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.
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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