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Houses dot the north shore mountains in the distance, in Vancouver, on April 15, 2020.DARRYL DYCK/The Globe and Mail

When the pandemic began and it looked like the economy would be brought to its knees, Andrew Anderson wasn’t the only one thinking he might finally get into the housing market.

“At the beginning of the pandemic everyone thought, ‘oh, there’ll be all these foreclosures,’” says Mr. Anderson. “We certainly were looking at when things start to pop we are going to be in a [good] position, because we had capital and enough earnings to cover the mortgage, so we can clean up, so to speak and pick up properties.”

More than a year later, it clearly didn’t turn out that way. After a few months’ pause, as the world caught its collective breath, it has been “off to the races” for anyone who still has a job and has either saved enough money or has mom and dad’s help for a down payment on a property. Bidding wars are commonplace. Properties are selling for well over asking. The fear of missing out on record-low interest rates has triggered panic buying. Added to the tension is the fact that the millennial age group is now entering their forties, and the older ones among them want to lay down roots. The concern is that many are taking on more debt than they can afford in the rush to get into the market.

Mr. Anderson, who works in business development, is seeing that first hand.

“People are stretching it way too thin on multiple offer properties. And I think it’s foolish. There’s good debt and bad debt, and all it takes is a few points in interest rates and suddenly people will be having a rough day.”

Mr. Anderson and his wife Katie are 36 years old and have an eight-month old baby. They live in a Kitsilano rental and enjoy good-paying jobs. They’ve invested heavily in stocks, mutual funds, Bitcoin and a real estate crowdfunding company called Addy (his wife works there). It’s been a good year for their investments. But Mr. Anderson feels like the property ladder is getting further out of reach, especially in the last year.

For the last five or six years, they’ve been looking to purchase a small house in Vancouver or on the North Shore, somewhere central, so they can keep their lifestyle without making big compromises. Their second choice would be a central three-bedroom condo. They’ve been outbid on properties numerous times because they refused to go higher.

“We could have pulled the trigger a handful of times but decided not to because prices were too expensive at the time, which seems laughable now, in hindsight,” says Mr. Anderson.

The stories are all too common. His friend bought a house in Surrey for $110,000 over asking. A two-bedroom Langley rancher made headlines last week because it sold for $500,000 over the asking price. It had 110 showings over five days and received 20 offers.

“People my age are exhausted…. it’s such a challenge. You can’t out-save the market the way it’s growing in value. And people are panic buying, which is driving prices up.”

He wants to remind buyers his age that even if interest rates are low, your financial situation can change down the road, when it’s time to renew. For example, his wife is on maternity leave and they are living off his income, which is a common scenario.

Home ownership in the Vancouver region for 35- to 44-years-olds transformed significantly over a period of one decade, says Andy Yan, director of the city program at Simon Fraser University. The rate of detached house ownership among 35- to 44-year-olds dropped 28 per cent between 2006 and 2016, which is the last census. And rate of ownership for that cohort in a condo (in a building more than five storeys) for that period increased by 57 per cent.

BlueShore Financial planner Scott Evans says that millennials taking out mortgages need to think of all possible changes to their financial situation.DARRYL DYCK/The Globe and Mail

Paul Kershaw, associate professor at the University of B.C., said incomes for millennials and young Gen-Xers aren’t keeping up, and home ownership for those younger Canadians is generally down. Mr. Kershaw is founder of Generation Squeeze, a group that lobbies for fairness for younger people.

“Their earnings after inflation have gone down by comparison to decades ago, while we have tolerated an economy that’s lost complete control over home prices.

“The conclusion needs to be if a pandemic induced recession is unable to slow down home prices in Canada, then we have to recognize that even if it’s unintentional, our housing system is designed in order for home prices to leave earnings behind.”

He uses himself as an example. In 2004, he bought a house that has earned him more than he could have saved.

“I accumulate way more wealth while I’m sleeping and watching TV and cooking than I do working 50 plus hours as a hard working professor at UBC. And I’m paid pretty well at UBC, so I find it anxiety inducing at the population level that someone who is as clever and hard working as me cannot now afford to live where I do.”

BlueShore Financial planner Scott Evans says that millennials taking out mortgages need to think of all possible changes to their financial situation, because the lender won’t. Ideally, they would be able to take on a mortgage with the expectation that their income will increase in five years.

“Realtors tell me they have clients who have lost out on 10 places. Be aware that real estate has gone straight up before in the past, but then it’s leveled out. There have been better times to get in. I know some people want to get in because it fits with their stage of life, but try not to get caught up in the fear of missing out. There is time,” he said

Realtor Shali Tark, who specializes in the Richmond market, said she’s already seeing signs of change. Buyers might have reached a ceiling in terms of what they can pay, and borrow.

“I’m starting to see the shift now, back to where prices have gone up so much for certain assets that I can’t guide my clients to pay more in this market, and we have to wait and see if other properties offer better value. Also, the buyers are exhausted and aren’t able to pay more.

“Another one of the trends I’m starting to see for single family homes in Richmond is buyers who aren’t following through with a sale because they can’t get their financing.”

Some lenders aren’t willing to finance a house that has gone up $400,000 in a month, for example.

For his part, Mr. Anderson says he and his wife intend to invest elsewhere and wait out the craziness.

“Until the market’s cooled down and we don’t have to compromise, we are going to look at other means to grow our wealth so that when the time comes we will be ready to pull the trigger.”

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