Victoria – “The ‘next wave’ of first time buyers is when housing drops to where the 30k-40k salary can purchase. A 10% correction has gone unnoticed”

“My social group is mostly 100k/yr co-workers and 30k/yr friends. Of my 15 co-workers all but me have bought, many in the 2007 mania in Victoria. None will have to sell but all took mortgages for as much as they could get and will be paying out 40% of take home for the next 25-35 years.
The 30k/yr friends would love to own, but accept that it’s impossible in this market without moving west out of Victoria and a couple trips through the Colwood crawl usually puts that to rest (for the smart ones anyway).
I won’t be buying, I like winter travel and early retirement too much. So the ‘next wave’ of first time buyers in my world at least is when housing drops to where the 30k-40k salary can purchase, a 10% correction would (and has) gone unnoticed to anyone who doesn’t have an assessment to look at each year.”

Lee at VCI 7 Sep 2012 1:23pm

A 10% correction from a bubble top is just noise, and doesn’t do very much to reconcile prices with fundamental values. It may, however, be enough to cause most buyers to take pause, and thus ensure future price descent.
– vreaa

8 responses to “Victoria – “The ‘next wave’ of first time buyers is when housing drops to where the 30k-40k salary can purchase. A 10% correction has gone unnoticed”

  1. A 10% drop should be enough to give a few more people paws. The heavy lifting of price drops typically starts about now and extends through the winter.

    • There are typos and then there are those that make you wonder if truly our pets are using the internet with their paws when we are at work. Woof woof! =)

  2. Very few jobs are 100% secure today so some of those 100k’ers could easily become 80k’ers or even 20k’ers for a while. Hopefully they have some savings for a rainy day?

    • Sure, but most of them will get raises in line with or above inflation, so their 40% debt service ratio will drop, until renewal time. Stretching to your max makes a lot more sense if inflation is higher or you can lock in a 30 year rate, as in the US.

      Hopefully those 30k workers will get raises, too. Were prices to stay flat (not that I’m arguing that) some f them would eventually have the wherewithal to buy.

  3. Even with a 20% drop (http://www.canadianbusiness.com/article/98306–canada-s-housing-crash-begins), houses are priced out of range for people.

  4. I want numbers of 40-50%.

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