High costs to buy will keep many renting in Vancouver

It can cost twice as much to more per month to buy a condo than rent an apartment

By
Western Investor
April 4, 2016





Buy versus rent: new ammunition fuels debate
Buying a Metro Vancouver condo more expensive per month than renting, experts say

It can cost twice as much per month to buy a condominium in Vancouver than to rent an apartment, and the price gap narrows only slightly across the region, according to an expert panel at the Vancouver Real Estate Forum, held March 30. 

The panel of developers and investors, moderated by Mark Kenney, COO of Canadian Apartment Properties Real Estate Investment Trust, broke down the real costs of buying a condo versus renting a Vancouver apartment, and provided stark evidence why more young tenants may opt to keep renting.

IIn downtown Vancouver, the panel agreed, it costs 79% more per month ($2,347) to buy a one-bedroom condo than to rent a similar-sized apartment ($1,313). At the two-bedroom level, it costs 108% more to buy ($4,064 per month on average) than to rent ($1,951). The gap is narrower in suburban Metro Vancouver; 60% more to buy than rent a one bedroom apartment and 73% more expensive to buy ($2,371) a two-bedroom condo rather than renting ($1,368) a two-bedroom apartment.

The study was based on the current rent for a purpose-built rental apartment, as provided by Canada Mortgage and Housing Corp., compared to the monthly payments for an average MLS-listed condominium (bought with a 20% down payment of $80,000, a 3.75%, five-year mortgage with 25-year amortization, and with monthly strata fees of from $250 (1 bedroom) to $350 (2 bedroom).
 
Since most young condo buyers would likely put down less than 20 per cent – some as low as 5 per cent with mortgage insurance - they would also be paying higher mortgage payments. This could make renting even more attractive. 

In March, the benchmark price for a Metro Vancouver resale condominium apartment was $415,200, reports the Real Estate Board of Greater Vancouver.


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