And according to CBC that makes you a part of a club. What does all this mean? Not much. After all, unless you're in the club, you're not in the know, so really, don't lose any sleep over this one. After all the death of the single income household happened sometime in the first half of the 21st century in Victoria. Right about the same time that housing prices for SFH crept, or leaped if you're hearing this from a Realtor, above the $400,000 mark.
I guess this adds fuel to the argument that rich Albertans and Ontarians--everyone knows Quebecers don't want to come here ;-)--are driving up our real estate prices. Next thing you know, Realtors will be blaming "those men" and saying that as long as they keep making men and not land, prices will continue to rise. (That sound you just heard was Ms. HHV slapping me).The country's 1.2 million high-income earners — those among the top five per cent — were predominantly male (75 per cent), aged 45 to 64 (54 per cent) and married (78 per cent), Statistics Canada said.
Almost half (46 per cent) of the top five per cent of tax filers lived in Ontario. About 18 per cent are in Quebec, followed by Alberta (15 per cent) and British Columbia (13 per cent).
$400,000K really is a magic mark. Let's say that the (generous) average household income is roughly $75K/year in Victoria right now. And that "average" household has $100,000 or 25% down payment saved up or equity in the condo they bought 4 years ago. That means they can "trade up" into an average SFH house priced at $400,000K, amortized over 25 years at 6% interest and still fall into the 30% of gross income figure that CMHC requires for mortgage insurance.
That $400K is this Bear's target for a downturn. I won't hold my breath, but that's the mark of sanity in my mind folks. And that number represents a 32% correction from August's prices. That's a big drop, but won't be breaking new ground in the land of modern real estate corrections. And to be buying in that kind of environment may prove to be more exclusive than the so-called 5% income club. And I won't be losing any sleep over that purchase.
Don't forget to keep posting in the What's happening on the Victoria RE market thread.
8 comments:
Thousands laid off by GM Ontario. If, according to Buzz Hargrove, 80k to 100k jobs could be affected, that's a serious scenario for RE!
http://www.wheels.ca/article/31723
What it probably means for us is that interest rates stay the same or get lowered. The BoC doesn't care about BC real estate, but they care a whole lot about the Ontario economy.
Central banks kept rates too low: Dodge
Ottawa — The world's central bankers failed to realize the magnitude of the easy money made available over the past few years through sophisticated loans and derivatives, Bank of Canada Governor David Dodge says.
As a result, central banks kept interest rates too low, he said in a speech that dissected the ongoing global credit crunch.
http://tinyurl.com/ynupfw
Hmm,so maybe they added about the last 20-30% hike on to the average house price buy screwing up ? We all knew this was getting stupid 2 years back,now this is setting up for a faster drop once the word gets out the market is cooling and things are still a long way from being all rosy in subprime land.
VG
I think Dodge is one of the few bankers that recognize that keeping interest rates this low for so long is going to have dire consequences. Canada and the US will start paying the price in the coming months.
Savings rates are at very low levels; inflation has only been avoided through access to cheap Asian imports; and families are mortgaged to the hilt.
Maintaining the current bank rate is probably the best course for now but inflation could rear its ugly head very quickly. Raising interest rates could tip the economy into recession and lowering rates will greatly increase inflationary pressure. Not very palatable choices.
The government has been warning manufacturers to increase productivity for years and to not keep relying on a devalued currency to generate exports. Our productivity per worker is lower than the US and now with the dollar at par this sector of the economy is in trouble.
There are no simple answers but at least we are insulated from these economic issues on Vancouver Island for all the reasons we have discussed in earlier posts.
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Savings rates are at very low levels; inflation has only been avoided through access to cheap Asian imports; and families are mortgaged to the hilt."
Roger do you really think inflation is as low as reported? I know I can buy a computer and clothes cheaper... but my car costs the same if not more, my food is way more expensive, as is housing, gas and property taxes.
Dodge has a big financial report out on October 18th that will detail all his projections into next year on interest rates etc. Should be interesting since we know his plan is to contain inflation though he will be gone in the new year.
Interesting to see the segment on all the RE buyers scooping up the cheap lots in Birch Bay across the water from us in Washington State. Ocean view lots for half the price of White Rock. Now if they are buying vacation property there then that is many lots not sold up here. The White Rock RE agent tried to put up a good front with the ole " we got the Olympics coming" line....how weak.
Our wealth tax kicks in at 80K, In the US I think it is 250K (I am not sure but very high).
So... Canadians don't have any money but we have some of the highest RE markets in North America i.e. Vancouver, Victoria.
Wealth tax?
I don't give Dodge a lot of credit for acknowledging they kept rates too low for too long. That's just spin. It takes a lot more guts to rain on the parade while it's still going on than to talk about what he should have done after the fact. And note that he's not even turning the sprinklers one now, when the parade is winding down.
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