Just to get started:
My biggests concern in vancouver is both the labor market and housing costs. I recently have been reading housing articles and reasearching housing and my biggest concer is how does salaries compare to housing costs? here is an article about housing costs
B.C., Vancouver remain least-affordable markets in country: RBC report
Home price gains in city expected to put 'high degree of stress' on market
Read more:
http://www.vancouversun.com/business/Vancouver+remain+least+affordable+markets+country+report/4815507/story.html#ixzz1NIzFW9q3Canadian housing affordability eroded in the first quarter of 2011, with B.C. and Vancouver showing the sharpest erosion, according to the latest Housing Trends and Affordability report released by RBC Economics Research.
"We have to monitor the Vancouver market very closely," the report's author, RBC senior economist Robert Hogue, said in an interview.
"It's reached levels of affordability that are starting to be worrisome and it may become more worrisome going forward.
"It's going to get worse." According to the report, affordability eroded in most markets in Canada.
"The sharpest deterioration occurred in B.C. -more specifically in Vancouver -where significant home price gains since the start of the year have propelled the already elevated costs of home ownership even higher," the report said.
The report concluded that owning a home is becoming less affordable in Canada as housing prices rise and that it will continue to do so as the Bank of Canada tightens interest rates later this year.
The report reverses six months of improving affordability that was driven by declining mortgage rates.
But with mortgage rates no longer falling and home prices continuing to rise -up eight per cent year-over-year to an average $372,544 as reported earlier this week by the Canadian Real Estate Association -the first quarter represented a transition to a period of diminishing affordability, said Hogue.
"Interest rates will likely soon start to rise again, leading to a period of steady increases in home ownership costs," said Hogue.
"This in turn will contribute to a flattening in Canadian housing demand going forward."
Overall affordability levels -which measure the proportion of pre-tax income needed to service the costs of owning a specified category of home -are still near historical averages across Canada. And continued growth in household income is also expected to cushion the blow of rising borrowing costs.
But in Vancouver, the cost of owning a detached bungalow -including mortgage payments, taxes and utilities -has soared to 72.1 per cent of all monthly pre-tax household income.
That compares to the national average, which edged up to 40.5 per cent in the first quarter from 39.8 per cent in the previous quarter.
The higher the reading, the more difficult it is to afford a home.
In Canada's largest cities, after Vancouver's 3.4 percentage point rise to 72.1, Toronto at 47.5 per cent was up 0.8 of a percentage point, Montreal at 43.1 per cent was up 2.0, Ottawa at 39.0 per cent was up 0.4, Calgary at 35.9 per cent was up 0.9 and Edmonton at 31.5 per cent was up 0.5.
For B.C., the report added: "We believe that deteriorating affordability will weigh increasingly on housing demand by B.C. households and raise the risk that they may be forced to the sidelines in substantial numbers, potentially causing painful market disruptions."
The report's section dealing with Vancouver, entitled Vancouver -Testing the boundaries of rationality, concluded that "frenzied pricing action has shown few signs of letting up since the start of 2011.
"Fuelled by strong demand for highend properties, home prices crushed old records in the first quarter of the year, surging between 4.5 per cent and 7.2 per cent depending on the housing type relative to the closing three months of 2010. This represented increases of as much as $50,000 in a single quarter based on Royal LePage data.
"Such steaming up of property values far outpaced income gains of Vancouver-area households and further exacerbated the market's already poor affordability.
"We fear that the Vancouver market is becoming increasingly disconnected from local demand conditions and vulnerable to a painful correction, especially once interest rates resume their ascent."
The report said the average price of a standard two-storey house in Canada stood at $383,000 in the first quarter of 2011, a 4.2-per-cent increase over the same period in 2010, and requiring a qualifying income of $84,500.
By comparison, B.C.'s average was $654,000, a 5.5-per-cent increase in the same period, requiring an income of $126,900. For Vancouver, the average price was $821,900, a 7.7-percent increase over 2010, requiring an income of $156,000.
Read more:
http://www.vancouversun.com/business/Vancouver+remain+least+affordable+markets+country+report/4815507/story.html#ixzz1NIxykbU3
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