Can someone please explain this market?

The following was posted by ‘Whistler or bust?‘ in the comments this weekend:

I will be the first to admit I have been very wrong about the direction of Van RE in the past 2-3 years. That disclaimer said, lets examine some facts to see if there is any upside left:

These are the incomes required to be in each % (Source CBC)

10% of income earners $80,400*
1% of income earners $191,100*
0.1% of income earners $685,000**
0.01% of income earners $2.57 million*

So with the average Vancouver detached home at $1,408,722 (Source Yatter Matters)

A DP of $281,744 is required to buy
PPT is $26,174
Misc Closing $2,000
Total $309,918

Mortgage $1,126,978 @ 2.59 for 5 yrs = $66,072 Annually ( I will note these are record low rates)
Assume 1% Annual Maintenance (This is a standard benchmark over many years) $14,080
Property Taxes – These can vary but lets assume $7,000?

So Annual carrying costs total $87,152 AFTER TAX – I am excluding heating and hydro which vary but in no cases less than $3,000 annually for a detached home

Back to our chart above – Lets assume a 30% avg tax rate for the 10%, 35% for the 1% and 45% for the 0.1 and 0.01%.
After Tax
10% of income earners $56,200* – This house would take up 155% of the after-tax income
1% of income earners $124,215* – This house would take up 70% of after-tax income
0.1% of income earners $376,750* – This house would take up 23% of after tax income
0.01% of income earners $1.413 mil – This house would take up 6% of after- tax income

This is assuming all of these people have $310K for closing. This is assuming they are buying the average house of $1.4 mil. I think we all know what kind of house $1.4 mil gets on the West Side and even on the East side nowadays.

So the conclusion – Even the 1%ers are realistically priced out of the average Van detached home. Only the 0.1% and and above can really afford to buy.

Put another way – 99% of people are priced out. As families combined lets assume 95% are priced out.

So to all you bulls out there, please answer the questions: Is this a healthy market? Is this a market with any upside left?

I think we all know the answer.

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Diadora
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Diadora
squeak
Member
squeak
#17: “We will also nearly double the budget for processing family class sponsorship. Wait times will come down – which currently average almost four years for parent and grandparent applications.” Wow… From my perspective, the elder care in this country is already in a crisis situation and underfunded. We can barely meet the needs now as it is. Dementia (our new epidemic) and psych issues are piled into elder care. Government facilities also get residents who have run out of money b/c they have been gouged by the private facilities and no longer able to pay, they boot them out and land in government run facilities…if they are lucky. Most of these people have been paying taxes through their lives. Now we are taking in elders from other countries who have not paid a cent? This is going to get… Read more »
Ulsterman
Member

After reading comments on this site i assumed Coqitlam had suddenly vaulted past the $1m mark. Then i went to MLS and discovered that there were hundreds of SFH’s in the 600-900k range. With my deposit I not so bothered after all – unless that is people can tell me that 90% of these are fictitious and really all sell after multiple bids for in excess of $1m. Please say that’s not the case.

patriotz
Member

Look who stuck with Harper last night:

Tory Alice Wong wins close race in Richmond Centre

Told ya.

w
Guest
w

>Wong has a lead of more than 400 votes with 175 out of 177 polls reporting.

Wow, Chinese Canadians have such a overwhelming affinity for the Conservative party. You totally proved your point patriotz.

w
Guest
w

>Ending TFW and IMP programs will have huge effects on rentals and Real Estate.

Liberals aren’t getting rid of the TFW program.

would-be buyer
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would-be buyer
The Liberal win has just sealed my decision to buy property next spring. I hate the Cons for making this housing bubble, but the horse has left the barn and the Liberals won’t be shutting the door. In fact, they will add fuel to the fire with their open and expansive immigration policies. I have no idea why anyone who lives in Vancouver and doesn’t own property would vote Liberal. I felt compelled to vote Conservative because, as a high-income earner priced out of the housing market in Vancouver, I have no other way to shelter my hard-earned income from the tax man except through the TFSA. I just woke up poorer today. The Liberals will roll back my TFSA contribution room, take away my universal child care (I earn too much) and tax me more to give to the… Read more »
vangrl
Member
vangrl

#31

I feel your pain.

Bright side? maybe our dollar will go up, making Van Real Estate less attractive to foreign money? or even better, giving foreign investors that own here, more reason to sell?

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

lmao, people really bought into the “hope and change” slogan (recycled directly from obama’s first campaign). and then their is the family name recognition. too funny.

patriotz
Member

@32: “I feel your pain.”

The pain of making over $200K a year? I could use some of that pain.

Of course I don’t believe for a minute the poster actually makes that much. He’s just another #angrycon reading from his collection of Conservative campaign ads.

vangrl
Member
vangrl

If the reason for reducing the TFSA was because only the rich were taking advantage, he should just limit it to those under a certain income threshold.

Better savings plan for those 1st time house buyers, and certainly a better idea than immediately giving them more access to their RRSP to buy a place.

One promotes savings, the other promotes going in debt, at a time when we’ve never been more in debt and house prices have never been higher

vangrl
Member
vangrl

If the economy improves because of all his promised spending, rates may rise, which could also help housing prices.

patriotz
Member

@35:

There’s more to it than that. The big problem is that TFSA withdrawls are not included in income. That means with a $10K/year limit someone could go into retirement with a million dollars or so in a TSFA, and claim full OAS or even GIS while having a de facto income much higher than most retired Canadians.

I agree fully that the TFSA is the right vehicle for saving for buying a house. But nobody needs to put $10K/year for their whole adult life into one to do that. Put a cap on net contributions of $50K.

Zero Down Forty
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Zero Down Forty

@#36 I doubt that Canada alone could spend it’s way out of this world-wide economic funk. Perhaps, if the US & Europe went on a massive stimulus spending spree to break the zero rate trap then it may make a difference.

Or if the US economy started gaining ground, in which case, stimulus spending here may speed what would be inevitable recovery.

Global factors probably have more to do with Canada’s economy than anyone sitting in 24 Sussex.

vangrl
Member
vangrl

GIS should be based on net worth, including Real Estate, especially for those living on the West Side

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

it’s like having gregor bethune robertson run the country 😀

i wonder if he has a side piece that’s made in china.

Canada’s Liberal leader Trudeau, not just another pretty face

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!
space889
Guest
space889

@squeak – healthcare is a direct provincial responsibility, hence the cost of the Liberal immmigration policy is borne by the provincial govts who will get all the voter backlash about lack of adequate care, instead of the Liberal, who will simply say they increase health fund by xx billions which is really a drop in the bucket.

space889
Guest
space889

@vangrl – uhmmm…no…if you had gotten your head out of your ass and actually listen to some facts from people who are in the know, like say a realtor that works in China for rich Chinese people to buy Vancouver real estate, you would know they don’t care if Cdn $ went up.

Cdn $ went up like 30% from 2008 to last year, the Chinese buyers in 2008 don’t care cuz they don’t view it as an investment that’s supposed to make them $$, and secondly the house price increase have offset Cdn $ appreciation, and lastly, they just don’t care cuz they didn’t buy it to make $$$ or using $$ they can’t afford to lose.

space889
Guest
space889

@Owe Canada – The modern fiat currency economy is basically a debt based economy and the money you hold in the pocket or in a digital bank account are all debts, claims against gov’t which you can never redeem for anything. Look up Money As Debt education videos on YouTube, it explains everythings and Canada get a big mention in it too.

space889
Guest
space889
So what do you call a market that doesn’t actually exist in real life? oh I know, a model! An unrealstic model that bears hold up as a representation of real world and then cry why the world is so insane and don’t work as expected in their model. Very few individuals making $80K/yr buys a 2000 sq ft house, even if they can afford it. Families with kids are the biggest buyers of SFH! Sheesh….so the example cited is flawed from start. Yes a few millionaire business people who are single will buy big ass trophy mansion, but 99% of single population do not. So redo the work using family net after tax income first. Then calculate the percentage of housing that are actual SFH cuz if only 10% of housing units are SFH then by definition, at most… Read more »
Bull! Bull! Bull!
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Bull! Bull! Bull!

what a handsome and dynamic young man!

http://imgur.com/jhgXB3u

burnabonian
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burnabonian

Has this already been posted?

From the platform of our new Kommunist Socialist Overlord Comrade Rulers:

“We will modernize the existing Home Buyers’ Plan to allow Canadians impacted by sudden and significant life changes to buy a house without tax penalty. This will ease the burden on Canadians facing job relocation, the death of a spouse, marital breakdown, or a decision to accommodate an elderly family member.”

[…]

“We will review escalating home prices in high-priced markets, like Toronto and Vancouver, and consider all policy tools that could keep home ownership within reach for more Canadians.”

THUMBTACK, MEET BALLOON

Royce McCutcheon
Member
Royce McCutcheon

@46: http://imgur.com/Q6Q32Y4

This game is stupid.

TheTop
Guest
TheTop

Did Space really just try to imply that Chinese don’t care about losing money?