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real estate prices in Canada sustainable?

real estate prices in Canada sustainable?

Old Apr 13th 2021, 1:48 pm
  #271  
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Default Re: real estate prices in Canada sustainable?

Originally Posted by Shard
If that were the case, nobody would be buying houses. Certainly not anybody earning above minimum wage.
If you buy a home for personal use then I would assume that you want to be able to afford it. The higher paid job I have today could be gone tomorrow, so worst case I can still afford the mortgage if I lose that job.
Although I am in Ireland, we made sure that our mortgage for a house here and in Spain is covered through job seekers allowance.
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Old Apr 13th 2021, 2:37 pm
  #272  
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Default Re: real estate prices in Canada sustainable?

Originally Posted by Moses2013
If you buy a home for personal use then I would assume that you want to be able to afford it. The higher paid job I have today could be gone tomorrow, so worst case I can still afford the mortgage if I lose that job.
Although I am in Ireland, we made sure that our mortgage for a house here and in Spain is covered through job seekers allowance.
The assumption most people (and most banks) make is that someone taking out a mortgage will be able to maintain an income sufficient to make their payments. If someone is earning 5X minimum wage, they won't (and don't) buy a house where repayments are near what they can afford if they were to become unemployed or work at minimum wage. Your own prudent financial management is commendable, but it's not realistic to suggest that it can be generalised for everyone.
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Old Apr 13th 2021, 3:09 pm
  #273  
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Default Re: real estate prices in Canada sustainable?

Originally Posted by dbd33
A single wage earner on $125 can borrow 375. They need 125 for a deposit giving $500,000. Orangeville offers a selection of homes for $500,000. So, that's someone in middle management or a starter role in a profession buying a home commutable to Toronto. Lots of people buy houses together, as couples, and so have lots more buying power than that; if they did not houses would not generally cost more than that. You can only sell something for a price people can afford, thus we know that lots of families are willing and able to buy a house somewhere not very nice for a million bucks, it happens every day.
that did not make sense & I'd be interested what your daughter was earning to buy her property, when it was & her income ... because based on a mortgage calculator, taking someone earned the $14/hr ($28000/yr) minimum wage in Ontario, net after tax, EI, CPP, Ontario health premium net net lets say $22000

entering those numbers into the calculator, zero deposit, 100% mtge

https://wowa.ca/calculators/affordability

comes out that I cannot afford a mortgage even on a outhouse

imagine a 2 wage earner situation on minimum wage buying their first lowest possible priced property of say $100,000, even if someone could get a 100% mtge 5% cash back earning $56,000/yr gross/$44,000 net, they'd have property tax, utilities, living costs, phones, internet, transportation ...not in Ontario, maybe in rural somewhere Canada where there are no jobs.

I also entered New Brunswick as a potential purchase, again based on minimum wage, zero down ... zero mortgage qualification

my guess is that Jsmith & his wife combined income could not afford a house anywhere in BC


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Old Apr 13th 2021, 3:12 pm
  #274  
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Default Re: real estate prices in Canada sustainable?

Originally Posted by Jerseygirl
I may have mislead you...the condo we viewed is a few miles west of where you are. It was sold for over ask within 48 hrs of it going on the market. Property is still selling very quickly here. The realtor was talking about properties in the GTA, not particularly downtown condos.
In downtown Vancouver, condos are selling but in the west end there some struggles to rent condos. Lots more vacancy signs around but also a lot of new buildings going up - I can’t quite pinpoint what is going on but one idea is this:

I know the area I work in is very close to the safe injection site at St Paul’s Hospital and I’m wondering if they that had an impact. (I know the local community has advised crime has gone up) plus Granville Street is getting worse!

I can’t wait until our move to the Langley area.
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Old Apr 13th 2021, 3:22 pm
  #275  
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Default Re: real estate prices in Canada sustainable?

Originally Posted by dbd33
A single wage earner on $125 can borrow 375. They need 125 for a deposit giving $500,000. Orangeville offers a selection of homes for $500,000. So, that's someone in middle management or a starter role in a profession buying a home commutable to Toronto. Lots of people buy houses together, as couples, and so have lots more buying power than that; if they did not houses would not generally cost more than that. You can only sell something for a price people can afford, thus we know that lots of families are willing and able to buy a house somewhere not very nice for a million bucks, it happens every day.
$125,000 a year as a single person??? Do tell who is earning that amount as a normal everyday person as a newcomer to Canada- not anyone that I know, even those with Phd's.. nor those that are cradles! We obviously move in very different worlds..
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Old Apr 13th 2021, 3:29 pm
  #276  
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Default Re: real estate prices in Canada sustainable?

Originally Posted by Shard
The assumption most people (and most banks) make is that someone taking out a mortgage will be able to maintain an income sufficient to make their payments. If someone is earning 5X minimum wage, they won't (and don't) buy a house where repayments are near what they can afford if they were to become unemployed or work at minimum wage. Your own prudent financial management is commendable, but it's not realistic to suggest that it can be generalised for everyone.
Well as you say maintain. If you borrow 150K over 25 years 2.5%, that's just under 700 monthly. f somebody is earning 5X minimum wage means they can save more and wouldn't need to borrow so much in the first place. If that's not the case, then they might have a job that pays well now but can't manage their money. What happens if they lose the job and can't get one with similar pay, market crash etc.?
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Old Apr 13th 2021, 3:58 pm
  #277  
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Default Re: real estate prices in Canada sustainable?

Originally Posted by Moses2013
Well as you say maintain. If you borrow 150K over 25 years 2.5%, that's just under 700 monthly. f somebody is earning 5X minimum wage means they can save more and wouldn't need to borrow so much in the first place. If that's not the case, then they might have a job that pays well now but can't manage their money. What happens if they lose the job and can't get one with similar pay, market crash etc.?
I think you are focussing on just one side of the coin. People do lose their jobs or do mismamage money and end up not being able to afford their mortgage. However, the majority of people are not in that boat. Consider a doctor, she's not going to buy a house at a fraction of her income simply so that she can afford to pay the mortgage if she is unable to work. Most people stretch themselves to the absolute limit to buy as nice a property as they can afford. In a rising market that often turns out to be a far more successful strategy than buying a modest house with some money in a low return savings/investment account.
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Old Apr 13th 2021, 4:12 pm
  #278  
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Default Re: real estate prices in Canada sustainable?

Originally Posted by not2old
that did not make sense & I'd be interested what your daughter was earning to buy her property, when it was & her income
The daughter in BC? I don't have any children in Ontario, the others grew up and emigrated, one of them to Tower Hamlets! She is eight years out of university. She married a chap from her class. At graduation they owed about $150,000 in student loans. They have paid off the loans and saved a house deposit. Obviously they're not on minimum wage. One needs a decent job to buy a house in a city.

Last edited by dbd33; Apr 13th 2021 at 4:24 pm.
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Old Apr 13th 2021, 4:19 pm
  #279  
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Default Re: real estate prices in Canada sustainable?

Originally Posted by Siouxie
$125,000 a year as a single person??? Do tell who is earning that amount as a normal everyday person as a newcomer to Canada- not anyone that I know, even those with Phd's.. nor those that are cradles! We obviously move in very different worlds..
That we move in different worlds is obvious from your mention of a qualification. I don't think the people I work with, ordinary computer people, have any qualifications but it's not something I would know; like winter tyres, that's just not something I see mentioned outside of this board.

I currently work with two people who have separately lucked out, they were at home when the lock down started so they've both had their pay (one at that level, one way up from there) paid in their home countries where it's worth a lot. Neither had been in Canada for a year when Covid struck.

Lots of people make that amount of money, actuaries, pharmacists, middle managers. Again we know this because someone is buying all those new houses.
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Old Apr 13th 2021, 4:45 pm
  #280  
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Default Re: real estate prices in Canada sustainable?

Originally Posted by Shard
I think you are focussing on just one side of the coin. People do lose their jobs or do mismamage money and end up not being able to afford their mortgage. However, the majority of people are not in that boat. Consider a doctor, she's not going to buy a house at a fraction of her income simply so that she can afford to pay the mortgage if she is unable to work. Most people stretch themselves to the absolute limit to buy as nice a property as they can afford. In a rising market that often turns out to be a far more successful strategy than buying a modest house with some money in a low return savings/investment account.
Of course that might be the case with a doctor and other professions but the majority aren't doctors and what is a modest house? It's often luxury properties that lose value quickly. I can buy a so called modest house and renovate to then market as luxury. And not all doctors are paid well either.
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Old Apr 13th 2021, 5:04 pm
  #281  
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Default Re: real estate prices in Canada sustainable?

Originally Posted by Siouxie
$125,000 a year as a single person??? Do tell who is earning that amount as a normal everyday person as a newcomer to Canada- not anyone that I know, even those with Phd's.. nor those that are cradles! We obviously move in very different worlds..






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Old Apr 13th 2021, 5:16 pm
  #282  
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Default Re: real estate prices in Canada sustainable?

Originally Posted by Jsmth321

Again, an unhelpful chart as it includes all of Canada, Someone earning a high income in Nova Scotia in 2017 might have be able to buy in Nova Scotia but not in the Yukon. It also seems to include all people in Canada, some of whom don't work. Local charts of people working 40 hours a week or more would be more informative.

That said, at what level of income do posters here think one should be able to buy a house; one person alone on minimum wage, two people together where each is in the top 50% of earners, only Avril Lavigne?
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Old Apr 13th 2021, 5:16 pm
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Default Re: real estate prices in Canada sustainable?

Originally Posted by not2old
my guess is that Jsmith & his wife combined income could not afford a house anywhere in BC
There are some places in BC we could potentially to buy, very small towns largely in the middle of nowhere, the problem is these places have no employment potential, lack healthcare services, and simply are not viable places to live hence why they are so cheap.

I know we will never own at this point, impossible for us to have a 6 figure income needed. But at least we should be comfortable rent wise, just have to accept I will never have an aquarium or hobbies again since my hobbies cannot be done in an apartment due to space constraints and landlord rules.

If I can get into school next year and take the training I want, assuming 40 hours a week (might not be doable as most jobs tend to be casual in that field.) after taxes but before any other deductions like union dues, extended health, parking and such, would be about 39,000/yr net add in the partial disability we would still get for part of the year, at beast we will net 50,000 to 52,000 per year combined all income sources.

Looking at TD bank site, seems at that income with 25,000 down, max mortgage would be 288,000 assuming no other expenses and $0 debt.

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Old Apr 13th 2021, 5:46 pm
  #284  
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Default Re: real estate prices in Canada sustainable?

When I bought my first house in 1995, the bank said it would only lend me 3.5x my household income. My Wife did not work so it was based purely on my income of £25,000 so I think I borrowed about £85k in all. My parents lent me £5k and I put down the rest to buy a £97k house.

That 3.5x ratio would still work here in Kamloops for a 1st home. $60k income x 2 = $120k x 3.5 = $420k for a mortgage.

Sucks for my Son though - him and his GF earn about $120k combined and could buy a nice mobile home in Langley.

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Old Apr 13th 2021, 5:52 pm
  #285  
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Default Re: real estate prices in Canada sustainable?

Maybe a condo in Chilliwack? Assuming they could find comparable jobs in Chilliwack pay wise.



Originally Posted by Danny B
When I bought my first house in 1995, the bank said it would only lend me 3.5x my household income. My Wife did not work so it was based purely on my income of £25,000 so I think I borrowed about £85k in all. My parents lent me £5k and I put down the rest to buy a £97k house.

That 3.5x ratio would still work here in Kamloops for a 1st home. $60k income x 2 = $120k x 3.5 = $420k for a mortgage.

Sucks for my Son though - him and his GF earn about $120k combined and could buy a nice mobile home in Langley.
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