Housing Affordability deteriorates to new low

Thank goodness we don’t have a housing bubble in Vancouver!

Otherwise one might start to worry about these latest numbers on housing affordability.

The housing affordability index takes local family income and then looks at what percent of it would would be required to service the debt on an average benchmark bungalow.

The entire province of BC is at 69.7% and blows away the rest of Canada for overpriced houses. Only Ontario starts to come close with an affordability index of 43.9%. Even Toronto can’t compete in the overvalued housing arena, coming in at 54.5%.


According to RBC Vancouver is the champion of overpriced houses. To buy the benchmark bungalow here it would take 91% of a local families pre-tax income to service the debt.

From Macleans magazine:

Nothing, of course, could persuade condo king Bob Rennie that the Vancouver housing market is in a bubble (or, worse yet, a bubble that’s starting to let the air out).

For everyone else, take a look at this chart RBC put out today with its latest survey of housing affordability in Canada (which is deteriorating in most provinces, by the way)

No problem, just arbitrarily knock 20% off those Vancouver numbers and we’re not much worse than Toronto.

If you look around the world, you may be able to find a few markets that have an even worse affordability index than Vancouver, with lower incomes or higher house prices. But for some reason, most of those places seem to be able to pull in higher rents than Vancouver.

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Sheesh
Guest
Sheesh

A follow-up: Yesterday I posted about an interview on CBC radio. It was with Bobby Ning from the Financial Literacy Council on the RBC report, debt levels in Vancouver and how people “afford” their lifestyles.

He says housing (buying or renting) shouldn’t exceed 36% of your income. End of story. Anyway, worth a listen and quite refreshing for the mainstream media to interview someone not tied to the real estate industry for once.

It is the August 28 episode. There is a “man-on-the-street” segment at 1:09 and the interview is at about 1:51.

http://www.cbc.ca/earlyedition/pastepisodes/

patriotz
Member

@kansai92:
When what’s all said and done? You can buy a 3 bedroom house right now in Ottawa for $300K.

kansai92
Guest
kansai92

@G:
When it’s all said and done I suspect it will be $300K for a 1BR and $475K for a 2BR.

Devore
Member
Devore

@Vote Down The Facts: So they would remove subjects on Monday or Friday instead, and you’d see more sales reported then. Still makes no sense.

Bag it and tag it
Guest
Bag it and tag it

@G: In fairness, he did say ‘good 2 beds’. There seems to be a much larger variation in the price of 2 bed vs 1. They start at about $450k but lots up over $800k also.

VHB
Member
VHB

@ZRH2YVR: In past years, the September listings surge begins precisely on the Tuesday right after Labour Day. Last year, we had 356 listings on that Tuesday. In 2010, it was 282.

So, it would be a surprise if there are fewer than 1000 new listings hitting the books during the four days next week. Good chance to get over 1200.

VHB
Member
VHB

@ZRH2YVR: I have PaulB’s daily numbers for 2010 to now. The current streak of 11 straight double digit sales days is now a record. You might think you could see this kind of streak in December or January. But August? This is nutty low sales.

yvr2zrh
Member

#80 – I was thinking the same. Given the longer month because of the location of the weekends – – we are actually behind 2008. However- that particular stat will not make the REBGV release. Why would it?

Tough to say anything other than that 15% decrease in sales rate in the second half of Aug compared to first half and that this month is brutal. Price declines coming in big way in October / November./

G
Guest
G

Ian Watt is saying this again.

“price your condo below others in a declining market!”

http://www.youtube.com/watch?v=Anf9cP6CDhA&feature=player_embedded#!

He suggests $400k for 1 bed, but $600k for 2bed? Isn’t that high for 2 bed?

A Non
Guest
A Non

I wonder how much this house would cost in Vancouver? I love stories like this that show how insane prices here are.

Vote Down The Facts
Guest
Vote Down The Facts

@Devore:

I can’t imagine many people remove all subjects on a weekend.

John
Member
John

Good Point.

Devore
Member
Devore

@John: Why? Are houses not for sale during weekends?

Makaya
Member
Makaya

@John: “If we have fewer than 94 sales tomorrow”

It’s been 11 days (not counting week-ends) since we’ve seen sales at this level. The odds are pretty good 🙂

good-format
Guest
good-format

Just for fun. The info for September, 2011

        listing  sales   s/l   price+-   Inv
Sep-06    356     103    28.9    124    16,083
Sep-08    277     103    37.2    134    16,254
John
Member
John

Thinking about monthly numbers. August 2008 had 20 business days, not counting the holiday. August 2012 has 22 business days not counting the holiday. If we have fewer than 94 sales tomorrow, we will actually have a worse August than 2008.

good-format
Guest
good-format
Copied from PaulB’s number http://www.laurenandpaul.ca Date Listing Sales S/L Price(+-) Inv Inv(+-) Aug-01 258 61 23.6 99 18,708 Aug-02 182 49 26.9 114 18,740 32 Aug-03 202 93 46.0 92 18,799 59 Aug-06 0 0 0 0 - Aug-07 232 113 48.7 128 18,784 -15 Aug-08 210 49 23.3 105 18,851 67 Aug-09 195 120 61.5 119 18,816 -35 Aug-10 169 96 56.8 118 18,806 -10 Aug-13 206 103 50.0 124 18,788 -18 Aug-14 239 97 40.6 125 18,811 23 Aug-15 175 53 30.3 110 18,826 15 Aug-16 183 76 41.5 91 18,792 -34 Aug-17 169 59 34.9 86 18,848 56 Aug-20 245 85 34.7 126 18,875 27 Aug-21 206 63 30.6 114 18,925 50 Aug-22 138 76 55.1 85 18,919 -6 Aug-23 156 72 46.2 93 18,918 -1 Aug-24 158 61 38.6 91 18,938 20 Aug-27 191 82 42.9… Read more »
Anonymous
Guest
Anonymous
Romeo Jordan
Guest
Romeo Jordan

Bag It,

Great point. I hope he wears the olympic village disaster.

Fucking douchebag (Rennie)

Bag it and tag it
Guest
Bag it and tag it

@Romeo Jordan: I hope Rennie keeps denying the bubble in a very public way…his career will be over in a few years as a result of being so badly wrong

Romeo Jordan
Guest
Romeo Jordan

Mike, if you need a shoulder to cry on, perhaps you can send a photo of yousrelf to Rennie, he might be able to comfort and put a smile back on your face?

Bag it and tag it
Guest
Bag it and tag it

@Makaya: The Trolls are at the beach….they do the opposite of what is logical