Vancouver

Vancouver’s Tech Scene Shows Just How F**ked Up The City’s Real Estate Is

Vancouver Tech Scene Shows Just How F**ked Up The City’s Real Estate Is

Think Vancouver’s aggressive move to bring tech jobs is going to fix the housing problem? Think again. US commercial real estate mega firm CBRE prepared a report ranking the 50 best tech hubs for their clients. Vancouver topped the list for employers because of the high quality employees, and low pay. In fact, the pay was the cheapest of any of the North American tech hubs, so we wanted to see what kind of real estate these employees are looking at.

Wages Are The Lowest of All The Tech Hubs

Despite having some of North America’s most talented tech employees, the pay sucks in Vancouver. CBRE’s analysis concluded the average employee made CA$57,104 (US$45,501), the lowest of all the 50 North American tech hubs. Despite the fact that education and years of experience placed these employees in the top 10. This works out to an estimated CA$44,274 of net income at 2017’s tax rate. Let’s see what this employee’s real estate life will be like.

Canada’s Top Notch Tech Employees Are 57% Cheaper Than The Worst Americans - Scatter Plot of Wages

Average Rental Consumes 52% of The Average Tech Workers Income

Most will probably start with a rental, so we’ll start here too. The CA$44,274 annual salary gives you CA$3,689.50 per month. Currently one bedroom rentals average $1,940, which is slightly more than 52% of the net income. At your “well paid” tech employee salary, you’ll have on average CA$437.25 for the rest of your expenses – including retirement funds, and saving for that downpayment on a home!

Is Homeownership An Option?

These salaries don’t leave a lot of wiggle room, so we wanted to test the possibility of homeownership. No, we aren’t going to use subprime borrowing, and high ratio mortgages. Living on the edge of financial ruins might be exhilarating, but we wanted to gauge what a healthy financial situation would look like. For the downpayments, we used 10% of net income, the average amount millennials are saving for a downpayment.

Condo Prices Are Over 13x Income

The typical condo is pretty far out of reach for these workers. The benchmark price is now $600,700 according to the Real Estate Board of Greater Vancouver (REBGV). Experts say you should be looking for a home about 2-3x your net income. This makes the benchmark price 13.86 times the net income, which isn’t even funny it’s so far away.

In terms of a normal down payment, you’re in for a rough ride. Super savers that managed to save 10% of their down payment will have saved their downpayment in 325 months, which is just over 27 years. F that, you’re going with a dangerous high-ratio mortgage and only putting 5% down? You’re looking at 6.7 years of savings.

Typical Detached Is 35x Average Tech Employee’s Income

Ha, we all know you’re not buying a detached home in Vancouver at these prices. Those are for Beijing’s finest and people born 30 years before you, but let’s crunch the numbers anyway. The typical detached is now $1,587,900 according to REBGV. The downpayment on this puppy is going to take 860 months, more commonly known as 71 years. There’s no option for a high-ratio mortgage to make that one work sooner, sorry pal. I joked on the Toronto version of this article that workers better hope that google solves death quickly, but this is pretty much the only option for a detached in Vancouver to be a reality at this point.

A few things you might want to note – the average salary, and rate of savings. This is the average salary, so while some of these people will make more, many will have to work up to this number. We’re also assuming your annual salary will grow at the rate of real estate, which may be a little overly optimistic.

The rate of savings is also important. Hopefully you meet someone, fall in love, and they’re also a “well paid” tech worker or earn roughly the same. This doubles your savings power, which means it’ll only take 13.5 years to save for a condo down payment, and 35 and a half years for a detached. With a situation like that, I’m not sure how long we can actually keep talented tech workers in Vancouver. After all, they’re just a hop, skip, and a NAFTA visa away from San Francisco.

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11 Comments

  • Reply
    the dude 2 weeks ago

    San Francisco is pretty much the same as Vancouver in terms of real estate affordability for it’s techies.

    • Reply
      TheDood 1 day ago

      I would challenge this statement Dude.

      In SF, you make twice as much AND pay less in taxes AND pay less for everything else (food, utilities, beer, internet, tv, cell phone, cars, you name it!). Canada is undisputed heavyweight champion of the world when it comes to overpriced everything!

  • Reply
    Dan 2 weeks ago

    Not sure which positions where counted in these stats, but if you’d like to refer to “well paid software engineer” then I can tell that “well paid senior software engineer” makes more than $100k/year (not CA$44,274 like article refers). Plus a lot of those positions are “contact” positions and average rate is $70-80/hour (which is $150k+ on annual basis). Trust me tech people make much more than referred in this article/stats especially if they are “well paid” ones 🙂 . And it’s a single person. Now take a family with two software engineers and they can easily afford a condo with current interest rates.
    Not defending ridiculousl house prices, just saying it’s much more affordable for tech people than presented in this article, especially condos

    • Reply
      Nimbus 2 weeks ago

      Actually most people dont , $44k annually is on point for a tech person with some experience. As a fresh graduate youll be lucky if you get $39.

      Alot of senior positions dont pay six figure salaries either. Typically i find only the bigger tech companies can afford to hire people are those rates.

      I find if you want to climb the pay scale in this city you have to switch jobs quite often , complacency isnt an option.

    • Reply
      Danuta 2 weeks ago

      Have to agree with Dan, I think that the so called “contractors” might report lower income than what they make. What drives the real estate market and our economy it is the majority of one group, which is the middle class, therefore the average of the tech position is around $65K but this only covers rent not a buy!!

  • Reply
    Nick 2 weeks ago

    Are both individuals still renting one bedrooms individually in your second scenario?

    If not, by sharing rent they reduce it’s percentage of their respective disposable income by half (as they are now splitting). Your second scenario’s couple savings rate is way off, simple math.

  • Reply
    Damon Chan 2 weeks ago

    The wages are low because there are not enough jobs and Vancouver and lots of qualified people. If you want wages to rise you need more tech companies…..the articles is metrics heavy but real misses the boat

  • Reply
    MS 2 weeks ago

    Your stats are Fu*ked and on wages and rental prices.

  • Reply
    Mark 2 weeks ago

    Everyone I know working in high tech is getting paid like 90k after 5 years out of school. If you don’t get 60k fresh out of school maybe you picked the wrong career. If you cannot make enough or save enough for a down payment then perhaps you should consider relocate to a cheaper place. Vancouver has the best weather over rest of Canada, probably the only big city without freezing cold winter. Everyone I know of would loving to move back to Canada if money isn’t an issue.

  • Reply
    Mark Suckerberg 1 week ago

    So much crying about properties and wages. I don’t see property prices in Vancouver being an issue. Just go out during the weekdays in the afternoon. 75% of the people are either at dim sum places or having high tea. Go to kits beach and you see a lot of lazy sluts waiting to be picked up. Heck, go there tomorrow afternoon and see. Nobody needs to work in Vancouver. Just get with the program.

  • Reply
    Charles 6 days ago

    I am curious to see how those numbers are gathered. $57k seems low as an average, but if you include interns, part timers, and contractors I guess that number could be accurate. Also consider tech sales – is this just base salary? Throw in commissions and that number is a lot higher.

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