[QUOTE=1stLand;2674117]
Quote:
Originally Posted by chemgear
Unfortunately, the long term ratio has been more like 3ish range (Which I assume correlates well to the 33%ish borrowing benchmark of total income for housing costs, etc.)
http://www.policyalternatives.ca/pub...housing-bubble
When you factor in median incomes, the same historic range appears for housing prices. Housing prices for 20 years, prior to 2000, stayed in a narrow range of between 3 and 4 times provincial annual median income.
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There was a completely different philosophy 20 years ago, regarding the use of credit for the average consumer.
People more willing to go into debt to buy what they want today than they were 10, 20, 30 years ago.
I don't think 3x's or 4x's the average household income as a benchmark for housing prices is as relevant as it once was |
This mentality is exactly the problem. 3 and 4 x's SHOULD be the benchmark. It's ridiculous to think anything else. There is a REASON that 3 - 4 x the median income was used over the years.
Being willing to go into massive debt to purchase a house isn't a good thing. It's a stupid thing. Yes you will have to go into to debt. But you shouldn't be house poor, and once you surpass the 4X income thats exactly what begins to happen.
That rule is definitely relevant. 30 years ago someone may have made 12 bucks an hour, and they could afford to buy a 75,000 dollar house. Today people are making 30/hr and they are buying houses that are 500,000. Those numbers don't add up.
The sooner people start getting real and using some common sense about how much debt and spending they are doing the better off we will all be.
The median income for a FAMILY in Calgary is roughly 91,000, when you factor in kids etc, there is no way, they should be purchasing a $400,000 property.