There has been much hubbub about how housing in Canada’s big cities is increasingly unaffordable, but some industry experts say ‘unaffordable’ is a relative term and especially when homes for sale in those cities often sell very quickly after being put onto the market. They argue that if they’re nearly all of them are selling then homes are in fact affordable if someone’s able to afford what is required to buy them. The question then becomes affordable for whom, and with that understood it’s important to understand that not everyone is operating with the same financial means.
This way of looking at housing affordability is important, and it is even more relevant in the bigger picture of things when we look at confirmed stats indicating how many of the people who are purchasing property in Vancouver, Toronto or elsewhere with a hot housing market are 1st-time homebuyers. Sure, they are likely being units in multi-family developments but the fact that they are able to assume the cost of buying a home does mean that it is hard to apply the unaffordable tag across every property and in relation to the purchasing capacity of every buyer.
Again, this is not to make less of the housing affordability crisis in Canada, but perspective is always important. Real estate professionals are also a part of all this and there will be those who say there’s no better place to be a realtor than in a major Canadian metropolis where homes often sell for well over asking price. That may be too simplistic a way of looking at it though, although what is certain is that our online real estate lead generations system here at Real Estate Leads is a proven effective way to build your real estate client base that much more effectively.
But back to topic – what is it that is allowing so many 1st-time homebuyers to not be prevented from buying a home because of the price of it as is the case with so many others who would like to buy a home – but can’t.
Between 10-20% Increases in 3 Years
A recent report showed that the number of first-time homebuyers buying homes in Vancouver increased between 10 and 20% each year between 2018 and 2020, and industry experts say the increases would have likely continued through 2021 and to where we are here in 2022. Detractors will say the majority of these people have FOMO and are over leveraging themselves to buy a home, but if there’s one thing that is for certain it is definitely not that simple.
Figures for the report were complied by the BC Ministry of Finance, and it also found that 5,602 first-time home buyers bought properties in Metro Vancouver in 2021. That number is about a 10% rise from the 5,114 who did the same in 2020 and is up just under 20% from the 5,602 that bought real estate for the first time in between Jan.1, 2018 and Dec.31 2020.
Another interesting point that goes somewhat against a popular narrative is that the majority of these 1st-time homebuyers (estimates being nearly 70%) were people who have been living in Vancouver for at least 10 years. This takes away from the credibility of those who’d say it’s foreign money that is making these home purchases possible. That’s just simply not the case, and people taking on mortgages to buy their first home over the last 3+ years face the same supply / demand realities distorting the market that everyone else does.
Dip in Relation to Entire Market
However, despite numbers rising the share of home purchases by first-time buyers of Vancouver real estate relative to the entire market actually went down in 2021, going from a market share of 8.8% for 2020 and then falling to 6.8% in 2021. If there’s any stat that does support the idea of declining overall affordability, that’s the one.
Go back to 2018 and the share by 1st-time homebuyers was 8.3%, and in 2019 it went up to 9.6% so it’s a fluctuating variable but generally speaking we are seeing the FTHB rate decline as part of the number of overall home purchases and while that may be something to note we also have to keep in mind it may also be a reflection of more of certain types of homes being put on the market as compared to others.
Activity in the pre-sale market has more or less reflected this same pattern though, and of course the majority of these developments will be multi-family housing and that further belies the belief that MANY 1st-time homebuyers are still able to get in to the market in the same way and buying the same types of homes that others have for generations when buying their first one.
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