Homes Out of Reach for Middle Class?
I found this quite surprising. Apparently, in a number of urban North American markets (including a few in Canada), houses are out of reach for over 50% of middle-class wage earners. Prices have leaped ahead of incomes in some areas. For instance, in the very hot Vancouver market (on the west coast of Canada) housing is out of reach of 74% of the middle class wage earners.
How are prices going up in this environment? All I can assume is that the investors are helping drive prices up; it's certainly not your garden-variety American or Canadian. However, even with the price of real estate at record highs in some locations, North America is "bargain basement" shopping for those coming from other countries. For instance, if you live in Hong Kong, real estate in North America is a really great buy! The same can be said for folks from other international urban locations, like London or Paris. For that matter, I read late last year that real estate in South Africa had gone up an awe-inspiring excess of 200% in the one year preceeding! Our prices start to look really good to investors from abroad.
Could help us out here. Investors from abroad could keep our housing market cooling slowly as opposed to falling quickly. While that's not good news for the first time home-buyer, it's certainly good news for the majority of us. And if the first-time buyer can wait a couple of years, they may find that the combination of higher savings and prices that have cooled will let them get into the market with less pain.