It’s the impossible dream for many Greater Victoria residents straddling high prices, debt and a challenging job market: owning a home.
According to Statistics Canada, a single individual living on minimum wage spends about 40 per cent of her income just to rent an apartment, making it even tougher to get traction in a city where the median income of $77,820 has remained almost flat since 2008.
When Victoria natives Tristin Hopper and Elizabeth Hames started searching for their first home, there were a few standards to check off the buying list: a walkable, non-terrifying neighbourhood, lots of light, clean, above-ground and close to downtown, independent grocers, parks, coffee shops, libraries and bikeways.
Finally, the two found their perfect home – in Vancouver.
“Almost everywhere else is prohibitive,” says Hopper.
The average mortgage payment in Victoria falls between $1,300 and $1,800 per month, says Sean Dhillion, a mortgage advisor and real estate investor in Victoria. That represents a mortgage between $300,000 and $350,000.
“Victoria is so expensive, but once you get in, you’re in. That’s why we’re seeing a lot of couples buy these fixer-uppers, invest in them, then, hopefully, step into another when it sells,” Dhillion says.
“Unfortunately, the prices are just high for what most people want, so as a two-income house you can rent well, but you can’t necessarily buy well.”
According to the Victoria Real Estate Board, the average price for a single-family home in Greater Victoria is $596,445, while the average condo goes for $300,037. Sales in Greater Victoria were up 11.5 per cent from last year, which saw 2,907 single-family homes sold – one of the lowest numbers in recent years. As of this July, already 1,941 have sold.
Similarly, 2012 marked 1,538 condos sold, while 2013 has seen 896 snatched up so far. But while the numbers are slowly climbing, the prices are not.
“I would say the biggest misconception buyers have right now is that the market will continue to decline. The biggest misconception sellers have here is that buyers will pay anything for their homes,” says Laura McCollom, realtor with Re/Max Camosun.
“People just aren’t willing to entertain the crazy prices anymore, but Victoria will always be more unaffordable compared to the Langfords and the Colwoods.”
While micro-condos are cropping up all over the city to lure in new buyers, Dhillion says there’s a reason people consider Victoria to be one of the most unaffordable areas – between the million-dollar investment homes and a challenging job market, buyers face a multitude of hurdles. Then, of course, there’s the federal rule changes.
Last summer, to fight an impending housing bubble, the maximum amortization payback period was changed to 25 years from 30, and Canadians can now only borrow 80 per cent (from 85 per cent) of their home’s value. Debt-service ratios were also lowered to 44 per cent from 45 per cent.
Another twist: government-backed insured mortgages are now only available to homes selling for less than $1 million, as the federal government believed those houses are “a small segment of the market” and taxpayers should not have to back those mortgages. Of course, in the City of Gardens, the million-dollar mark isn’t rare at all.
“The main challenge new buyers face in Victoria is that most have income but not necessarily the down payment. Or, they have the down payment but a more creative form of income – there are a lot of creative people here – and it can be really hard to secure a mortgage in that situation,” Dhillion says.
Dhillion, who grew up in Victoria, purchased his first home in the city 10 years ago at the age of 25, but says family help was to thank – a necessary leap for many new buyers.
A few upgrades and good deals later, Dhillion now has a number of Victoria properties to his name, both as owner and landlord.
“I believe that anyone can become a homeowner, but you have to have a good plan and a way to get that solid down payment, even if it comes from the Bank of Mom and Dad,” he says. “You can make it happen, but it takes time and a commitment.”
While Hopper and Hames attribute their home-buying success to relatives in the field who know the legal language, both agreed their biggest challenge was the amount of paperwork involved. That, and how little a quarter of a million dollars can get you these days.
“My parents bought their five-bedroom, three-bath home in Saanich for somewhere around a quarter of a million dollars, 16 years ago,” Hames says.
“During my search, I saw run-down one-bedroom condos in Mount Pleasant (Vancouver) for more than that. Tristin and I have a game now where, when walking past a row of crumbling single-family homes, we point to one and say, ‘That’s $1 million.’ ‘That’s $1 million.’ And we’re probably right.”