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Noah Zivitz

Managing Editor, BNN Bloomberg

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While a number of economists from Canada's Big Six banks have sounded the alarm on an affordability crisis in Vancouver's housing market, a local realtor said homebuyers are turning to the so-called bank of mom and dad to help shield their paycheques.

"What we are seeing, feet on the ground perspective, is that people are coming up with very large down payments," said Steve Saretsky, a Vancouver realtor with Oakwyn Realty, in an interview.

"A lot of gift-giving from mom and dad; and, you know, borrowing on existing home equity. So I don't think people are necessarily going 100 per cent of income."

In a report this week, RBC Economics calculated that owning a single-family detached home in Vancouver would have chewed up 99.7 per cent of median pre-tax household income in the fourth quarter, compared to the average of 69.7 per cent since 1985.

Similar to Saretsky, RBC Assistant Chief Economist Robert Hogue acknowledged there are numerous "coping mechanisms" available to homebuyers to avoid seeing the entirety of their income sucked up by servicing costs, including "asking mom and dad for a gift (or a larger gift) toward down payment."

He also noted that some homebuyers are seeking out more budget-friendly options, and pointed directly to Vancouver's comparatively cheap condo market, where 41.4 per cent of income would have gone toward mortgage payments and other ownership costs in the fourth quarter, according to RBC.

"Buyers have taken notice and directed increasing attention to this segment, making it the fastest-growing category over the past year. We expect this to continue," Hogue wrote in his report.

National Bank's economics department also recently pointed out Vancouver's ignominious standing as the country's least affordable major housing market.

In a report released at the end of February, Kyle Dahms and Alexandra Ducharme modelled that it would take 431.2 months of savings (at a rate of 10 per cent, using median household income) to cover the minimum cash down payment for a CMHC-insured mortgage on a non-condo home in Vancouver.

The combination of tight supply and low interest rates have propelled home prices across much of the country. The Real Estate Board of Greater Vancouver's most recent update showed home sales in February were 26.9 per cent above the 10-year average for the month, while the composite benchmark home price climbed 20.7 per cent year-over-year to $1,313,400.

Saretsky, however, said activity is decelerating as mortgage rates climb amid anticipation for a series of rate hikes by the Bank of Canada.

"We've gone very quickly from this fear of missing out to, maybe I should wait a little bit longer and see how this plays out."