While the mismatch persists between income and real estate prices (including rental rates) in metro Vancouver, creative real estate options are emerging as people find ways to adapt.
Housing affordability continues to be a major concern in our region. Key reasons:
- Real estate prices for much of the housing stock in the metro Vancouver area have risen above what average incomes can afford.
- Many buyers are having additional difficulty qualifying for a mortgage that will allow them to purchase the type of housing that they would prefer as a result of the Federal Government's mortgage stress test (building in prudence for future mortgage rate increases).
- Rental affordability is also under pressure. Vacancy rates in most areas in BC have been under 1% for several years and rents continue to increase. Recently the BC Government has announced a raise in the maximum annual allowable rent increase to 4.5%. This is the highest increase in many years and is an attempt to balance the interests of tenants and landlords as owners face increasing costs.
While many experts - governments, lenders and specific interest groups - struggle to find solutions to achieve their particular affordability goals, what do individuals seeking to buy or wanting to sell a home do in the meantime?
Fact - we are not seeing a "price crash". Real estate prices of various housing types are correcting slowly and there's no sign affordability is going to dramatically improve any time soon. (We are also likely to see one or more interest rate increases in the next few quarters.)
While some are reacting by delaying action in the hope that market conditions become more favourable, others are finding solutions now that work for them in innovative ways:
- purchasing residential property with income generating capability - changes in lenders' formulas are making this more attractive
- property swaps
- rent to buy agreements - incentive offered by some sellers
- assumable mortgages (mortgages which are transferable from current owner to buyer) - another incentive offered by some sellers
- sharing space - more people are finding ways to share living space or add new living space to existing properties
- co-ownership - more tools from lenders and lawyers are available for buying properties with family/friends
- family members are assisting in various ways with real estate purchases for others in their family circle
- owners are co-operating with their neighbours and properties are being combined into land assemblies, land is being rezoned and single structures are being replaced by denser forms of housing (I have a wealth of information and useful resources to assist with this)
- moving out to cheaper suburbs and beyond
I suspect this list of ways to adapt will grow as people find ingenious ways to cope and thrive despite tough conditions.
Call me if you would like assistance finding a solution that will work for you. (604) 365-0991