As happens when greed overtakes sanity, average houses in most places in Canada have become unaffordable for the average family. Too often people are having to choose between having a house and having a life.
For most people a house represents the largest single purchase they will ever make. Unfortunately, it can also be one of the most emotional. When our acquisitive desires meet our nesting instinct, rational decision making often ends up being a victim of our illusions.
While many countries around the world have already seen their housing bubbles pop, Canada's has continued to inflate until recently. After over a decade of annual increases, house prices have reached a historically high level relative to income. Unfortunately, average income has not been inflating much since the 1980s.
It used to be that a household needed to spend about 30% of pre-tax income to pay housing-related expenses. Not any more.
"For the second quarter of 2011, Vancouver residents could expect to spend 92.5% of their pre-tax income on homeownership costs, including mortgage payments, utilities and property taxes."Vancouver is the country's most expensive market, but in Canada as a whole, servicing a mortgage is still requiring almost half of pre-tax income. While we all need somewhere to live, giving half of your monthly paycheck to the bank is extreme. Having to turn over your whole check sounds more like robbery.
There is a time to buy a house or property. A time when there is more balance and you can enjoy both a house and a life. In most places in Canada, including where I live, that time is not now.
Is it possible to own a house and have a life in your area?