New rules burden middle-class would-be home buyers unnecessarily, says an observer.
The undue focus on the effects of high-end home prices in Vancouver draws attention away from the fact that, by and large, houses in the city could’ve been still relatively affordable, according to a markets observer.
In an analysis published at the Dominion Lending Centres website, accredited mortgage professional Dustan Woodhouse argued that it is “short-sighted” to focus on average prices skewed by the skyrocketing costs in the luxury segment.
“What buyers rarely hear is the average price of the bottom 80% of listings of the Greater Vancouver Area. Y’know, the properties that the overwhelming majority of us live in,” Woodhouse wrote. “When we skim the ultra high end sales off the top, and look at the lower 80% of properties listed in the Lower Mainland we arrive at an average sale price of ~$597,000.”
“Such a property ($597,000) would today require household income of ~$108,000 using a 5.8% down payment ($34,700) to qualify for purchase” he added. “A $108,000 household income is certainly above the recently sighted average of $80,000, but not at all uncommon in the lower mainland in the era of the dual income household in which we currently live.”
More importantly, homes in this bracket are well within reach of the middle-classes—at least, prior to the new federal mortgage rules that took effect last month.
“It is also worth noting that previous to Oct 17, 2016 the income required for this same purchase price was ~$88,000.00 per year. In other words an experienced police officer, teacher, nurse, or firefighter could pretty much pull that $597,000.00 purchase off on their own income.”
Effectively, what the regulatory revisions accomplished in doing was penalizing would-be buyers who have stable verified income streams, exemplary credit scores, and no consumer debt loads, Woodhouse said.
“They [will need to] get themselves a $20,000 raise before they buy what they could have bought. Exactly what so many before them have bought, and what just ~0.30% of CDN’s ever stop making payments on.”
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In an analysis published at the Dominion Lending Centres website, accredited mortgage professional Dustan Woodhouse argued that it is “short-sighted” to focus on average prices skewed by the skyrocketing costs in the luxury segment.
“What buyers rarely hear is the average price of the bottom 80% of listings of the Greater Vancouver Area. Y’know, the properties that the overwhelming majority of us live in,” Woodhouse wrote. “When we skim the ultra high end sales off the top, and look at the lower 80% of properties listed in the Lower Mainland we arrive at an average sale price of ~$597,000.”
“Such a property ($597,000) would today require household income of ~$108,000 using a 5.8% down payment ($34,700) to qualify for purchase” he added. “A $108,000 household income is certainly above the recently sighted average of $80,000, but not at all uncommon in the lower mainland in the era of the dual income household in which we currently live.”
More importantly, homes in this bracket are well within reach of the middle-classes—at least, prior to the new federal mortgage rules that took effect last month.
“It is also worth noting that previous to Oct 17, 2016 the income required for this same purchase price was ~$88,000.00 per year. In other words an experienced police officer, teacher, nurse, or firefighter could pretty much pull that $597,000.00 purchase off on their own income.”
Effectively, what the regulatory revisions accomplished in doing was penalizing would-be buyers who have stable verified income streams, exemplary credit scores, and no consumer debt loads, Woodhouse said.
“They [will need to] get themselves a $20,000 raise before they buy what they could have bought. Exactly what so many before them have bought, and what just ~0.30% of CDN’s ever stop making payments on.”
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Housing affordability summit convenes in Vancouver
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