The

Lunatics are in Charge!

Canadians Paying Dearly for Their Housing

Another housing study has come to familiar conclusions: Canada boasts the least affordable housing in North America. With a median family income of just under $65,000 a year, it would take 7.5 years for a family to pay off the median-priced home valued at 485K. 

That’s if they were able to live on air and direct every single dime of income to pay off just their home for 7.5 years. 

According to the latest International Housing Affordability Survey, a multiple of 3x income and under is considered affordable, and multiples over 5.1 are considered severely unaffordable. In Vancouver, this multiple is now 17.3 and in the greater Toronto area 7.5x. You can look up comparables on other NA cities at this link.

DYI:

Oh Canada – Oh Canada.  I’ve been writing for 5 plus years your debt bubble has pushed real estate – residential and commercial – to heights greater than Mount Waddington (British Columbia Canada 13,186 ft.)!

At 3 times your income, yes you can afford the house AND pay the rest of your bills but not much after that.  Reality is a real task master if you want to have a life.  At 2 times your income or less a rapid pay off is not only possible but very doable without living on air!  Drilling down further into the Canadian numbers Toronto at 7.5 times income is simply insane and Vancouver 142 miles north of Seattle Washington at 17.2 times income the lunatics are in charge of the asylum!

When the manure hits the fan popping this debt/real estate bubble Canada will go into a flat out depression lasting 10 and possibly 15 years in length.  The Canadian government is doing everything to kick the can down the road extending the life of this bubble but Mr. Market in the end will have his way dropping home prices BELOW their long term mean.  Bankruptcy will be the order of the day as one Canadian household after another throws in the towel defaulting not just on real estate debt but all of their loans.  This will be Canada’s 2009 and possibly a redo of the 1930’s!

As an American I wish the Canadian people the best of luck. They are going to need all they can get!   

DYI