One of my long-time favourite bloggers, Professor Piggington of San Diego, has finally decided to buy:
After the recent leg down in interest rates, monthly payments are the lowest compared to incomes and rents than they’ve been in the history of the data, and are quite dramatically below their median historical levels:
But note another consideration, which applies only to the US where you can lock in rates for the life of the mortgage:
If this outlook is correct, as I believe it is, then today’s ultra-low rates make this an ideal time to take out a chunky 30-year fixed mortgage, and to sit back and let inflation hew away at the real value of the mortgage and the monthly payments over the years to come.
So even if the buy/rent ratio in Vancouver came down to what it is now in San Diego, buying would not be as favourable, because interest rates would certainly rise if we went into a period of long-term higher inflation.
Note that the graph above compares monthly payments against per capita income (not median household income). It would appear that it is now possible to buy a SFH in San Diego on a single median income.
But of course Vancouver can’t go the way of SD, it’s surrounded by ocean, mountains, and a border… um it has the nicest weather in the country and everyone wants to live here… um…
Well it’s just different here.