Quote:
Originally Posted by SeeGeeWhy
I'm intrigued by this rule of thumb...
Would you say that this is a good rule for an individual to target for their own housing situation - i.e. go buy a house that is 3 - 4x your annual household income?
I know that in my case, I wouldn't be doing that so I am not sure where the 3 - 4x rule comes from.
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What Slava said.
In general that seems to be used when evaluating economies on a large scale, cities, provinces, countries, and economists say that 3-4 rage is healthy for the population.
I'm not sure I totally buy that as there are other factors.. places like Vancouver where land is limited so things are always going to be higher than that range. Or large cities where the downtown core is always higher because of scarcity and demand.
I like the percentage of income a little better since it takes interest rates , different mortgage types, etc into account as well (cost of ownership as a percentage of a person's annual income). 40%ish for Calgary, 70% or more for Vancouver.