It’s no secret Vancouver constantly hits the top of any study showing it’s one of the least affordable cities in the world, more affordable than cities like New York, London, and Paris.

However, I want to take a deeper dive and look at the methodology behind such studies and see what’s really going on. For example, home prices are rising, yet people are still able to purchase and buy real estate in Vancouver. There is no bubble ready to burst as the media have long predicted. Why is this?  Where is this money coming from?

In your monthly expenses, what actually matters to you in terms of affordability? The total price of your home? Or the payments you have to make on your mortgage, coming out of your paycheck? Obviously your monthly payments. A lot of Vancouverites and Canadians are just extending their mortgages for longer periods of time.

The income-to-home-price measure doesn’t work because the vast majority of people – even first-time buyers, and especially those further up the property ladder – do not buy a home with only their income. They put down a down payment and then pay off their mortgage with their income. And by the way, the average new mortgage in Metro Vancouver is $438,716 in a year when the average home sale price was $1.02 million.

This price-to-mortgage gap is largely because around 70 per cent of all real estate purchases are made by non-first-time buyers. That is, people who are selling a home to buy the next one, and therefore already have equity to offset the cost of their new mortgage. The higher real estate prices have risen, the more equity they have to set against the new home price – which means their new mortgage doesn’t rise according to prices.

Add into that money flowing into locals’ pockets from things like inheritance often from the high-priced sales of local homes and generational wealth transfer from Baby Boomers freeing up millions in equity, and you often get situations where locals are able to afford homes because of the high prices, not despite them. Millennials are also using money borrowed from their parents.

You might be surprised to learn around 50 per cent of Metro Vancouver homeowners have no mortgage at all, and they are sitting on millions in equity. Vancouver real estate has made many local people very wealthy.

The bottom line is you don’t even have to be rich to be enjoying affordability in Vancouver. What about the senior who has lived in a West Side house for 40 years and paid off the mortgage years ago? They, too, contribute to our city’s high prices by selling up for millions and buying another home with the proceeds often with all cash. Their income is negligible but they can well afford a pricey home.

All this adds up to skewed studies that try to show Vancouverites as hard done by, but in fact, aren’t doing as badly as these studies will have you believe. Yes real estate is expensive in Vancouver but does it effect your lifestyle as much as the media would have you believe? The answer is an unequivocal no.