over the past decade to the point that we can now say we are certainly an urbanized region.
Some areas of the region have transformed faster than others—the city of Burnaby, as an example, focused on the growth of key city centres. Metrotown, Brentwood and Lougheed have all evolved rapidly into new urban nodes because of that proactive planning and vision. New Westminster has experienced steady growth because they were able to focus their planning efforts around the [Skytrain] stations in their city, and the Brewery District is an excellent example of how new neighbourhoods can be introduced.
What areas are also on your radar?
Personally, I am excited about North Vancouver—first and foremost because it is one of the only areas north of the Fraser that will be delivering new townhome
communities to the region in 2018. Additionally, we will see multiple lowerdensity condominium developments introduced. These housing forms are really important to the region because they offer a more ground-scale form of housing that many want. If you ask the people coming into our sales centres, we find people like the feel of these neighbourhoods. The form allows more people to stay within the communities they grew up in, but it also allows their parents an opportunity to remain in an area that they built their roots.
More specifically, an area that I think we will look back on for years to come and say, “that was the right thing to do, that worked,” is Moodyville, which is a new community plan east of Lonsdale on Third Street. North Vancouver had the vision a few years ago of enabling the transformation of the area by a communitywide rezoning. What is special is that they didn’t transform to high-density forms; they enabled these moderate heights on a grander scale. In less than three years, 150 (mainly older) homes have been purchased and are in the process of redevelopment to create about 500 homes. These are family homes. It’s housing that suits a lot of needs, which is what communities need.
Downtown Vancouver is always an area we will have on our radar. It demonstrates the sheer transformation of our wider region and what is interesting for us to watch is the number of Boomers coming into the downtown core—it proves to us that the promise of urban life is now certainly a reality.
And you cannot have a discussion about our region without focusing on South of the Fraser and the multiple different communities such as Cloverdale, White Rock and Central City ( just to name a few). These areas are providing some of the affordability for our region and, through the connection of rapid transit, Central City is becoming a very desirable option for not just area residents who have long supported the city’s vision, but also for those coming from north of the Fraser who are now aware of the livability these areas offer. We are really excited to watch that area of our region as more connectivity through transit is introduced to connect neighbouring areas like Guildford and Newton.
What other trends are you seeing?
People are thinking through their housing options differently and thinking about ownership differently. For some, this means that they are looking outside of the region for options of ownership and choosing to rent the housing they require in town.
We hear constantly from Rennie Advisors (our Realtors) that some clients are turning attention to Vancouver Island, Kelowna, Whistler or south of the border for recreational properties that they can own as legacy assets. This shapes what we need to build as a region; it means that family housing (rental and condominium) will see the same growth of demand in the next few years as we have seen for the last few.
So watch for continued discussion around livability of urban form options, demand for rental housing and demand for bedrooms.
Condo developers have to address these changing needs, such as flex space and dog-washing stations. How are they doing it?
Storage is becoming as valuable as parking through the region. Developers have to keep up with the change that seems to now be constant. A perfect example is the impact online shopping has had on the design of condominium units. We now talk about the “Amazon room” that is required to intake and store the growing volume of packages being delivered on a daily basis. And we are already thinking about increased delivery of food and groceries and how to accommodate that.
Developers are attuned to the changing trends and demands and are driven to respond fast enough to market needs, whether that would be more creative options for creating additional bedrooms or designing buildings with no one-bedroom options in areas where families are the predominant group demanding homes.
There's a lot of talk of Baby Boomers downsizing. How is this affecting the market?
Over the last while, age has become almost irrelevant. It’s more about lifestyle choice. You have people in their twenties who are happy to move outside the city in order to have more space and live in a quieter neighbourhood. And, yet, you have those in their sixties wanting a much more urban lifestyle: they bike all the time, they go out to restaurants more. Storage is consistently important, as is having reasonable living space. In some cases, with a 1,200-sq.-ft. unit, you don’t need three bedrooms. You’re building a two-bedroom and den. For the downsizer, they don’t need three bedrooms but they want space and they’re happy to pay for it. One of the most interesting things is the amount of equity that the Baby Boomer has: the number of mortgage-free, clear-title homes that the over-50 buyer has and the impact of this. What’s happening is they’re selling that single-family house, and it’s creating
two or three more households. They’re taking some of their equity and helping their children buy a property. That has a huge impact on our market.
Have pre-sales of condos ramped up?
With supply of new housing as constrained as it has been for the past few years, we have now entered a reality where presale is in nearly every market as the only alternative for those looking to purchase a new home. In fact, according to industry analysts, of the more than 20,000 new homes completing in our region this year, only 50 units will be unsold.
What this means is that we are seeing the prevalence and frequency of pre-sale campaigns across our region at a level that surpasses all previous records. Everyone from the first-time buyer to the empty nester to the investor is adjusting to this new reality and it requires, for most, that one thinks further ahead about their needs for housing. Take what we have, and will see, along the Evergreen Line as an example—markets in Burnaby, Coquitlam and Port Moody are not new to pre-sale campaigns, but what has changed is that we have gone from seeing 50 to 60 per cent of a project being sold at the launch of a community to the total sellout of communities before the completion of even the parkade.
Where this is more pronounced is in how we sell townhomes. Traditionally, the home buyer was not willing to purchase a townhome more than three to six months in advance. Now, again a direct result of constrained supply, we see purchasers willing to wait a year or more for delivery of their home.
With so much demand and limited supply, how can a potential buyer navigate this pre-sale market?
There’s no magic or trick to it. It’s more a case of being confident in what you’re looking for, of having done some research, knowing the size and the price points so that when you enter into a pre-sale program that may be oversubscribed or in high demand, you’re able to confidently make a quick decision. After that, it really does depend on the neighbourhood and the product type you’re looking for.
That said, there are few things you need to make sure you do: make sure that you are registered with the buildings and communities that you are interested in. If you have a Realtor that you like to work with and trust, then make sure they are on top of this, too. After that, you need to make sure you are following up and that you establish a two-way communication with the sales team in the community you are interested in.
Some people believe that developers market exclusively in Asia and that local buyers don't get a chance to buy units that are sold offshore. How do you answer this?
The offshore buyer simply is not as prevalent in the new-home market as the media would suggest, and that is for a few simple reasons.
First, developers will not and cannot get financing if they have a meaningful level of foreign investment. Financing requirements are very clear and rigid when it comes to whom developers sell to and even how many units they sell to one purchaser. With little exception, Vancouver developers need to assume conventional financing with one or more of the large Canadian lenders and so that alone restricts the amount of participation foreign purchasers have in the new home market.
Vancouver is one of the most diverse, multicultural populations in North America and the pre-sales that we enter into no doubt represent that diversity. My hope is that we can start having more of a conversation about the fact that the demand for housing locally continues to outpace supply and, if we can address that fact, then we can then address how we better respond to the needs within the region.
How much housing do we need to support the population growth in the Lower Mainland?
Most estimates indicate that we will have to build 530,000 new homes before 2041 to accommodate this growth. To put it into perspective, we need to accommodate another Burnaby, New Westminster, North Shore and Vancouver into the area between the coastal mountains, the U.S. border and English Bay to Abbotsford.
Rental Renaissance Today’s fast-rising rents are the result of an apartment-building slump between 2003 and 2012. But relief is on the way as rental developers play catch-up
Conversations about housing, particularly here in Greater Vancouver, tend to revolve around the cost of ownership: how long can prices keep rising? How much will interest rates go up? Where is everyone getting their down payment from? But with rental housing representing more than a third of homes in this region, this more flexible (and often less expensive) form of tenure is an important cog in our housing market, if not at high-end dining establishments.
If we start by looking at the supply side of the rental market in Greater Vancouver, purpose-built rental apartment starts have accounted for an average of 15 per cent of all apartment starts since 1990—not an insignificant number. Having said this, rental has played a varying role over the past two-and-a-half decades, ranging from a high of 46 per cent of apartment starts in 2001 to a low of only four per cent in 2007. Furthermore, during an extended period from 2003 to 2012, the region experienced below-average investment in its rental apartment stock, with rental apartment starts averaging only eight per cent of total apartment starts. Even in absolute terms, the 735 rental apartment units started on average each year between 2003 and 2012 was 47 per cent below the 1990-2016 average of 1,375. As the regional population continued to grow over this period, the consequences of this underbuilding are reflected in the current state of the rental market in this region.
Let’s take a closer look. The region’s rental vacancy, while not quite at an all-time low, threatens to get there. Having declined for five consecutive years, it now sits at 0.7 per cent. (Only 2008, at 0.6 per cent, was lower.) Within the region, 11 municipalities are at or below the regional average vacancy rate, with Delta and UBC having virtually no vacancy whatsoever. The North Shore isn’t much better, with West Vancouver and the two North Vans ranging between 0.2
per cent and 0.3 per cent. At the “high” end of the vacancy rate spectrum is Coquitlam, at a mere 1.8 per cent. Again, this is largely a function of a lack of additional supply in the face of continually growing demand.
A knock-on effect of low and declining vacancy rates is rising rents. With the average monthly cost of being a tenant in Greater Vancouver having risen steadily since 1990, the latest data from Canada Mortgage and Housing Corporation ( CMHC) show average rent (for all bedroom types and all years of construction) of $1,236 in 2016. This reflects an increase of almost 20 per cent over the last five years, and of 41 per cent over the last decade. Across the region, the average rent varies considerably, with areas such as UBC, West Vancouver and the District of North Vancouver ranking at the top. Surrey, White Rock and Maple Ridge land at the bottom, at nearly half the rent of the UBC area. (Note that CMHC’S average rent data do not necessarily reflect true market rents for newly built and/or newly available units, in part due rent-control policy and in part due to their exclusive focus on purpose-built rental structures.)
Perhaps not surprisingly, given the decade-long dearth of rental additions, the most recent year-over-year change in average rent in Metro Vancouver reached 6.4 per cent, marking the highest relative increase in the past 25 years. Within the region, five municipalities saw average rents increase at a faster pace than this region-wide average, led by the District of North Vancouver, while only Pitt Meadows saw its average rent decline (by 4.4 per cent). Compared to the past 25-year average annual rent increase of 2.8 per cent, and the previous fastest yearover-year increase of 4.6 per cent (in 2007), it’s clear that a lack of supply is driving the cost of renting upwards.
So where do we stand today in terms of supply? Well, if we underbuilt rental apartments in the decade leading up 2012, we’ve been playing catch-up since, with the number of rental apartment starts in each of the years 2013 to 2016 exceeding the previous 25-year high of 2,535 in 2001. More specifically, rental apartment starts over the past four years have averaged 3,730 per year, reaching a peak of 6,177 in 2016. Thus far in 2017 (through August), we’ve started 2,577 rental apartments, already above the pre-2013 high. Notably, this rise in rental construction hasn’t been driven by increased construction activity overall: compared to an average of 15 per cent going back to 1990, recent rental apartment starts have been above this average, accounting for between 17 and 25 per cent of total apartment starts in Metro Vancouver.
As these recent starts become completions and available for occupancy, we would hope to see some moderation in the tension in the rental market as measured by rents and vacancy rates. That said, to the degree that this above-average number of completions is just playing catch-up for more than a decade of underbuilding, the tension may persist for a few years yet.
Changing Skylines, Changing Lot Lines Canadian cities continue to grow and accommodate more residents, but not in the way they used to
The skylines and lot lines of many of Canada’s metro regions have shifted significantly since the early 1990s. A growing share of the new housing that has been added over that time is in formats other than that of the traditional singlefamily, detached house. As of August this year, more than 86,400 new multi-family units were started in Canada, more than double the number of traditional detached homes. The lion’s share of these multifamily units was in high-density formats, with apartments accounting for 72 per cent of the new multi-family starts and the remainder being semi-detached and rowhomes.
While the 1990s saw almost 332,000 new apartments built Canada-wide, this number grew by 74 per cent to 576,000 during the 2000s, and since 2010, 627,000 new apartment units were started in Canada. Despite the perception of a construction boom—given the number of construction cranes that currently dot the skylines of our major metro regions—the current rate of apartment growth is not the fastest on record. In fact, the greatest boom in apartment additions was actually way back in the late 1960s and early 1970s. In 1969 alone more than 104,000 apartments were started in Canada, a level that has not been achieved since (the closest in recent history was the 93,000 units started in 2012).
The increase in apartment construction during the late 1960s and early 1970s was in part driven by the first baby boomers coming of age and leaving home, in part by growing levels of immigration to Canada—especially following changes to immigration policy in 1967 and adoption of the official multiculturalism policy of 1971. Interestingly, it was also a time when federal tax policies were favourable to rental housing, which saw a number of these apartment additions hit the rental market.
If this period represented the high point of apartment development in Canada, the early 1990s represented the low point: in the last decade of the 20th century, only 33,000 apartments were started on average each year (this during a period of relatively robust total starts of 124,000 per year). This was also a period of only moderate immigration to Canada and a time when many of Canada’s boomers had transitioned from apartment living to family rearing.
These Canada-wide trends are certainly reflected in English Canada’s two largest metro regions. In 2016 a total of 18,900 apartments were started in the Vancouver metro region, the largest single-year number on record (the closest were the 13,000 units started in 2007 and 2008, and then the 12,000 in 1969). A similar situation is seen in Toronto with a record 29,617 apartment starts in 2012, followed closely by the 25,825 started in 2015 (by way of comparison in 1968 Toronto saw almost 29,000 apartment starts).
Just as with the late-1960s boom, the current resurgence in apartment construction is in part being driven by the pull of demographics. On the one hand, we have a large and growing younger population: indeed, there are now more baby busters (those born 1966 to 1985, 9.7 million) and millennials (1986 to 2005, 9.5 million) than there are boomers (1946 to 1965, 9.3 million). Given this, you could say that the busters are the new boomers (insofar as aggregate size is concerned). That said, it is also being driven by a growing cohort of retirees and emptynesters looking to downsize, a segment of our populations that will see the greatest relative growth in the coming years.
Unlike the late-1960s and early-1970s boom, however, the apartment trend is also being pushed by increasingly constrained urban landscapes in our metro regions. Supporting evidence of this comes by way of the most recent census, which showed that of the 25 major municipalities in the Lower Mainland that stretch from Hope to Squamish, 21 of them (fully 84 per cent) saw a decline in their stock of single-family housing between 2011 and 2016.
The traditional lot lines of many singlefamily neighbourhoods are being redrawn to accommodate our growing, aging, and changing populations. From the pull of demographics to the push of urban land economics, these trends will continue to see the multi-family segments of our housing markets grow in importance as the image of the traditional, large-lot, single-family home with a white picket fence fades from our rear-view mirrors.
The Power of Equity It isn’t just migrants and outsiders pushing up home prices. Consider the role of existing residents’ rising home equity
When it comes to understanding rising home prices, the drivers cited typically range from immigration and foreign investment to speculators, shadowflippers, and the underground economy. What is not commonly cited in these discussions about prices is the potential impact that the region’s existing residents may have on prices and affordability.
According to the 2011 Census there were an estimated 2.4 million residents in Metro Vancouver living in 909,500 homes (the 2016 data has yet to be released). Of these homes, roughly 591,600 units were owned and the remaining 317,800 were rented. The census also reported that 41 per cent of those in the region who were homeowners had no mortgage—that is, 240,000 households lived mortgage-free. While only 17 per cent of owners under the age of 45 had no mortgage, 53 per cent of those 45 and older also did not. The proportion for these older age groups ranged from almost a third of owners aged 45 to 54 (30 per cent) to fully 83 per cent of those 75 and older.
The census also gives us an estimate of the value of these mortgage-free homes. In 2011, the average value of mortgage-free homes in Metro Vancouver was $771,257. Households led by those aged 55 to 64 had the highest values, at $818,000, with values falling off slightly through the older age groups to $706,000 for mortgage-free owners aged 75 and over. Looking at this data, it’s possible to estimate the total current amount of mortgage-free equity in Metro Vancouver.
Between 2011 and August 2017 the region’s benchmark price increased by 64 per cent, which would have translated into an increase in value of the average mortgage-free dwelling to $1.27 million. Considering the demographic profile of the mortgage-free homes and their associated values results in an estimate of $355 billion in mortgage-free equity in the region today. Of this amount, slightly more than half is held by the baby boomer generation (those aged 55 to 74) with a further one-fifth being held by those over the age of 75.
There’s a direct impact on prices of this older population trading up the housing value ladder and being able to benefit from the increasing value of their homes, years of paying down their mortgages, rising incomes and falling interest rates that we have seen since the 1980s. These factors have facilitated the Boomers movement up the housing value ladder, multiple rungs at a time.
Another impact on prices can be seen as this generation helps their children get into the housing market. For example, a 25- to 34-year-old couple that has a household income in the range of $75,000, qualifies at an interest rate of 4.64 per cent, and after meeting all other lending criteria could afford a home in the range of $350,000 with a five-per-cent down payment. Of interest, there have been more than 8,000 sales in Metro Vancouver this year that this couple could afford, representing 18 per cent of all sales year-to-date.
But consider the implications of one set of parents offering to help boost the kids’ down payment. Ratehub stats show that for all first-time home buyers in B.C., 42 per cent received down payment help from their parents (and 45 per cent of first time buyers who put down 20 per cent or more had parental help).
If the young couple gets parental assistance toward a 25-per-cent down with an additional $95,000, they have two options. First they could purchase the same $350,000 condo that their current income could support and significantly reduce their mortgage to $235,000 from $330,000. Or they could add the $95,000 to their existing purchase price and consider a purchase in the neighbourhood of $445,000 (there have been 13,590 sales in the Lower Mainland this year that were no more expensive than this, which represented 30 per cent of all sales year-to-date).
This means the couple’s buying power is now almost 30 per cent higher than it otherwise would have been, thereby pushing home prices up at the margin. Put slightly differently, their purchase price is 30 per cent higher than what the couple could otherwise afford based on their income (but note that here, their mortgage payment has not changed at all).
There are currently 250,000 boomer households in Metro Vancouver (144,000 of which are mortgage-free) and more than 570,000 children aged 20 to 34. With the census showing that 220,000 of them are still living at home, the power of equity will continue to play a role in pushing prices. ■