“We used to live in Vancouver. Moved back to Ontario a few years ago. My part-time, contract job (1 day per week) pays an annual income almost equal to the average annual income in BC and my house costs one fifth of the average Vancouver home price. A similar job in BC would pay me 1/2 of what I earn in Ontario! We have a beautiful century home just north of Toronto that doesn’t require repairs. When home owners spend an average of 90% of their pre-tax income on their primary dwelling, it’s only a matter of time before the cracks appear – and that’s not even factoring in a marginal rise in interest rates and other inflationary pressures. Using intuition alone, I don’t know how this “system of wealth” can continue in Vancouver. Maybe its time to make money the old fashioned way and actually invest in retirement plans. There’s a reason why the feds are strongly encouraging Canadians to reduce their debt burdens.”
- paul at VREAA 23 Feb 2012 6:14am
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They must be doing it in some parallel universe. Because in this one, the feds are keeping interest rates at historic minimums, tolerate 0% down mortgages (through cash backs), legislate tax-payer backed bailouts for banks if RE goes down, give handouts to construction industry, etc.
Yup. Negative real rates, asset price bubble. In hindsight it was obvious.
“They must be doing it in some parallel universe.”
No, the government thinks they are doing it in this universe, by use of finger wagging and parental lectures. “Stop eating so much candy little Jimmy, it’s not good for you. But here’s another big bag of free candy for you, in fact we’ll pay you an allowance to hold this. Just keep it under your pillow, do not eat it!”
CMHC is Insite for Canadian debtors.
70k/year for one day a week: sounds like federal government hiring back their own retirees.
70k/year?
According to Statistics Canada, median income in BC was $27,970/year in 2009.
That sounds awfully low. Are you sure that wasn’t disposable income or some other definition of income? Is there a link?
Individuals by total income level, by province and territory
(British Columbia)
http://www40.statcan.gc.ca/l01/cst01/famil105k-eng.htm
Bubbly, what I found most interesting about that link is the change in the brackets from 2008 to 2009. The top three brackets all went down. This isn’t the top getting increases, it’s the top getting off the train! Were a lot of jobs lost at the top end? Of course this table is lacking all off-book income which I’m sure is significant.
Total income includes realized capital gains, dividends, commissions, etc.
2008/2009 was a rough time.
As much as this seems insane contract jobs will pay higher. Bubbly makes a good point that it wasn’t specified if it was average personal or family income.
Assume it’s the former and we chargeout at $100/hr loaded that’s $800/wk which is smack near BC’s average weekly earnings. Of course with contract work earnings can be more variable.
It makes more sense to assume that “paul” was comparing to individual income. He also mentioned that his income is “almost equal” to BC average, or in other words a little lower than BC average. We can use a nice round $25,000/yr for our calculation. $25k/yr is about $60/hr – not that uncommon even in Vancouver.
Here in Calgary 40-year-old engineers make $120/hr on contract or more. Try making that in Vancouver.
To my mind, the theme of this article is about the choices we all make in order to improve our quality of life. The specifics about income are not really important so much as the decision of the writer to not allow excessive suffocating debt obligate his family and ruin their standard of living. He is saying that it is preferable to live in Ontario with fewer high quality hours worked while owning a solid inexpensive home versus trying to survive Vancouver’s meat-grinder of credit excess and anxiety.
…and low wages.
“and that’s not even factoring in a marginal rise in interest rates”
Well we know that’s off the table until 2020.
Ontario is in a housing bubble as well, particularly the GTA. The GTA is only very slightly less insane than Vancouver. Ottawa is not so bad – you can still find a decent condo in a beautiful area for $200,000. Semi-detached or townhouses for $325,000-ish. Still way too high and ripe for correction, but Ottawa might be one of the few cities where the 15% “soft landing” is a reality.
“I’ve never seen a soft landing in 53 years” – Angelo Mozilo
Good. Maybe there is hope for you. Soft landing always turns into hard landing.
Have you come over to the dark side, formula? Good quote. True too and when it is expressed by the guy who led one of the biggest lenders it says a lot.
Meanwhile, back in the US, one of the most notable points from that Corelogic report that I put up the other day was that it is now cheaper to buy than rent in every single State in the US. Every last one…..that should give us all a long pause before thinking that housing is safe to buy in Canada at our current bubbly prices.
Our turn will come too. Prices are now set for a significant decline.
Before drawing conclusions, we should ask f1 what he meant exactly by citing that well-known quote.
Please elaborate, formula1.
2008-09 was a “soft landing” according to some. The problem is, as bubbly has already pointed out, soft landings are usually just a prelude to hard landings. 08-09 was but a glimpse of what can and will happen. Perhaps Ottawa will just appear to be landing soft compared to other cities. Or, if the fed cuts hit hard enough, we might be falling hard on our asses like everyone else. Hell, if that happens, I might just start looking around for a place. Cuz right now I’m – you know – just throwing money away on rent….