Quote:
Originally Posted by blankall
So the young family should just throw caution to the wind and take on a half million dollar debt that they can't possibly afford to maintain unless the interest rates stay the way they are? And they won't go back to historical norms....ever? This basically strips the BoC of their power to regulate the economy.
The fact that our economy is dependent on out of control housing prices, foreign investment, free borrowing, etc... is ridiculous. What a mess.
The whole system also horribly favors high income earners and children of the rich. Perhaps the median family in Calgary can afford the median house, but the wag gap is growing substantially. What about the social worker earning $20/hr? What do they afford?
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Quote:
Originally Posted by burn_this_city
This is where we are at. The BoC really can't raise rates beyond 3-5% without causing a huge drag on consumer spending. Best they can hope for is flat home prices for a decade so wages and real incomes catch up. Anyone in the bottom 40% is going to be hard pressed to afford a home in a major metro area country wide.
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Perhaps this hypothetical young family could choose not to participate in the housing market and instead, just rent?
I believe Calgary has among the highest home-ownership rates in Canada (and thereby, the world), so I get that there are social and peer pressures to "join in". However, looking at more pragmatically, if would be difficult make a good argument for stretching your personal finances and affordability to participate in the Calgary housing market at this time. Rents are soft and are often far below mortgage equivalency. The housing market is soft and trending further downward with more and more headwinds, including labour market outlook, property taxes, interest rates and more... We've had posts recently in this thread to the effect of "I've had my $500k house for 11 years and it might be worth that much today"..
The thought of anyone - young family or otherwise - scrimping and saving to barely qualify for their first mortgage that will leave them house-poor because they look at the Calgary market and think: "I want a piece of that" makes my head spin...