Vivien Bevis and her husband, Richard, don’t see any benefit to taking advantage of their equity and selling their west side home. Now in their late 70s, the value of the home they purchased in 1977 has dramatically increased.
“I’ve been in the area for 37 years and what keeps us here is what attracted us in the area in the first place — a park across the street, trails to the river and the endowment lands, and proximity to our workplaces by bicycle,” she said.
Bevis was a public-teacher in Vancouver and her husband a professor at the University of British Columbia. When they bought, prices were considered expensive but, compared to today’s prices for the city’s now highly desired Dunbar, Kerrisdale, and Point Grey neighbourhoods, they were still affordable.
“Of course, it was more affordable, according to today’s standards. But our mortgage [rate] was [at] 10 per cent, salaries were much lower. It seemed expensive, but I think it is more expensive now.”
[pullquote align=”right”] BC Assessment average home value on the West Side: $2.15 million. [/pullquote]
The Bevis’ are one of many house-rich seniors in Vancouver — people over 55 own almost half the homes in the city, even though they’re only a quarter of the total population — who are keeping their home and ignoring profit opportunities as the real-estate market heads into the busy spring season.
The average price of a west-side home, according to B.C. Assessment Authority, is $2.15 million. Many people, like Bevis, in this demographic are uninterested in their home values, despite now owning some of the most valuable real estate in the city.
Canada’s Home Equity Bank, which provides reverse mortgages to people over age 55, says that 77 per cent of seniors’ equity is locked up in their homes.
Seniors can reverse mortgage up to 50 per cent of their home equity through the bank’s Canadian Home Investment Plan (CHIP). The plan allows seniors to withhold repayment until they die or sell their home.
Professor Thomas Davidoff at the Sauder School of Business says these plans are popular among home-rich income-poor seniors.
[pullquote align=”right”] “I think there are a lot of people here that have a high ratio of housing wealth to other wealth in the area.” [/pullquote]
“I think there are a lot of people here that have a high ratio of housing wealth to other wealth in the area. It should be a target-rich environment for reverse mortgages.”
In a city where there is such a massive amount of wealth held in home equity, Davidoff is surprised that not more seniors in Vancouver are tapping into it.
Vancouver’s high home prices are typically associated with the high level of wealth in the city. But homeowners must sell or refinance in order to access their equity, and selling is seen as the smarter decision.
“If they don’t mind selling, selling is the move. But if they do mind selling, then it’s not bad to use reverse mortgage.”
However, Davidoff also notes that “older people typically want to pass wealth on to their children and they don’t want to risk reverse mortgaging.”
Sydney Hayden, 90, lives in the same Dunbar-area home that he and his wife bought for $9,000 in the late 1960s. Hayden spent his life working hard as a commercial painter, not expecting that his modest home would someday be worth $1.5 million.
“I don’t consider myself rich. Even though my house is now worth a lot, I keep living the way I was living since I moved in.”
Hayden’s home has increased in value, but he doesn’t think much of its high price. He has no intention of downsizing or refinancing.
“My son will get [the house]. He will be the one that benefits from it,” he said. “It’s a scam, these reverse mortgages. You don’t benefit, the bankers do.”
However, seniors’ real estate specialist Brad Moldowan has seen many seniors sell their houses and downsize in order to free up their home equity.
“You can go from a three-bedroom bungalow in Dunbar and go to a nice condo somewhere on the west side, put some money in your jeans, and step it up a notch.”
Some residents who don’t mind moving or downsizing are taking advantage of the housing market and using their newfound cash to invest.
Jed Brezer, an investment advisor at BMO Nesbitt Burns, says that he sees these seniors investing in companies that pay big dividends like banks.
“[Seniors] are selling their homes and taking the capital from their house and buying an apartment or townhouse, then taking the remaining capital and investing for something to live off of.”
But not everyone wants to give up their home or has the desire to invest. Bevis and her husband are content to stay.
“If we sold, it would be a wash,” said Bevis.
“The quiet street, nice neighbourhood, close walking distance to our doctor and dentist, grocery store — it’d be very hard for us to find a condo that provided that.”
Living on the West Side