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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers -- Ignore unavailable to you. Want to Upgrade?

To: koan who wrote (21633)	9/21/2006 12:26:13 AM
From: Proud Deplorable	Read Replies (1) \| Respond to of 78418

OT..... Housing 'unsustainable' Royal Bank report: Buyers soon won't be able to afford Vancouver homes Published: Wednesday, September 20, 2006 If housing prices in Western Canada continue to rise at their present pace, consumers will soon find themselves unable to afford their homes, according to a new report. Royal Bank of Canada singled out the Vancouver market as "unsustainable," based on the fact the current median household income in the city of $54,912 means a typical family would have to shell out 72.8% of their pre-tax income to meet all the expenses of owning an average two-storey home, which now has a price tag of $563,397. "This just isn't sustainable going forward when you only have income growth of 4% [per year]," Derek Holt, assistant chief economist with the bank, said of the Vancouver market. "People are willing to allocate a big chunk of income to home ownership." Vancouver is now passing even the frenzy of the 1990s. The study by the bank found two classes of housing -- townhomes and bungalows -- have set records according to Royal's housing affordability index. The index is calculated by taking the median income of a family and dividing it by the costs of home ownership -- calculated as mortgage payments, property taxes and utilities. Vancouver's costs have skyrocketed. The standard two-storey at 72.8% of pre-tax income is up from 69.7% a quarter ago. A detached bungalow, which Royal says costs on average $530,111 in Vancouver, now consumes 68.2% of pre-tax income, compared with 64.5% a year ago. "These are the most stressful conditions Vancouver has been dealing with on record," said Mr. Holt, adding consumers need at least $124,668 of household income to qualify for a loan for a $563,397 home. While Vancouver remains the most expensive city in the country, Calgary is still the hottest. A standard two-storey home in the city is now $337,067, a 30.9% increase in price from a year ago. The city gets an affordability index rate of 36.2%, up from 30.9% just a quarter earlier. Despite the sharp rise in Calgary home prices, affordability is still worse in Toronto and Montreal. Toronto's affordability index is 50.1% while Montreal's stands at 46%. Traditional lenders usually demand no more than 32% of your pre-tax income be dedicated toward servicing a home, or 40% including all other consumer debt. The rising cost of detached homes is one of the reasons why consumers continue to look for a cheaper alternative in condominiums and townhouses. Royal Bank said only 49.7% of pre-tax household income is needed to carry a standard townhouse in Vancouver, and 34.2% for a condo. Mr. Holt noted that across the country, condos generally result in a much lower affordability rate than bungalows and two-storey homes. "Condos have become the real safety valve for the first-time home buyer," he said. Consumers have also been turning in increasing numbers to new mortgage products, which are allowing them to pay their debt off over a longer period. The standard amortization period for a mortgage is gradually shifting from 25 years to 35 years, lowering the monthly mortgage payments. Elton Ash, executive vice-president of RE/MAX Western Canada, said Canadians have begun to adjust their thoughts about how long it is going to take them to pay off their debt.