High home prices make Vancouverites house rich, but cash poor
A recent study reveals Vancouverites have the highest net worth in Canada as a result of their pricey homes; so why do so many of us feel like we’re in the poor house?
It’s probably because, with median incomes below the national average, Vancouver residents are grappling with monster mortgages, as well as the highest consumer debt loads in the country.
And while it’s great building home equity, this does little to improve financial positioning until a place is sold and a profit realized.
Peter Miron, author of the 2013 Wealthscapes study for Toronto-based Environics Analytics, confirms Vancouver’s enviable net worth — the value of real estate plus liquid assets minus debt — is due largely to a real estate market he describes as “out-of-this world”.
The Real Estate Board of Greater Vancouver reported, in June, the typical price for all types of residential properties in the Lower Mainland was $601,900. The comparable statistic in the Greater Toronto Area was $515,000.
Within the city of Vancouver, a detached West side home had a typical price tag of $2.06 million; it was $844,600 on the East side.
And the dividing line between east and west gradually is shifting eastward with more and more properties of $1 million-plus to be found east of Ontario Street.
In cities where home prices are high, incomes also tend to be robust. But in Vancouver, median family income is at $66,970 — lower than the $70,000 Canadian average.
And so, a lot of Vancouverites rent. Or purchase compact condos. And many large West side properties these days are being converted into two- and three-unit townhouses or half duplexes.
Yet, despite our housing hardship, the Environics Analytics study makes it sound as though we’re in an enviable position.
Vancouver net worth, the study reports, is $662,600 a person, with 65 per cent of people’s assets tied up in real estate — five per cent more than the national average.
In B.C., average net worth is $550,554. Across Canada it’s $400,151.
The Real Estate Board’s latest report says Vancouver-area property sales in July were up 27 per cent over a year ago.
According to the board, the current market reflects “pent-up demand from the slowdown in sales activity we saw at the end of last year.”
Despite the brisk market, I found a spring foray into the housing market, led by top notch realtor Rosalee McRae, hair-raising and unproductive.
In a visit to one open house — a Kitsilano townhouse selling for $800,000-plus — the first step through the front door revealed a mildew smell. After that, it didn’t matter that the wall-to-wall carpets looked soiled or the kitchen and bathrooms were circa 1970.
A tour through a succession of unimpressive properties — a few with bedrooms on the lower floor or a kitchen on the top floor — led me to believe sellers were pricing their properties too high, by $100,000 or more.
But further scrutiny, of 54 West side properties that fit my search criteria and sold last spring, revealed otherwise.
Most had sold in under a month, several within days.
In 11 of the transactions, buyers paid more than asking price, in one case $45,000 more.
On the other hand, in 11 cases, owners lowered their asking prices to achieve a sale. But they generally did so only by $20,000 to $50,000.
With a further challenge of having to pay real estate commission and B.C.’s property transfer tax, it’s fair to say Vancouver real estate, even for those of us with the highest net worth in Canada, is indeed out of this world.
Source: Barbara Yaffe, Vancouver Sun
