By downtown you mean within a 15km radius of union station, right?

 

Yes, in that area, so she can take local transit easily.

 

That's interesting Wayne. I was reading an article this morning that stated there was about 270,000 people moving out of England annually but 600,000 moving in. Reasons for the out migration were given as housing costs, weather, taxes and crime.

Shame she may not be able to get what she wants here. G/L to her.

 

I'm not sure if you're referring to just where you live or all of Canada. That's probably true if we're discussing parts of Ontario or the GTA. However, I would say most of Canada is not overpriced and won't experience what you're suggesting. Real estate in Canada is actually lower priced than most of the rest of the world.

Many parts of the country offer great housing value such as all of Atlantic Canada, Quebec, Manitoba etc. Parts of Ontario, Saskatchewan, Alberta and BC are much higher priced of course. Edmonton is the only major city in Canada which has recently seen year over year declines due to prior ridiculous run ups. Saskatoon has seen increases over 50% in the past year and may be the next area to see declines.

 

Thanks Deane, her move isn't definite. They have been in England about 7 years and do have a house and good job positions there.
They are being brought here for job interviews in Toronto and Calgary in another week, and they already have a couple offers in England.
So right now they will be checking out their different options.

 

Good stuff. Sounds like they have lots of great choices.

 

I'm not sure if you're referring to just where you live or all of Canada. That's probably true if we're discussing parts of Ontario or the GTA. However, I would say most of Canada is not overpriced and won't experience what you're suggesting. Real estate in Canada is actually lower priced than most of the rest of the world.

Many parts of the country offer great housing value such as all of Atlantic Canada, Quebec, Manitoba etc. Parts of Ontario, Saskatchewan, Alberta and BC are much higher priced of course. Edmonton is the only major city in Canada which has recently seen year over year declines due to prior ridiculous run ups. Saskatoon has seen increases over 50% in the past year and may be the next area to see declines.
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The Real Estate market is regional so I was not making a blanket statment. The worst area in Canada for value right now has to be Vancouver. If home prices don't come back in line with the historical relationship between wages and inflation it means that our stand of living has droped significantly.

 

IMO, a real estate market can be considered a neighbourhood, local cities or towns, regional, or national. Going back to your original statement if it's not a blanket statement which market are you referring to?

I agree the standard of living has and will drop significantly for those people living in the handful of Canadian markets that have seen large price increases outpacing inflation.

Most of Canada has not been affected by this however and even places like Vancouver are reasonably priced relative to many areas of the industrialized world. We'll probably see some softening or slowing of prices in some of these "hot" areas however if the national or regional economies weaken and supply/demand situations change.

 

IMO, a real estate market can be considered a neighbourhood, local cities or towns, regional, or national. Going back to your original statement if it's not a blanket statement which market are you referring to?

I agree the standard of living has and will drop significantly for those people living in the handful of Canadian markets that have seen large price increases outpacing inflation.

Most of Canada has not been affected by this however and even places like Vancouver are reasonably priced relative to many areas of the industrialized world. We'll probably see some softening or slowing of prices in some of these "hot" areas however if the national or regional economies weaken and supply/demand situations change.
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Vancouver, GTA, Calgary....too many to list. Vancouver and Ontario will probably see a significant pullback for different reasons. Vancouver is way overpriced and Ontario will be follwing the US into a recession. How are RE prices in NS?

 

Just some scattered thoughts....

Garth seems to ignore the fact that Americans have less incentive to pay-off their mortages as the interest on their mortgages is tax deductible. Canadians do not have this "benefit". This is another reason as to why it has been so easy for Americans to get "upside-down" in a house (owing more debt than the actual value of an asset) and why the credit crunch will be worse in the States than in Canada.

From a wealth-building perspective - owning is usually better than renting because with one you build equity while the other you're throwing away cash, (but you definitely don't want to be paying only interest for too long either).

Vancouver RE dropping - hmm not likely soon - it's been unaffordable for more than a decade. I blame it on the foreign ownership driving up the cost for locals....it IS a beautiful city (when its not raining) and still one of the top places to live in the world.

 

1.Garth seems to ignore the fact that Americans have less incentive to pay-off their mortages as the interest on their mortgages is tax deductible. Canadians do not have this "benefit". This is another reason as to why it has been so easy for Americans to get "upside-down" in a house (owing more debt than the actual value of an asset) and why the credit crunch will be worse in the States than in Canada.

2.From a wealth-building perspective - owning is usually better than renting because with one you build equity while the other you're throwing away cash, (but you definitely don't want to be paying only interest for too long either).

3.Vancouver RE dropping - hmm not likely soon - it's been unaffordable for more than a decade. I blame it on the foreign ownership driving up the cost for locals....it IS a beautiful city (when its not raining) and still one of the top places to live in the world.
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1. You are right to a degree however Interest deductability is only a partial tax credit and does not amount to that much if you have a low/middle income(much better for very high incomes with big mortgages). Not sure what you mean when you say "the credit crunch will be worse in the States than in Canada" the credit crunch is global in that liquidity is drying up everywhere (e.g. costs more for the banks to borrow money....thats why the last interest rate cuts from the BOC did not move fixed mortgage rates down.
2. Historically RE appreciates slightly above the rate of inflation so how is it a good investment? Investing the difference between rent cost and purchase cost(mortgage, taxes, maintenence) will always have the renter further ahead. So as an investment it's not great, it is more of a forced saving program.
3. Vancouver RE is the most overpriced in the country and will correct. You are far better off renting a condo in Van for 2000 per month rather than buying the same place when it would carry for more than twice as much.
fyi-Before anyone accuses me of being a jealous renter I do own a home.

 

1. I meant to say the consumer credit crunch will be worse in the States. Tax deductible mortgage interest and rapidly rising home values only fueled consumer debt levels in the US. The Canadian househould, with a marginally better savings rate, is still better off, if only slightly, hence the impacts of the global credit crunch will be "felt less." Significant nonetheless.

2. Thats assuming renting is significantly less than a mortgage payment. In a number of places in Canada, rents and mortgage payments are very close in value. At the end of the day you've increased your networth with one (home ownership) while the other you've forever tossed away money (renting). So amounts being equal - Renting can't even compare to home ownership. That's not to say there are very good reasons to rent. Might also want to check the opportunity cost of mortgaging vs. renting & investing in a market that is in a long-term down cycle....

3. You might be amazed at how "sustainable" the prices in Vancouver are (I certainly am). I speculate (and I have no stats to back this up - only the faces of Vancouverites and a good guess) it has a lot to do with the foreign ownership of assets and the attractiveness of Vancouver as a locale. It is a "world class" city that seems to attract significant foreign investment, and for some global investors - continues to be a bargain for what you get. Its also still not the most expensive place in Canada. Fort McMurray holds that title - but once the Oil & Gas boom is over in AB (someday it will happen) - than say bye bye to the RE prices...scary what a slight slow down can do to an overheated market like Edmonton. Vancouver seems to be quite a different situation - barring a monster earthquake - its gonna stay up there.

 

+1


The bottom line is this - more entrepreneurs in Canada have become wealthy through real estate than any other type of investing. If that's not a testament to real estate being a good investment I don't know what is.

 

Good discussion..............as for foreign ownership propping up the Van market I don't buy it. Look at Miami, far more international city with substantial foreign investment and RE values have been cut in half.
Median home price in Canada $313,000 median home price in the US $214,000 with median incomes being approx. $7000 higher in the US and interest deductibility on a mortgage in the US. Is Cdn RE overpriced??? I guess only time will tell.

 

^sources?