Around here (northern European capital), salaries are lower than the US counterparts. I would say a fairly qualified job in IT earns you around $100k (yearly, before all taxation). Houses cost around $1M outside town.
Even people with less qualified jobs buys at these prices. I would have expected $1.5M to be affordable with Silicon Valley salaries. I wonder if interest rates are that much higher in the US..?
I used to work with a guy from Belgium that was building a house. He said it was affordable because it came with a 50 year mortgage. The common length in the US is 30 years.
In Toronto, average SFH cost is now $950k, amortization period is 25 years, with most common mortgage term of 5 years, and yet the houses get snapped in less then 26 days on market, while year over year price increase is 10%.
It seems like real estate prices are increasing rapidly in every major city around the world. I hear the same story from London, Sydney, SF etc.
BTW, I would take that 50 year and 30 year fixed mortgage term any day. 30 year fixed at 4.4% seems like extremely good offer from this side of the fence.
Toronto has a large wealthy immigrant population that is parking foreign money in real estate that drives up the prices. Salaries in Toronto area do not justify $950k homes. I have also noticed people in those $950K live poorly : by that I mean they don't eat out in decent restaurants, or got to movies as often. Best Buy and Target stores are doing poorly in GTA.
Very well said, that is the argument against high valued real estate in relatively modest income large cities such as Toronto. With low or no disposable income other sectors of economy are getting affected. I would also argue another reason for high prices are the greenbelt laws, by which government has effectively restricted land available for development.
Most of the people I know who have bought real estate recently are scraping by and using their basement apartments as mortgage helpers. Another issue I have noticed is the lax standards in issuing mortgages, there are companies writing employment letters for $1-2k in order for couples to qualify for mortgages. Banks and government is wising up but the damage has already been done.
Around here (northern European capital), salaries are lower than the US counterparts. I would say a fairly qualified job in IT earns you around $100k (yearly, before all taxation). Houses cost around $1M outside town.
Even people with less qualified jobs buys at these prices. I would have expected $1.5M to be affordable with Silicon Valley salaries. I wonder if interest rates are that much higher in the US..?