Quote:
Originally Posted by stampsx2
Start of a new bubble? Seems like everytime there’s a real estate thread there’s bubble talk. The market is overextended, a major correction is around the corner, this can’t continue, home prices aren’t in line with wages etc etc.
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The better question is are mortgage payments in line with wages.
The median family income in Calgary is 102k in 2018. The median detached SFH is 466k.
(There is a huge assumption here by using median SFH and Median family as opposed to average or including all dwellings or looking at individual income but I think this comparison makes sense if looking at the SFH market)
A 25 yr mortgage of 466k at 2.34% has a monthly payment of 2050 plus say 250 in taxes or so for a total of 2300 per month which is 27600 per year or about 27% of income. The recommended max is 30-32%.
So in Calgary, at current interest rate the median family can afford the median SFH therefore no bubble. Now if interest rates rise to 5% the payments and tax come out to 35.5k which is 34.8% of gross income so may put stress on a house hold.
Calling Calgary a bubble or even at high risk if interest rates rise doesn’t seem backed by evidence. Commodity price volatility and oil industry employment is the far bigger risk to Calgary housing prices.