Raman Gill understands why many young people despair about ever owning a home. The 30-year-old manager at a digital marketing company can relate to that feeling from his own experience.
Gill recalled that when he was growing up, he thought that a half-million dollars could purchase a “mansion”. With a mortgage for roughly the same amount, he got a 630-square-foot condo in the Yaletown neighbourhood of Vancouver two years ago.
“To end up buying, like, my first little tiny one-bedroom condo was just eye-opening to me,” Gill told the Georgia Straight in a phone interview. “This is the actual world that we live in.”
He noted that young people have to be “more creative” nowadays “because we do live in a shitty housing market; like, that’s the only way to really describe it”.
“Your first property may not be in the ideal location that you want to be in; like, living downtown can’t be a reality for everyone, just based on the pricing that we do have,” Gill said. “But then perhaps you can look at something closer to a SkyTrain station in Richmond or Surrey so that you can still have that easy commute.”
He also suggested buying somewhere else and renting it out while leasing in a place that is either close to work or suited to a chosen lifestyle.
“Then you’re still building up your equity, you’re paying off something that you actually own,” Gill said.
Even though he’s pleased that his condo has appreciated in value, Gill is worried for other young people who haven’t yet entered the market.
“Unfortunately, it seems that people will have to reduce their expectations,” he said.
Next year is expected to be tougher, with tighter mortgage regulations and rising interest rates. In its housing forecast for 2018, the B.C. Real Estate Association (BCREA) predicts “increasing headwinds” for buyers.
“A rising-interest-rate environment will certainly erode affordability in the new year, while tougher mortgage qualifications for conventional mortgagors will reduce their purchasing power by up to 20 per cent,” according to the realtors’ association.
The BCREA also anticipates average home prices in Metro Vancouver, the Fraser Valley, and the Chilliwack district to increase by four to six percent in 2018.
In Gill’s case, he had some things that helped. He had saved a large sum because he lived rent-free with his parents in their family home for two years.
Gill had money in a registered retirement savings plan, and it was his realtor, Chris Tioseco, who told him that he could use up to $25,000 of RRSP funds for a down payment.
Tioseco also prepared him for the fierce downtown market. “He got me to make sure my mortgage was preapproved, so I could go in with no subjects, which was essential to having a competitive offer,” Gill said.
In closing the deal for his condo, Gill went up against seven other buyers, offered $25,000 over the asking price, and asked no conditions from the seller.
Gill’s work is three blocks—or five minutes on foot—from where he lives. With the many restaurants, shops, and other amenities in the area, Yaletown fits his young and outgoing lifestyle.
What Gill bought may not be the mansion he envisioned as a child, but he believes it was a good deal.
“My condo has appreciated more than $200,000 in the two years I have owned it, which is obviously a great return but also shows how out of control the Vancouver housing market is,” Gill said. “Had I waited any longer, there is no way I could have got in, because $650,000 to $700,000 for a one-bedroom is way too high for one person to be paying a mortgage.”