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Today's 8.5-to-one ratio is, to be sure, quite a bit worse than 20 years ago when it was 6.6 to one, and even worse still than the 5.9 to one figure in 2003. But ...
These historical ratios, though lower than today's, were still very high by any conventional measure, and they never once dipped to a low or even "normal" level during the entire duration of the last two decades. Yet Vancouverites still coped, and the population still grew by well over 500,000 in that 20-year period...
Half the reason for a high priceto-income ratio is not the cost of a home, but rather the lacklustre growth of personal incomes in Metro Vancouver over recent years to the point where we trail most major cities in Canada. If this turns around - and, once again, there are no guarantees - the affordability squeeze will ease.
Robert Helsley, dean of the Sauder School of Business, added an additional perspective when he spoke last week at a UBC-sponsored symposium on affordability. He suggested Vancouver's high home prices are "the price of admission" to this amenity-rich little corner of the world.
Similarly highly priced real estate is found in other places where people really want to live - Hong Kong, San Francisco, London and New York, to name a few.
"If you want affordable housing," Helsley said, "go to Detroit."
A big thanks to Ham for his efforts.At the end of the first month of daily data. Vancouver stayed running at a fairly steady pace of six filings per working day. So big picture, what is going on with British Columbia foreclosures? First, I think one needs to understand the data. Courts aren’t located in every municipality, so “New Westminster” foreclosures probably include Port Moody or Coquitlam, while “Nanaimo” might include Qualicum Beach etc. That being said we can get a pretty good look at what is going on regionally.
The basic situation is that the periphery is doing worse than the big city. If I annualize the data by population, the Lower Mainland as a whole is running at about 0.7 annual foreclosures per 1000 population. That compares to Vancouver Island with a run-rate of 1.3 foreclosures/1000 pop; Okanagan at 1.8 foreclosures/1000 pop; and Kootenays and North maybe running 2-3 foreclosures/1000 pop with those last two regions most susceptible to problems in counting and defining the right regional population number.
Turning to lenders, I think the basic model of all the banks, roughly in proportion to retail market share, is to write any old mortgage at any old level to someone that can be covered by CMHC/Genworth wrappers. There is no bank that seems to be extra careful … Royal’s share this month is a bit lower than I would have expected, CIBC’s a little higher. The specialty mortgage co’s are active across the province and must be punching much higher than their weight in terms of foreclosure volumes to mortgage assets. Credit unions, whom I thought might be the loosest lenders of the bunch, seem to be there in about expected market share.
We clearly are not in a meltdown. I’d be interested if other readers have the data on what the foreclosure numbers per 1000 pop got to in various US states. However, we have a good sense of the base. This data series will probably spike at some point, maybe beginning next month, maybe beginning in 3 years, I can’t say. Like others, I’ve been surprised at how well prices have held up and how few foreclosures have occurred to this point. However, I suspect that 20-40% of current “homeowners” would be in serious trouble at either in a 5% interest rate environment or in a material recession regardless of the rate picture.
As there is a little repetition in the daily numbers, going forward I will share the data weekly.
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