Sobering Warning from the Governor of the Bank of Canada on Vancouver housing costs

[Tindalos]

Sobering Warning from the Governor of the Bank of Canada on Vancouver housing costs

To deliver his key address on Housing in Canada in June 2011, Bank of Canada Governor Mark Carney chose his venue carefully, appearing in Vancouver at the Board of Trade. (1) He noted that Vancouver’s average selling price was now 11 times the average family’s household income—a level is so extreme that its primary comparable is Hong Kong—the least affordable city in the world.
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Relative to household income, our property values are now among the most severely unaffordable in the world. Relative to income, Vancouver’s property values are 56% higher than New York’s, and 31% higher than London’s.

In its November, 2011 report on the Canadian housing market, RBC notes that 94% of average household income is required to cover the ownership costs of a 2 storey detached home in Vancouver.

http://votesandy.ca/2011/11/28/vancouver-housing-costs-unaffordable/

It's getting ridiculous here. I have a friend who shared a two bedroom apartment with 6 other people (2 families with children) and another who rented a house with about 15-20 people (no one was ever sure of the exact count). Meanwhile condos are selling for $5 million.

[polly7]

1. Damn. That's sobering and scary.

"Carney identified two drivers of Vancouver’s explosive housing market growth: low interest rates and the movement of Asian capital into “selected international housing markets as those investors seek out diversification and hard assets.”

Maybe it's time B.C.'s gov't needs to take a look into the benefits of these investments versus the harm.

[Tindalos]

2. Probably not until we get a new government.

As I understand it, our local and provincial governments both have close ties to the developers. They're benefiting just fine, thank you. We are the 99%.

[polly7]

3. Sickening. So sorry:(.

[Spazito]

4. Yes, the prices in Vancouver are so over-inflated....

it is downright scary, imo. Who, in their right mind, would take a transfer to Vancouver to work or even look for work there with those kinds of costs coming with it.

[Tindalos]

7. Yes

I know a lot people who just moved here from the UK, looking for work and adventure. They love Vancouver and the mountains, but they're all shocked by the price of everything - rent, food, cell phones... At least there are jobs here.

[Fiendish Thingy]

5. The market appears to have peaked...

with small, gradual declines since this past summer. Things may accelerate in the spring when more listings will provide downward pressure on prices.

While prices in Vancouver are indeed insane, $5 million condos are a rarity; I think the average home price for the Greater Vancouver area last month was in the mid $800k's. Certain neighborhoods are definitely in the $1million+ club.

For an interesting, entertaining perspective on Canadian real estate, including Vancouver, check out Garth Turner's blog:

www.greaterfool.ca

(sorry, can't figure out how to post links in the new DU3)

I'll be relocating to BC by next summer (at long last!), and will patiently rent for a few years while the RE market melts, then purchase a reasonably priced home with the proceeds from the sale of my California house.

[Tindalos]

6. I hope you're right about peaking.

They've been predicting that for years and it hasn't happened yet. It's true the $5M condo is an extreme here. It irks me that they're knocking down lower income housing/rentals to gentrify the neighbourhoods. It makes housing even tougher for low income/renters. Real estate is cheaper out in the valley, farther from downtown, and they're getting more accessible as transit improves. One of my favourite things about Vancouver is the high urban population even downtown.

Welcome to BC!