Instead of blaming foreign investors for Metro Vancouver’s skyrocketing house prices, some local analysts say the blame should at least be partially ascribed to the bank of mom and dad.
Andrew Ramlo, vice-president of Rennie Group, said it’s “stupid” to compare Metro Vancouver’s house prices to average incomes.
“In part, what’s happening is we’ve seen a lot of people moving into the market having help from their parents,” he said. “So, that sort of changes the fundamental dynamic because what that household’s income is, is not really representative of what they’re able to buy and because they’re getting a significant down payment or significant help from their parents over time.”
Thomas Davidoff, director of the UBC Centre for Urban Economics and Real Estate, said people earning $70,000 annually can’t afford a $4m house.
“If you have rich parents, of course, lots of good things happen in your life. One of them is assistance of buying a home in an extremely expensive housing market where it’s quite challenging otherwise,” he said.
During a luncheon hosted last week by the Urban Development Institute, Ramlo suggested that 26% of all homes sold in the Lower Mainland last year were not worth more than $440,000, which is far lower than the average.
“Benchmark prices are in the range of $900,000. We know that a first-time home buyer is not going to go and buy that particular unit,” he said.
Also read: New stress test could shrink the bank of mom and dad
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