This post was a long time coming. As most Canadians know, the price of a house is way beyond the average wage earner now, especially here in the Lower Mainland and surrounding Vancouver area. As money from Banks gets cheaper, with super low mortgage rates, and the supposed Off-Shore buyers, the prices for a house have gone passed the clouds. The effect is not just here in the lower part of British Columbia, but have spread everywhere, where there are meaningful services and work. The North Coast, for example, has also seen its share of higher real estate prices, just like the South, but not as strong, yet. I was doing some searching on-line, and saw something disturbing, in my opinion.
Buying a house up North seems to be relatively easier than here in the Vancouver area, with almost a two-third difference, but I noticed that the rent rates are almost in tune with each other. As a good friend told me, gouging seems to be the flavour almost everywhere in British Columbia, as both job and house seekers alike scramble to get their share of the pie. Sure, makes sense, if everyone cranks up the rent, hey, that is a good thing for home owners, right? Now it seems that everywhere there is a house shortage…, or is there?
I say no! There are lots of homes to be lived in for everyone, but who has the money to live in one when rent rates have to keep in pace with the mortgages. It seems you need a 70k plus per year job to keep pace with the housing markets. So, if you’re not a drug dealer, C.E.O. of a off-shore corporation, have rich parents, or won the lottery, then where are you getting your money from?
This goes into my next question: what happens when the prime lending rate bounces back? I mean, a full on gain of say, five percent, by the Bank of Canada? Market crash, as the big correction take place? The bubble explodes and prices tumble? Something tells the Bank of Canada will not let this happen, unless…
The crash of ’06 seems to teach us a lesson that we are all greedy, and some more than other’s, when money is at play. The United States taught us that it is not just the head of fish that rots first, but the whole body at the some time. Canada follows the U.S. lead well, although there are more ridged rules in place to prevent financial institutions in Canada from imploding the market from this type of mismanagement, we are on the path in my opinion. But I think Canada is just a decade behind the U.S., and we only out lasted the impending melt-down with these rules, but we will get there.
At my work, I am tied directly to the housing market. I see people doing renovations, upgrades and complete construction projects, and the do-it-yourself-er. I see the cost of those materials going up, and cost of labour climbing even higher. The race to upgrade the house for the already set homeowner to cash in on the white hot market has created it own super local economy. Sadly retail has also become a race to bottom, as customers demand the lowest prices, and competition make the profit margin that much thinner. This leaves the worker at a huge disadvantage now–where to live?