From the NYTimes: (in bits and bites)
You should really read the rest. It's US specific data, but the same underlying factors apply here and the ratios are fairly similar. A good read, thanks Talus.
One of the big lies of the real estate business is the idea that renting a home is tantamount to throwing money away. It’s a useful fiction for real estate agents, because they make vastly bigger commissions on house sales than rentals. But the comparison isn’t nearly so straightforward for the rest of us.Renting involves one obvious, recurring cost that can never be recouped: the monthly rent check. Buying, on the other hand, involves multiple expenses, some of which aren’t so obvious. On top of closing costs, there are repairs, property taxes, mortgage principal and mortgage interest...When you own, you also lose the ability to invest your down payment elsewhere, like the stock market.
Over the last several years, I’ve come to like a simple, back-of-the-envelope way to compare the costs of renting and owning. You find two similar houses, one for sale and the other for rent, and divide the sale price by the annual rent. You can call the result the rent ratio.
The concept will probably sound familiar to stock market investors. It’s the real estate market’s version of a price-earnings ratio — a measure of how expensive an asset is, relative to the underlying economic fundamentals. Like a P/E ratio, the rent ratio provides something of a reality check.
They even provide a cool Buy vs Rent calculator to play with.
A welcome addition to the Victoria RE blogosphere has arrived. Womp brings us MLSstats.ca for daily stats on the local market, emulating one Realtor I'd happily work with in Vancouver, Paul.
UPDATE: a week ago I gave you some snapshots of low-end market inactivity. A week later, of the 16 May listings for SFH in my criteria four have sold:
MLS #246067 original price $419,900. 16 days on the market. Sold for $390,000 or 8% less.
MLS #246160 original ask $419,900. 8 days on the market. Sold for $425,000. (It's a triplex).
MLS #246156 original ask $399,900, sold after 10 days for $375,000, a full 7% less.
MLS #246107 original ask $389,900, sold after 11 days for $377,500.