# Housing price - General thread



## MrBlackhill (Jun 10, 2020)

Nice, so with $300k you can buy 243 sq.ft home in Vancouver, BC or a 1,685 sq.ft home in Saguenay, QC. Or for English speakers a 1,579 sq.ft home in St-John's, NL.









This is How Much Home $300K Can Buy You in Major Canadian Cities Right Now


According to new data, this is how many square feet of home $300,000 could buy you in some of Canada’s most populous cities.




www.slice.ca


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## sags (May 15, 2010)

If $xxx is affordable at 2% interest, is it still affordable at 7% interest ? There lies the problem. Lower prices and higher interest rates don't solve home affordability.


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## nathan79 (Feb 21, 2011)

In reality you would get nothing in the city of Vancouver for 300K. If there actually were 243 sqft units available, they would be priced greater than 300K. General rule: as square footage decreases, price per sqft increases.


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## KaeJS (Sep 28, 2010)

I still want to know how the house I bought in 2010 for 235k is now 800k but employers are giving 1% raises every year and wonder why people don't want to work hard lol...


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## Jericho (Dec 23, 2011)

KaeJS said:


> I still want to know how the house I bought in 2010 for 235k is now 800k but employers are giving 1% raises every year and wonder why people don't want to work hard lol...


Sunny Ways.


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## cainvest (May 1, 2013)

KaeJS said:


> I still want to know how the house I bought in 2010 for 235k is now 800k but employers are giving 1% raises every year and wonder why people don't want to work hard lol...


I'll take a stab at that and say the employer's company didn't invest in real estate that had all their properties at least tripled in value so their profit increases (if any) are likely much less.


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## MrBlackhill (Jun 10, 2020)

cainvest said:


> I'll take a stab at that and say the employer's company didn't invest in real estate that had all their properties at least tripled in value so their profit increases (if any) are likely much less.


I wonder how much the salary increased for the executive level of that employer, though? Also 1% like their bottom level employees? I can bet they got much more.


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## HappilyRetired (Nov 14, 2021)

I bought my first house in 1983 for $44k, I was making $20k a year.

I bought my current house in 1997 for $80k when I was making $42k. It's now worth at least $450k. It must suck to be young and dream of owning a house.


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## spiritwalker2222 (Nov 7, 2017)

KaeJS said:


> I still want to know how the house I bought in 2010 for 235k is now 800k but employers are giving 1% raises every year and wonder why people don't want to work hard lol...


You work at the wrong place. My salary doubled from 2000 to 2010 and doubled again from 2010 to now. Doing the same job, just more experienced.


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## londoncalling (Sep 17, 2011)

Warning offtopic:

The current market no longer rewards long term employees with raises as they had done in the past. I know of several companies that are spending more of their salary budget on recruitment offering wage packages for new employees that are higher than current staff in the same position. As a consultant I continually advise against this but employers would rather take the risk that the current staff do not know or will not leave for greener pastures. I think 2022 provided a window into the consequences of that risk (ie. the great resignation, quiet quitting, and career cushioning).

One employer that comes to mind, does many great things for its employees in the way of sick days, extra vacation time, family leave, professional development etc. However, they do offer a significantly lower wage package to its competitors and have no clarity in how employees can move along the pay grid. They do utilize a grid system and pay bands are clearly defined however there is not clear guidance as to which level within that band one starts or how to progress. In essence, new employees negotiate their starting wage within that pay band and rarely progress to top of band. As a result they have become a training ground for their competitors with a high turnover rate with employees using the employer to enhance their resume, improve their skillset and move on. I know of several current employees that would have been paid more with a lower workload with a larger competitor 7-10 years ago than they are making currently. As mentioned they are trying to improve with new hires but are not doing anything to fix the wages of the current workers.


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## KaeJS (Sep 28, 2010)

spiritwalker2222 said:


> You work at the wrong place. My salary doubled from 2000 to 2010 and doubled again from 2010 to now. Doing the same job, just more experienced.


If my salary doubled from where it is, I would be rich. But unfortunately there is no upward movement where I am and there are no other places that will pay me what I currently make. I am basically stuck lol.


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## MK7GTI (Mar 4, 2019)

spiritwalker2222 said:


> You work at the wrong place. My salary doubled from 2000 to 2010 and doubled again from 2010 to now. Doing the same job, just more experienced.


This is absolutely not the norm and I think you know that.


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## Eclectic21 (Jun 25, 2021)

londoncalling said:


> Warning offtopic ....


Me too ... until the bottom of this message. 




londoncalling said:


> ... The current market no longer rewards long term employees with raises as they had done in the past. I know of several companies that are spending more of their salary budget on recruitment offering wage packages for new employees that are higher than current staff in the same position ...


From my perspective - why is this a surprise?

Basically all but one company that I worked for operated this way. My first employer in the '90s was the worst for this. My raises came from changing jobs within the company, not from annual reviews. When I no longer had new jobs to move to, I left the company.




londoncalling said:


> ... As a consultant I continually advise against this but employers would rather take the risk that the current staff do not know or will not leave for greener pastures.


I pointed out to mangers and a few executives that it was horribly costly to turn down a stellar employee for a $1K raise repeatedly. The employee would leave where there would be new training costs plus several times, two new employees had to be hired, at far more than the raise asked for. Only one manager agreed. The rest justified it by saying the raise was an unnecessary expense to the company while the replacement costs was the cost of doing business. 

Not surprisingly, the competent and stellar employees moved on quickly.


Back on topic.

I wonder if Nova Scotia has bulldozed all the company houses, built by the coal and mining IIRC, one of the buyers for $40K or less around 2012 wrote that a similar sized house in Alberta was $275K. There is risk though. One buyer of half a duplex for $11K ran into damage problems. The owner of the other side walked away from the house so that a hole in the other side's roof was damaging the middle wall. 


Cheers


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## afulldeck (Mar 28, 2012)

Back on thread. Its ridiculous that stick houses cost are some of the highest in the world here in Canada, given that we are a huge softwood lumber provided and have more land per person...Just silly politics...


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## sags (May 15, 2010)

Add up the cost of land speculators, heavy equipment companies putting in the utillity services, roads, and foundations....then move up the chain to the builders.....then to the sales realtors and the lawyers. I know people at all these steps in housing and they have all done very, very well from housing.

If the government had a real interest in providing affordable housing they would eliminate most of the above. They did in the past and can do it again.

Buy the land. Service the land. Sign deals with factory home builders, set up a display office, provide access to mortgages in the sales office, transfer ownership without lawyers, plunk down the new home. Nobody needs and few want a big lot to maintain these days. Small bungalows with walk out finished basements are more than enough for a family with a couple of kids. Done and done............no extra mouths to feed in the home building business.

Do they want to do this ? Hell no........politicians are lazy and only think in terms of the next couple of years until they are up for re-election.


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## sags (May 15, 2010)

It is going to get really ugly.

They purchased homes right before the real estate downturn. Now, they're struggling to close | CBC News

Ruined — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate


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## londoncalling (Sep 17, 2011)

"We thought, if we live hand-to-mouth, we can still afford it," Rehal, an Uber driver who also earns income as a property manager and from a business in India, told CBC News. 

This says it all. Nobody should put them self at the limit to own a home. Yes the historic rates were low for a long long time but to buy at your upper limit without any expectation of a rate change over the life of the mortgage is speculating. Speculators often praise their investment savvy when they are on the winning end and then expect sympathy when they lose. funny how our good fortune is skill and our misfortune is bad luck.


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## MrBlackhill (Jun 10, 2020)

sags said:


> It is going to get really ugly.
> 
> They purchased homes right before the real estate downturn. Now, they're struggling to close | CBC News
> 
> Ruined — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate


But how does a Uber driver qualify for a $2M house?!


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## sags (May 15, 2010)

By the sounds of it they don't. Construction pre-sale doesn't require a mortgage until the unit is built.

The builder keeps the $200,000 deposit and sues them for the difference between their contract price and the eventual selling price.

They could declare bankruptcy and the builder will declare bankruptcy and the trades will declare bankruptcy and the bankruptcy trustees will be busy.

There are 30,000 units with closing dates coming up in the GTA and most of them won't be able to close.


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## sags (May 15, 2010)

I was thinking the government will re-introduce 40 year mortgages, but given the size of the debt they may need to go 50....75 year amortizations.


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## KaeJS (Sep 28, 2010)

sags said:


> I was thinking the government will re-introduce 40 year mortgages, but given the size of the debt they may need to go 50....75 year amortizations.


This would just makes things worse.


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## off.by.10 (Mar 16, 2014)

sags said:


> I was thinking the government will re-introduce 40 year mortgages, but given the size of the debt they may need to go 50....75 year amortizations.


Longer amortization doesn't help payment as much with higher rates so this wouldn't be all that helpful. More the of payment is interest and the interest part doesn't change with amortization.


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## londoncalling (Sep 17, 2011)

sags said:


> I was thinking the government will re-introduce 40 year mortgages, but given the size of the debt they may need to go 50....75 year amortizations.


The government should leave well enough alone. They are a contributing factor into the current economic environment and it is unlikely any legislative changes will make things better overall. Let the BofC do their job. Unfortunately, when you try to appease every situation you end up resolving nothing. Sometimes people shouldn't be protected from themselves. If there was less intervention by helicopter governments people may actual think before they act.


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## Covariance (Oct 20, 2020)

londoncalling said:


> The government should leave well enough alone. They are a contributing factor into the current economic environment and it is unlikely any legislative changes will make things better overall. Let the BofC do their job. Unfortunately, when you try to appease every situation you end up resolving nothing. Sometimes people shouldn't be protected from themselves. If there was less intervention by helicopter governments people may actual think before they act.


Agreed. They should but they're not. The extended am is the easy way out. Look no further than the OSFI imposed increased equity buffers. Another alternative they could have taken was to risk-weight mortgages which would have penalized lenders with problem mortgages and required only those lenders to increase equity. Not the road taken.


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## londoncalling (Sep 17, 2011)

Covariance said:


> Agreed. They should but they're not. The extended am is the easy way out. Look no further than the OSFI imposed increased equity buffers. Another alternative they could have taken was to risk-weight mortgages which would have penalized lenders with problem mortgages and required only those lenders to increase equity. Not the road taken.


Risk weighted mortgages makes sense. Imagine a rate that was based on risk and ability to carry the cost. I can see why that road was not taken. It would be viewed as punishing first time home buyers and younger people. To some extent that may be true but in reality it would prevent buyers purchasing beyond their means as intended. It would take away a lot of the risky leverage as well. Both of those were culprits in pushing up RE values for years preventing new entrants into the market. Seems like a reasonable idea to base things on the risk level.


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## Mortgage u/w (Feb 6, 2014)

Government encouraged household debt to reach the levels they are today.

They could have prevented all this with one simply change - decrease the allowable debt servicing ratios.

As long as I can remember, the debt servicing ratios (TDSR/GDSR) have remained stagnant at max 44%/38% - meaning no more than 44% of your gross income can be used to service all debt obligations (38% for housing debt only). 

Cell phone and utility bills have never been included - even though they can represent as much as a mortgage payment for some. 

They only played around with amortizations, minimum qualifying rates, down payments, etc., but never touched ratios.

If they were to just minimally decrease to max 40%/35%, it would have a huge impact and save a lot of people from living paycheck to paycheck.


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## off.by.10 (Mar 16, 2014)

Mortgage u/w said:


> and save a lot of people from living paycheck to paycheck.


Not a chance. I know people who live paycheck to paycheck. I has little to do with their mortgage or their income. Their spending simply grows to match available money.


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## Covariance (Oct 20, 2020)

londoncalling said:


> Risk weighted mortgages makes sense. Imagine a rate that was based on risk and ability to carry the cost. I can see why that road was not taken. It would be viewed as punishing first time home buyers and younger people. To some extent that may be true but in reality it would prevent buyers purchasing beyond their means as intended. It would take away a lot of the risky leverage as well. Both of those were culprits in pushing up RE values for years preventing new entrants into the market. Seems like a reasonable idea to base things on the risk level.


Good discussion. It does seem like mortgage pricing could be improved. 

I was referring however to the lender and the value of the mortgage (their asset) in their regulatory ratios and by implication the amount of equity cushion they need.


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## spiritwalker2222 (Nov 7, 2017)

sags said:


> There are 30,000 units with closing dates coming up in the GTA and most of them won't be able to close.


How do you come up with this statement. Probably only a handful of people took on too much risk. Even 300 people not being able to close is only 1% and I doubt it is that high.


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## Mortgage u/w (Feb 6, 2014)

off.by.10 said:


> Not a chance. I know people who live paycheck to paycheck. I has little to do with their mortgage or their income. Their spending simply grows to match available money.


You're right, people who live paycheck by paycheck will not change their habits - regardless their disposable income. However, tightening up the lending capacity (applicable to mortgages as well as retail debt) will at least provide some flexibility to those who have poor money management skills.


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## londoncalling (Sep 17, 2011)

Covariance said:


> Good discussion. It does seem like mortgage pricing could be improved.
> 
> I was referring however to the lender and the value of the mortgage (their asset) in their regulatory ratios and by implication the amount of equity cushion they need.


This didn't occur to me as Canadian banks have such a good reputation but going forward should likely be looked at if we continue into a higher rate environment with declining property values. Great point.


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## sags (May 15, 2010)

I don't think they need to make it more difficult to buy a home. They are already unattainable for most Canadians.

_This means only wealthy people, or the highest-income earners (in the 50%+ tax bracket) can afford homes unless they’re trading up. Across Canada it takes not 30% of income, but 62.7% to service a mortgage, with a hefty 25% down payment. That’s up 14.5% points in a year – the most on record. In Toronto the number soars to 85.2%. In Vancouver it’s an utterly ridiculous 95.8%. “Owning a home has never been so unaffordable anywhere in Canada ever—and probably most places around the world,” says the bank.

And it’s everywhere. In Halifax, for example, household income needs to be 44% higher than one year ago to buy the same house at current mortgage rates. And how many people in NS (or anywhere else) got a 40% pay increase in 2022? Exactly.








_


Book and Weblog – Authored by Garth Turner — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate


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## sags (May 15, 2010)

Unless you are one of the top wage earners in Canada, be careful of selling your home because you may not be able to buy another one.... or even your own house back.

Building unaffordable homes in the GTA greenbelt isn't a solution. The builders are having trouble selling what they already have.


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## londoncalling (Sep 17, 2011)

Against Homeownership - The Atlantic (archive.ph)

Although I agree with a lot of points made in the article I am a firm believer in home ownership at a reasonable price as a way to build wealth. My house is first a home and can also be an investment. IMO it acts as a store of wealth. I think it makes more sense to own property than to own physical gold. Just because I don't own gold(or crypto) for that matter does not mean it cannot create wealth for those that own it.


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## nathan79 (Feb 21, 2011)

londoncalling said:


> Against Homeownership - The Atlantic (archive.ph)
> 
> Although I agree with a lot of points made in the article I am a firm believer in home ownership at a reasonable price as a way to build wealth. My house is first a home and can also be an investment. IMO it acts as a store of wealth. I think it makes more sense to own property than to own physical gold. Just because I don't own gold(or crypto) for that matter does not mean it cannot create wealth for those that own it.


"Reasonable" is the key word. The past two years is an anomaly and there is no way to know when we'll see prices reach peak levels again. Historically, it can be 5-10 years before prices recover to their previous highs after a large correction. The magnitude of the the current bubble certainly suggests the longer end of that range.


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