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Who’s buying property in the Lower Mainland? Amazingly, people under 30

October 19th, 2014 · 12 Comments

I know this story is going to bring out the hate mail. As well, the timing is weird, coming as it does in the middle of a frenzy of “All our young people are leaving town! There’s nothing for sale under two million!”

But I’ve been intrigued by this for a while, ever since the various young people in my life started to hit their mid-20s and ’30s. And I started to hear about their friends buying. I, like others, had thought every youngster was being driven out of town to Saskatoon. But the stories kept coming in.  Two sisters, friends of my stepdaughter, bought a condo together five years ago, then sold, split the proceeds, and each bought one of their own. The friends of someone else’s son, guys who work in port jobs, have done the same with a condo in North Van. A friend of my niece’s, a young Vietnamese guy from Edmonton who does social marketing for sports events, bought a place in Burnaby a couple of years ago. And, weirdly, they weren’t doing it with big whacks of their parents’ money.

So I’ve wanted to do this story for several years. Even interviewed Matt Kennedy, the young guy in this story, back in 2011 when he first bought. But didn’t get around to doing the story until I saw a hook recently, the Urban Futures analysis of data showing that home ownership among the young and the oldest increased between 2006 and 2011.

My story, of course, has prompted all kinds of comments on the Globe’s site about how it must be just real-estate promotion. (And, I have to say, only in Vancouver would we be profoundly suspicious of a 20-something who saves his money, lives at home, works hard, doesn’t go out, in order to be able to buy a piece of property. In another city, another era, he’d be called a smart and thrifty person.)

There’s no doubt that the young people buying in Vancouver, more so than other places except possibly contemporary Toronto, are settling for smaller spaces, perhaps more precarious footholds. (Strata councils, ack!)

But people who’ve wanted to live in desirable places have done that for a while. I decided a long time ago that I wasn’t going to move to the suburbs, even though I grew up in North Van and loved it. I have stayed in Vancouver but have had to give up on some other things. I bought a house together with my mother originally. I’ve never been able to buy in exactly the neighbourhoods I wanted. I’ve always had less space, shared space, compromises. I think a lot of people in the city have done that. And, if they didn’t want to make those compromises, they moved to Burnaby, Coquitlam, Surrey, Langley, for the last 50 years.

It’s harder now, I’m not questioning that. Besides the pressures on housing from people outside the market (Americans buying vacation condos, whatever is happening with Chinese capital), one of our issues is we have a generation that wants to live in the city. Previous generations, except for a certain set of oddballs, accepted that they would move to the suburbs when they had kids. This generation is much less happy with that answer. So they’re creating pressure on the market too.

In spite of that, they’re buying in  major metro areas in greater numbers than ever. It might not fit your preconceptions, but unless you’ve decided you don’t believe in statistics, this has to make you think.

The story is also cut and pasted on the next page, for those who can’t get past the wall

Matthew Kennedy is a young man many people would consider to be the equivalent of a unicorn in Vancouver. This is, after all, the city renowned in popular mythology as a place with such astronomical house prices that its young will be forced to live in basement suites forever.

Mr. Kennedy bought his first condo four years ago when he was 20, using the money he had saved from the job he started right after he finished high school. The first one, at H&R Block, doing deliveries. The second, doing what his father had done and he’d loved since a kid, painting cars.

He put 10 per cent down on the $265,000 two-bedroom suite in Langley, B.C. He only needed his parents’ help because the bank was antsy about him being so young. They lent him another 10 per cent, which he repaid. (His parents, with four other children and no Vancouver west-side house to cash out of, don’t have money to burn.)

Mr. Kennedy, who has since married, is now looking for a slightly larger place to buy, a townhouse, with plans to rent out the original condo.

Matthew Kennedy in his Langley, B.C. home. Photo by Darryl Dyck for The Globe and Mail

“It was a lot of work,” says Mr. Kennedy, who paid rent to his parents while he was saving for his first down payment. “There’s definitely sacrifices. I budgeted. I didn’t eat out. Some could say I missed some life experiences. But if you have that [home ownership] as your goal, anything is possible.”

Mr. Kennedy, as it turns out, is not as rare as many might think.

A recent analysis of home-ownership rates in Canada done by Vancouver-based Urban Futures shows that the proportion of young homeowners increased from 2006 to 2011, a period when prices appeared to be climbing out of reach in many urban centres, including Toronto, Calgary and Ottawa.

“The headlines that portray the current younger generation as being more challenged than previous younger generations to enter the owned side of the housing market are balanced by the data that show continued increase in home ownership rates among young age groups,” the report said.

Home-ownership rates among younger people in B.C.’s Lower Mainland went up more than the national average. Vancouver homeowners in the 20- to 24-year-old age bracket increased four percentage points, to 25 per cent, in those five years – putting young Vancouverites near the top of the list among Canadian cities in proportion of homeowners under 25. The rate went up to 37 per cent from 35 among those 25-29. It stayed around 50 per cent for the 30- to 34-year-olds.

As a result, about a third of people under 30 in the Lower Mainland own homes. That’s about 10 percentage points lower than in Calgary, but the same as the proportion in Toronto, says Andrew Ramlo, a director at Urban Futures.

UBC’s Sauder School of Business professor Tsur Somerville says part of the reason for Vancouver’s high rate of young homeowners is that the proliferation of condos and townhouses here gives them a lower-priced product to choose from compared with other cities that are dominated by houses. And they likely feel more pressured to buy early, because, like everyone else in the city, they worry they’ll be priced out if they don’t buy now.

Mr. Ramlo acknowledged that some of the home-ownership patterns in Vancouver are puzzling, given the disparity between incomes of young people and house prices.

An analysis of local incomes released last week by researcher and urban planner Andrew Yan, who works with Bing Thom Architects, showed that 25- to 55-year-olds with BAs in Vancouver make about $41,000 a year, $10,000 a year less than the median for Canada and $20,000 less than in top-paying Ottawa. The spread was even worse for people with master’s degrees– as though employers realize people are so desperate to be in Vancouver that they can pay them less.

“The relationship between incomes and prices of homes has totally broken down here,” Mr. Ramlo said. He, like others, said part of the explanation has to be that parents, who benefited from the last several decades of real-estate appreciation, are transferring their wealth to their children.

But that’s not all. It’s clear from talking to young people who are buying homes in the expensive Lower Mainland that they’re also strategizing how to crack the market on their own.

Siblings or friends will buy an apartment together until they’ve built up enough equity to sell and take their proceeds to buy their own dwellings. They’ll buy a condo in a suburb that’s affordable and rent it out to build up equity, while they continue to live in the central city. They’ll definitely make do with less space.

Because it’s equally clear that they’ve decided they’re going to buy in, no matter what. Despite what many say about the young being driven out of the Lower Mainland, they’ve decided they’re not leaving.

“People I know here couldn’t imagine going somewhere else,” said Kent Maier, 31, who just closed this month on a near-$400,000 condo a few blocks from St. Paul’s hospital downtown. Mr. Maier, a federal government employee and his partner, Fabian Gutierrez, an immigration consultant in training, came from Edmonton a year ago and say they are never returning to that city, no matter what the house prices are there. “Most people I know are buying or planning to buy. Prices are high but they’re not going to change and you might as well get in.”

For Jordan O’Donnell and husband Chris Richards – she works as a specialized tutor, he is a social-media consultant at the Vancouver airport – buying became an emotional decision about moving to a new life phase.

“This was the first step of being an adult,” said Mr. Richards, 30, who said he and his 29-year-old wife chose Richmond because that’s where they grew up and where their parents still live.

They saved enough for most of the 20-per-cent down payment needed for their $300,000 townhouse – “a real fixer-upper, 43 years old, near Garden City and Williams” – and got over the hump with the help of Ms. O’Donnell’s father. (That saved them extra costs that get tacked onto a mortgage with a less-than-20-per-cent down payment.)

Some young homeowners have become slightly evangelical about the need for others to realize it’s possible if they stop being so clueless about money.

Eesmyal Santos-Brault, a green-building consultant, bought his first condo 10 years ago when he was 28 and working at a non-profit for near minimum wage.

He didn’t think he’d even qualify for a mortgage, but his mother, a real estate agent, told him just to try. She also offered to lend him the $7,000 he needed for the minimum down payment on a Commercial Drive condo.

“She kept pushing me even though I was saying: ‘I can’t qualify, I’m poor, I’m just a kid.’” To his surprise, he found the bank would indeed lend him money.

“I keep telling all my artsy, environmental friends that they should do this,” says Mr. Santos-Brault, who has since bought a townhouse in Strathcona while renting out the condo.

And he worries that people – those in certain fields who believe they’re above talking about money or who come from lower socio-economic backgrounds – are handicapped by the attitudes they’ve inherited from their families or social circle.

“They don’t know anyone who owns, they don’t understand money, they just don’t think it’s possible. I keep telling them: “It’s a conspiracy to keep you as renters. Then you can pay someone else’s mortgage.’”

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