by MARCELLA BERNARDO
It’s misleading to blame foreign buyers when it’s the bank of mom and dad increasing real estate prices, says expert
People who can’t afford homes are getting financial help which is impacting housing prices: analyst
VANCOUVER (NEWS 1130) – Instead of accusing foreign buyers for Metro Vancouver’s out of control real estate prices, a local analyst says we should actually be blaming the bank of mom and dad.
Andrew Ramlo, who is a vice-president with the Rennie Group, says that’s why it’s “stupid” to compare 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. 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.”
However, Tom Davidoff with UBC’s Sauder School of Business says people earning $70,000 a year can’t afford to buy a $4 million 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.”
During a luncheon hosted by the Urban Development Institute last week in Downtown Vancouver, Ramlo suggested 26 per cent of all homes sold on the Lower Mainland last year were not worth more than $440,000, which is much 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.”
Ramlo also says he’s expecting housing sales to continue dropping thanks to rising interest rates and mortgage rules becoming stricter.
