There’s a story in the Globe and Mail today about a study on affordability across canada. Apparently its expensive to live in the most expensive cities and 14% of Canadians spent 30% or more of their income on shelter. The 30% of income thing is a standard indicator of lack of affordability.
The concept of affordability has traditionally been based on a ratio of housing costs to total household income, Statscan said. A household paying 30 per cent or more of its pre-tax income for housing is considered to have affordability problem.
During Statscan’s survey period, 12 per cent of households spent between 30 per cent and 50 per cent of pre-tax income on housing. Two per cent spent 50 per cent or more to keep a roof above their heads.
Averaged across Canada, it was renters that were more inclined to have this affordability problem, so I’m guessing most other Canadian cities don’t have the situation we have in Vancouver where owners buying at current prices are subsidizing renters.
Renters were much more likely to fall into this category of people who struggle to afford housing, Statscan said. Thirty-one per cent of people who rented in 2004 spent 30 per cent or more of their budget on shelter, compared with 6 per cent of home owners.
â€œThese rental households consisted mostly of individuals living alone, those relying on government assistance, and those in low income,â€ Statscan said.
Not surprisingly, people who rented in Canada’s two most expensive cities, Toronto and Vancouver, incurred the highest cost in terms of rent.
The best line of the whole study is at the end:
Renters who earned less than $19,190 a year were 18 times more likely to be cost-burdened when it comes to housing than people in the top one-half of the income chain.
Yes, the startling fact: People with lower incomes have a more difficult time affording things. Thanks Statscan!
What’s that old saying again?
Bears miss out on opportunities to make buckets of cash with no effort, Bulls keep betting till they go broke, and Pigs wallow in their own filth until such time as they are ready to become delicious crispy strips of bacon.
There’s an article in todays Globe and Mail about some of the anger and distress caused by the recent increases in False Creek lease rates.
The people who own homes in False Creek aren’t rich and they aren’t poor. They’re teachers, child-care workers, retired professionals and small-business owners. Over the past 30 years, most of the nearly 300 homeowners have paid out their leases, so this increase does not affect them.
But the owners of 118 units, like Ms. Greene, still pay monthly. Ms. Greene said she could never afford to buy out her lease, last tabulated at more than $30,000.
The new rates were passed unanimously by city council last month, though some politicians are now saying that they ‘didn’t fully understand the issue’.
Michael Flanigan, director of Vancouver’s real-estate services, said the increases were tabulated to reflect current market values. Mr. Flanigan stressed that the increases aren’t carved in stone; residents will have their say at a council meeting. He said consideration may be granted to those who can’t afford the fees.
“We are not insensitive,” Mr. Flanigan said in an interview. “Not all homeowners are in the same socio-economic class or have the capacity to pay these increases. . . . We don’t necessarily want to see economic evictions.”
No, we don’t necessarily want to see economic evictions, but you can’t make world class omelette’s without breaking a few eggs eh?
As I’m sure you’ve noticed the tap water in vancouver is running a murky yellowish brown right now, so there is a boil water advisory in effect. This means any water you consume should be fancy expensive bottled water, or cheap tap water that you have boiled to avoid risk of gastro-intestinal illness.
VHB has this topic covered with a request that comments stay on the topic of water and remain free of unsubstantiated rumours.
I’d like to stake my claim as the irresponsible vancouver real-estate blogger, so post info, conspiracy theories and unsubstantiated rumours below.
Just keep it cleaner than the water.
Story in the Sun
There’s an interesting article in Newsweek about US real estate woes. The National Association of Realtors just had their annual meeting and the mood and topics up for discussion were decidedly different from last year. One of the topics discussed is the difficulty in predicting how hard of a crash the US housing market will experience:
That uncertainty stems from the fact that the current housing slowdown isn’t like the more typical real estate busts of the early 1980s or early 1990s. Those downturns followed a traditional pattern: mortgage rates rose, job growth faded and the economy weakened, pinching people’s ability to buy homes. Today, in contrast, mortgages are still near 45-year lows and unemployment is down, yet many buyers are reluctant to make offers. Lereah attributes this to high prices reducing the number of people who can afford homes, falling demand by investors and the public’s psychological shift from celebrating the boom to worrying about a bubble. Those forces make this slowdown an anomaly, which makes it hard to predict where things will head next. Says Lereah: “You’d have to go back to the Great Depression to find a housing period that is this unique.”
The Great Depression? Geez, thats encouraging. So if it wasn’t rising mortgage rates or high levels of unemployment that caused the problem, who’s to blame for the real estate slump? The media of course!
..many crowded into the convention center to attend seminars on how to adapt to the slowdown. In nearly every session, speakers spent a few minutes blaming the media for hurting the market. All those headlines about a bursting real estate bubble have a lot of potential buyers really freaked out, industry officials say, which is one reason they’ve begun running full-page newspaper ads reminding would-be sellers that despite slowing sales, conditions aren’t really so bad.
So if you work in the media in Vancouver, please take heed: The future of our real-estate market is in your hands. If you run any stories reporting negative signs in our condo market you very well may destroy our economy.
But you don’t really care do you? And why don’t you care? ..because you’ll be making money selling ad space to realtors telling everyone everything is going to be ok.
You greedy bums.. How could you?!