In: Real Estate News7 Jun 2011
It’s the Stanley Cup Finals. The Vancouver Canucks are facing the Boston Bruins. A Canadian team vs. an American team. As these 2 teams battle for hockey supremacy, it’s a good time to look at the real estate markets in the cities of Vancouver and Boston.
Vancouver – The most expensive city.
The average family income in Vancouver is less than $90,000. Yet the average home value in Vancouver is more than $600,000. That amount is the average for ALL housing, including condos, townhouses, semidetached…If you don’t want to be connected to your neighbours, the average single family detached is close to one million dollars. This basically means that “the average family” cannot afford a single detached home in Vancouver.
Vancouver’s real estate has always been the most expensive in Canada. Yet, at no point in time has the gap between Vancouver and the rest of Canada been so wide. At no point in time has the average price been so much more than the average income. Vancouver has a great hockey team, but for average hockey fans, it’s a very expensive city to live in.
Aside from a very brief drop in housing prices during the financial crisis of 2008, Vancouver’s real estate market has increased for the past 20 years. Many are speculating that the recent spike in Vancouver’s real estate market is due to Asian buyers. “Chinese” money is now being blamed for the high prices. As housing prices increase in Vancouver, most average Canadians are not participating the real estate bubble. Who can afford to? A family making $90,000 a year will take home less than $70,000. $5,000 a month in take home pay if fine if your housing costs are $2,000 a month. But when it costs $600,000 to buy a home, then the housing costs come close to $4,000 a month. This leaves very little money for daycare, cars, gas, food, internet, savings, retirement…This is why average Canadians are not able to afford buying a home in Vancouver.
On the other side of the arena is Boston.
The average price in Boston has dropped from a high of $379K in 2005 to a current average price of $320K. This is a $60,000 drop in real estate prices. This drop would be considered “good” compared to other homes in America. Some cities in the USA have seen home prices drop by 50%!
There are very few bidding wars in Boston and when you buy a home for 1 million dollars, you don’t get a dilapidated shaq. You get a mansion.
This contrast leads to many questions. What truly is the difference between real estate in Canada and America? Is it the job market? Incomes? Better location? Lower taxes? Why is that a Canadian will pay 6-12 times earnings for a home, but an American will no longer pay these amounts…but enough about real estate…
Go Vancouver Go.
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