CA - Impossible Home Prices Are The Problem

2024-04-04 09:50:00 ET

Summary

• The median Canadian household income of $85k (Dec 2023) now qualifies for a maximum home price of $496k.
• The long-standing affordability rule is a home price no more than 3 to 4x annual household income.
• Costs of the epic misallocation of resources continue to compound through reduced productivity and less cash for everything else.
• Only lower for longer home prices can meaningfully restore shelter affordability and help free up resources for other essential spending and investment.

The median Canadian household income of $85k (Dec 2023) now qualifies for a maximum home price of $496k (assuming 20% down, 25-year amortization, and current mortgage rates (5-year fixed)). That’s a problem since the average home price is $796k, an impossible 9.4x the median household income. The long-standing affordability rule is a home price no more than 3 to 4x annual household income....

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