Thread by @globeandmail

Wealth, not annual income, is driving purchases of costly homes by some of the lowest-paid workers in B.C., a new study suggests. The gap is stark in the province, where houses have been selling for well above $1-million in the Vancouver region for years.

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New data show typical buyers in the lowest income quintile, with a median income of $29,800, spent a median of $499,000 on a home in 2018, the report from CHSP said.

In comparison, middle quintile income of $97,600 spent a median of $490,000 on a home.

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“The divergence between property prices and incomes in some areas demonstrated that sources other than income can play an important role in homeownership,” the report said.

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The data suggest many home buyers are either taking out very large mortgages or using savings and wealth to make purchases, said Annik Gougeon, a CHSP senior analyst.

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The study attempts to provide a measure of housing affordability by analyzing the purchase price of a property against the buyer’s income. The higher the price-to-income ratio, the greater the financial burden the buyer takes on.

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