Sunday, May 22, 2011

Lack of Affordability Noticed by Canadian Press

I'll just pluck one of many articles out at random.

First off 70% of Canadian households already own a house. That's going to be painfully clear very soon.
“Quebec started the year with a hit to affordability, showing deterioration that ranked second only to British Columbia for certain housing types,” said Hogue. “The province’s housing market has seen consistent price increases over the past year, which has raised the bar for homebuyers in the province.
A little reminder that housing is local. Houses in Quebec, relative to national prices, are cheap, but still badly overvalued.
“Despite the latest erosion in affordability, provincial levels generally continue to stand near their long-term averages, suggesting that owning a home remains affordable or, at worst, slightly unaffordable across Canada—with Vancouver being a notable exception,” said Robert Hogue, senior economist, RBC.
Can someone explain this one to me? He's saying if we throw the downtowns, the suburbs and the countryside into a giant pile it doesn't look so overpriced? Not desperate to shine up those numbers any way possible, are they. If that's the case, then why say with the exception of Vancouver, it's not a province.

The Globe and Mail also jumped on the bandwagon
The last time housing accounted for such a high percentage of household income in the city was in 2008, just before prices tumbled in a recessionary swoon. The city’s real estate market has since recovered and gone on to set new records, but the recent climb has market watchers worried that the gains are unsustainable.
“What’s happened this year in British Columbia is puzzling,” said Robert Hogue, an economist at the RBC. “The increases we are seeing just aren’t justified by market fundamentals. I feel like this is something we have to flag.”
Nice of you to notice now that it's utterly too late.

The only soft landing you could engineer at this point is to *require* every homeowner who is underwater relative to a price at 13x annual rent to sell out to a Hot Foreign Money Buyer de jour. Then they can buy their house back in 5 years at firesale prices.

No comments: