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7 Myths About Vancouver’s Real Estate Market

Despite a thriving Vancouver real estate market, misconceptions around affordability, mortgages and the impact of interest rates continue to circulate. Here are seven of those prevailing myths debunked.

Myth #1:  The high average house prices in Vancouver mean the market is out of reach for the average buyer.
Here’s the problem with “average” prices in Vancouver: they’re skewed by sales in elite neighbourhoods such as Point Grey and Coal Harbour, where multimillion-dollar homes are common. This creates a false belief that all houses are similarly priced and therefore unaffordable. “What you hear about in the news is the actor buying the $9-million property,” says Akash Sablok, president of the Society of Notaries Public of BC and a notary public in east Vancouver. “Those stories bring up the averages and get all the attention. But there is lots out there. A client just bought a beautiful one-bedroom-and-den condo in Richmond for $199,000.”
Myth #2:  A small hike in interest rates would make mortgage payments challenging and home buying inaccessible.
Interest rates are so low right now that a small increase in mortgage rates wouldn’t increase mortgage payments a significant amount. And if and when rates do go up, they’re expected to climb gradually. “Our banking system is set up very well to curb any overspending to begin with,” Sablok says. “There are safeguards in place. Even if rates jump up one per cent they’d still be at around three or three and a half per cent—still quite a reasonable rate of borrowing.”
Myth #3: A large down payment is required to buy a home. 
The minimum down payment on homes under $1 million in Canada is five per cent, with typical down payments ranging from five to 20 per cent. On mortgages with down payments of less than 20 per cent, mortgage default insurance is required to protect the lender in the event of the borrower defaulting. “The insurance makes it slightly more expensive to borrow, but at least we have that option,” Sablok says. “Plus, as your property value increases, your equity will grow.” 
Myth #4: Condos and houses are similar investments. 
They’re both good investments, but for different reasons. “If you’re using a home as your principle residence, it has to work for you, whether it’s a condo, townhouse or single-family detached house,” Sablok says. “The rate of growth is different for different properties. Condos have a slower rate of growth than that of a single-family detached home because of sheer volume and demand, but condos are in demand as rental properties.”
Myth #5: Most investment rental properties are owned by offshore buyers. 
“Rental properties are seen as a good investment, with lower interest rates and a strong rental market,” Sablok says. “I have seen an increase in local residents purchasing condos downtown as an investment.”
Myth #6:  Only lawyers can handle the legal documents required for the purchase or sale of a home. 
Trained and authorized to draw up and complete all of the legal documentation involved with the purchase or sale of a home, notaries are involved in more than half of all real-estate transactions in B.C. 
Myth #7: You can get the best deal on a mortgage if you seek it out yourself.
Often a mortgage broker can negotiate a better interest rate and mortgage terms that fit with your specific needs than you would be able to secure on your own, as they have access to multiple lenders.