# Vancouver millennials have least purchasing power in Canada



## tavogl (Oct 1, 2014)

This is how I feel, wife and I are making 110k a year (starting this year) since I was in school and had a crappy job before... that and this income is not enough to get us in a decent apartment, not even mention a house. We have no debt (just paid that off  yay) but would like to have kids.... we don't think we can afford to do both, have kids and buy a condo, and let buy a condo alone, we would have to save for 3 years for a downpayment... which in 3 years who knows what we can afford since prices are going up so quickly. The only reason people with lower incomes are buying properties is because A) They are nuts and they are spending ALL their money in mortgage B) Daddy chipped in a nice downpayment so monthly payments are low C) They don't plan on having kids, or travelling (ever!) sorry if this offends anyone, it wasn't my intention to do so... I just needed to vent. 

http://www.vancitybuzz.com/2016/05/vancouver-millennials-least-purchasing-power-canada/


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## RCB (Jan 11, 2014)

And that is why my husband, toddler, baby and I moved from the GVR and BC in 1998. We were never going to be able to afford a decent home of our own.


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## Ag Driver (Dec 13, 2012)

I think I would love to move to BC, but I know I likely never will because I can't afford it.


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## none (Jan 15, 2013)

Counterpoint: Renting is what you do when your life is so interesting you don't notice where you are living

It's a stupid house / condo. The thing I love about renting is that I have a pile of cash to invest and have fun with. Life can be much better renting compared to owning.

https://www.thestar.com/opinion/com...you-sure-you-want-to-own-a-house-mallick.html


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## nobleea (Oct 11, 2013)

> The average millennial couple earned a combined annual salary of $72,291 in 2015, which Vancity says is the second lowest rate in Canada. After essentials are paid for – think taxes, clothes, utilities, and everything that allows you to function in life – they’re left with $41,609. After homeownership costs of $44,354 are subtracted, *millennial couples are left with an annual debt of $2,745.*
> Young homeowners in Canada might want to consider packing up and moving to Edmonton, though – *millennials in the city have $47,000 in discretionary income*, the highest in Canada.


Think how easy it is to get ahead with investments when you have $50K more each year to play with.


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## MoreMiles (Apr 20, 2011)

RCB said:


> And that is why my husband, toddler, baby and I moved from the GVR and BC in 1998. We were never going to be able to afford a decent home of our own.


Sorry to tell you, that was probably the worst decision of your life. You would have been a multimillionaire by now if you just stayed and bought something like $300k house at that time.

Even with mortgage, it's almost paid off 18 years later at this time, you can easily sell it retire early.


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## Ag Driver (Dec 13, 2012)

MoreMiles said:


> Sorry to tell you, that was probably the worst decision of your life. You would have been a multimillionaire by now if you just stayed and bought something like $300k house at that time.
> 
> Even with mortgage, it's almost paid off 18 years later at this time, you can easily sell it retire early.


Well, aren't you so wise with your crystal ball and your 20/20 hind sight vision. You should write a book.


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## MoreMiles (Apr 20, 2011)

In 1998, people said the Vancouver houses have gone up so much already because of Hong Kong immigrants. Many people were scared of 1997 Chinese takeover. 

Who would have thought a high price and become so much higher? Right? But aren't we not in the same situation now? Who would have thought the next wave of immigrants or factors are in the next decade?

We have to remember that a cup of coffee used to cost 5 pennies. Right now it's 100x more at $5 per cup. If I tell you coffee would cost $500 and a house will cost $200 million, would you believe me? Probably not... but neither did those early Candians drinking their 5-penny coffee at one time!


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## sags (May 15, 2010)

In the news today, an unemployed Chinese student purchased a $31 million dollar. How did she qualify for the mortgage ? A good question for CIBC.

There is a network of Chinese students, buying multiple million dollar properties, all linked back to mainland China.

A sudden interest in owning multiple Vancouver properties and willing to pay substantially more than the homes are appraised at...... looks suspicious.

As does the realtors campaign contributions to the Liberal party of BC and the Premier.


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## sags (May 15, 2010)

Coffee cost 5 cents a cup in 1939 when the average yearly salary was $1368. The average home cost $3800.

To buy a $5.00 cup of coffee today or a $380,000 home.............salaries should average $136,800. They actually average about $46,000 per year.

Therein lies the problem. Incomes have not kept up to the inflation in prices...........from coffee to million dollar homes.

Debt......government sponsored low cost debt has extended the life of the problem, but it is coming to an end because it all comes down to basic mathematics.

People have reached the end game...........mired in debt, tapped out on future sources of credit, no savings for retirement, a one month paycheque away from bankruptcy.

This will end badly.


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## OurBigFatWallet (Jan 20, 2014)

I know quite a few people who are originally from Vancouver but left the city (for good) to get a start somewhere more affordable. I dont know how anyone could possibly start their career with any hope of owning a house, raising kids etc as the prices are so high it seems unattainable for most. The people that do leave generally dont ever come back and are able to pay off any debt much easier since housing costs are so much lower outside the GVR. If I was a millennial just starting out in the workforce and planned on owning a home I would definitely leave Vancouver for somewhere more reasonable


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## RCB (Jan 11, 2014)

MoreMiles said:


> Sorry to tell you, that was probably the worst decision of your life. You would have been a multimillionaire by now if you just stayed and bought something like $300k house at that time.
> 
> Even with mortgage, it's almost paid off 18 years later at this time, you can easily sell it retire early.


I think you missed the last sentence of my post....



> We were *never* going to be able to afford a decent home of our own.


Actually, it was the BEST decision we made. With a move to northern Ontario, my husband's income doubled in just four years. His commute went from 45 minutes of gridlock to 10 minutes of relaxed driving. We were able to buy a decent house with a large yard for under $100,000, when a Fraser Valley 2 bedroom "condo" (3 storey, wood frame apartments sold as condos) cost $120,000 four years prior.

The original home is about to become mortgage free. We now have four houses...two pay for themselves and provide a nice monthly cashflow, with the original also about to do the same. The fourth we are moving to is waterfront on the world's largest freshwater lake, for well under $200,000. It is a slice of paradise. The golf course is on the way home from work for my husband. 

We've had disposible income to enjoy life. Why burden oneself with more mortgage than affordable just to cash in a retirement? What life do you have in the meantime? Clearly it was a good decision for our family, and we were followed by both my husband's Lower Mainland parents and his sister's family. They thought it a good decision as well.


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## My Own Advisor (Sep 24, 2012)

OurBigFatWallet said:


> If was a millennial just starting out in the workforce and planned on owning a home I would definitely leave Vancouver for somewhere more reasonable


Same. Insane. Nice to place to live but cost of living, forget it. 

If I owned a house there that is worth $2M+ like some say, I would sell ASAP and retire elsewhere. Sure, the prices go could higher but that much bird in one hand is worth a great deal to my freedom.

Alas, I work and live in Ottawa and there is absolutely no way my house will ever appreciate to that value in my lifetime. Probably a good thing actually, folks can afford to buy it when I decide to sell it.


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## Tawcan (Aug 3, 2012)

Unfortunately real estate in Vancouver is just absolutely nuts right now. 

I guess not everyone wants to live in the snow half of the year.


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## OurBigFatWallet (Jan 20, 2014)

CIBC is now calling for a tax on flipping from foreign investors. http://www.bnn.ca/News/2016/5/13/Ca...on-foreign-investors-says-CIBC-economist.aspx

But I dont think that would solve the problem. As the article mentions most transactions aren't as simple as a foreign investor buying the property; they either have a holding company (Canadian), subsidiary or simply a Canadian relative. If the tax is simply on foreign investors they could easily avoid it, they could even pay someone local to act as the buyer on their behalf


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## tavogl (Oct 1, 2014)

do you guys recommend buying? the only place we would be able to afford is Coquitlam... but the commute would be brutal, we both work in Vancouver, wife in VGH and I work downtown... and that's what is killing us. We are currently renting for 1100 a month plus utilities etc (coquitlam) and if we buy, we would be paying around 1300 mortgage, mortgage insurance (since we would give only about 5% down), home insurance, and maintenance condo fees.... I am guessing everything together would be 1700 at least... plus utilities, our saving power would decrease significantly. what's your opinion?


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## Pluto (Sep 12, 2013)

^
This is something that people can't really assess for you. You don't say what your current rent is, what your saving and so on. You do say the commute would be brutal, so that's a negative. With a family income of over 100 grand you are ahead of most families. 

It is most discouraging for people who are at home buying age at a time when prices are running away. I think if you look at a graph of historical prices going back to the 60's to somewhere near the present you will find that prices top out and spend YEARS going nowhere. That's the time when folks such as your self can catch up as long as you have been saving and you get COLA at your jobs. One price graph of Vancouver prices I looked at recently was adjusted for inflation. Prices topped out, dropped a bit and it took 20 years for prices to get back to where they were. That provided a very long window of opportunity for those wanting to buy. the current madness can not last. 

I know someone who could not afford to buy so saved by buying stocks. Years later, (about 10 years) they had enough for a 70% down payment on their own place. This plan can try your patience and requires faith and steady accumulation despite periods of slow progress. Most of your gains will likely come during a bull market some years after commencing such a plan. By that time the dividend income might be so significant that you have three incomes instead of two. 

Alternately, if you do buy now, with the brutal commute, you might end up finding comparable employment close to home, but only you could assess that.


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## tavogl (Oct 1, 2014)

Hi Pluto, thanks for your response.
My current rent is 1.100 a month, we like the place so far even it's kinda small (we rent the lower floor of a nice 2 year old house, it's a legal suite) in Coquitlam, which is where we would be able to buy (at some point).

We just did some math in our expenses and saving potential, since we haven't saved much because everything was going to paying debt, we are probably going to be able to save 2.000 a month, maybe 2.500 if we really push it... but it comes down to life quality too.

What other numbers do you need? We have 1.200 debt right now at 6% which is getting paid next week with my next paycheck since I had a decent sale, the commission should be around 1.440 before taxes, so I should be able to pay that debt right away next week and start putting a bit in the saving account.

That's other thing, while my salary is not very high, I do get monthly commissions in production and sales... this job is new, only 3 months in, so it's hard to predict how much in commission will I be making, that's why I budget based only on my base salary and everything on top of that is just extra, right to savings (or paying debt in this case). On the other hand, my route is small now and it should get bigger in a few months, I should be making money in production, not only sales. I know a few guys that work in my area making about 35% more than me, just based on their route being bigger and making money from their production.

Tell me what kind of numbers you need from me so you can give me better advice.


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## rl1983 (Jun 17, 2015)

I'd hold off buying anything right now. The storm is coming, most likely higher interest rates in the near future.


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## Pluto (Sep 12, 2013)

OK, so you already live in Coquitlam, and are familiar with the brutal commute. And you can afford buying. I don't see any real downside.


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## My Own Advisor (Sep 24, 2012)

Personally I don't think you should buy.

Current rent as you put it = $1100.

You've just started a new job with total compensation unknown.

You mentioned without killing your life, you could spend $1300 per month in the mortgage.

On top of any home mortgage, there are maintenance costs. That's usually 5% per year so that's $1365. Add in property taxes. Don't forget decorating and such. If you have a condo there are condo fees. Those will rise at least every other year. 

There is no rush (or requirement) to own a home. Do what's best based on the long-term math. Buying now probably isn't it.

Good luck with your decision!


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## OurBigFatWallet (Jan 20, 2014)

+1 for not buying. You mentioned you're paying $1,100 now but if you bought you'd be paying $1,700. This would impact your spending/saving power and since you would buy in Coquitlam, you'd commute wouldnt get any better. The taxes and condo fees will only increase over time so your monthly costs will keep going up. If you put 5% down you'll have to pay CMHC insurance which will eat into your original equity. Plus moving costs, furniture, decorating etc.

Have you considered moving closer to work into something slightly more expensive but close to transit? You could get rid of a vehicle (assuming you have one) that would cut down your total monthly costs since you'd no longer be paying fuel, insurance etc.

I like the idea of investing for a few years and then (assuming all goes well) using that money as a down payment should you decide to buy later on.

But right now I dont think it makes sense to buy - it would increase your monthly costs, your commute would stay the same, with only 5% down CMHC costs would add up fast, your monthly costs would increase over time with condo fees and taxes, and not to mention the added stress of a mortgage with variable income.


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## avrex (Nov 14, 2010)

My Own Advisor said:


> OurBigFatWallet said:
> 
> 
> > If I was a millennial just starting out in the workforce and planned on owning a home I would definitely leave Vancouver for somewhere more reasonable
> ...


+1. Agree with you guys.


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## Tawcan (Aug 3, 2012)

avrex said:


> +1. Agree with you guys.


Agree as well. Property taxes and condo fees will most likely to increase rather than decrease. Another thing to consider are all the special levies from the condo as the building ages. BC now requires condo building depreciation report to be done so owners can know when the big expenses might come.


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