This Global News headline caught my eye recently; 25,000 Vancouver homes claim their total income is less than they spend on housing.
Reading the story, I was curious about a few things:
1. How were shelter costs calculated?
2. What was the assumption re average mortgage balance/rate/payment?
3. Were the ~47% of mortgage free Vancouverites factored in?
4. What of retirees on fixed incomes, yet with zero mortgage.
5. Part time income, owners of business, contractors, etc.
None of these were addressed in the Global News Story, so I clicked the link for the story source website.
Still not finding the detail desired I explored the entire site and clicked the Blog link.
This is where things got more interesting. ‘Full Time Employee income only’ – that’s not what the Global News Headline reads…
But there was still one more click required to find the gold, or absence thereof.
The ‘Read On’ button.
Clicking this we find some pretty interesting data. Here it is stated explicitly, and in direct contrast to the Global News Headline that “the ‘affordability’ map linked above uses individual income for full-time employees instead of combined household income, which differs from how affordability is usually calculated.”
The next sentence…
“The reason is that the data I had did not have the household income.”
So we have a news headline that stirs up inaccurate thoughts with inaccurate wording based on a story with (self-admitted) incomplete data.
Consider the many other sources of income that have been excluded in this study, that absolutely exist in real life and are completely acceptable when qualifying for a mortgage.
1. Permanent part time work (many nurses and teachers fall into this category with income still exceeding $40,000 per year).
2. Business owners.
3. ‘self-employed’ contractors.
4. Basement Suite income.
These are just a few examples of perfectly legitimate taxable income not factored into this study.
Perhaps the sentence that best encapsulates this entire situation is the final one in Mr. Von Bergman’s Blog post; in relation to the data map being built on limited employee info, rather than total household income: “But I am lazy, so for now that’s it”
Mr. Von Bergman is perfectly entitled to be lazy and not put forward a complete story, we are not paying him to do the work. In fact, he comes across as a perfectly logical guy.
However, Global News should be held to a higher standard.
Courtesy of Dustan Woodhouse, AMP – DLC Canadian Mortgage Experts