Monday, March 12, 2007

A quick look at Edmonton affordability

The usual suspects have been claiming how a Scotiabank study (pdf) 'proves' the strength of real estate market, especially in Edmonton.
And how it is based on fundamentals.
Without getting into the usual bullish reasons, that we have covered in the past, let us just look at the fundamentals .
Average Edmonton family income: 57, 360
(these are 2003, numbers so we'll inflate these by around 15% for current values)
Current Family income in Edmonton: 65,964
Average Housing Price in Feb 2007: 321, 307

Number of years required to own an average property at average salary: 4.87

And what does the average property look like? While this would be extreme scenario, this is more typical.

Just last year-Feb 2006, the average dwelling sold for $211,536, giving the number of years to own at 3.35.
In 2003, the number would be between 2 and 2.5 (I don't have the average sales numbers for 2003. If someone has it, I can plug those in here)

Affordability has been falling for Edmonton very sharply, especially in the last 2 years. Anyone who is trying to buy in this market knows how it has fundamentally changed from the market just a year ago. Rather than simply saying that things are going a 'little crazy' here, they continue to cite studies and create spin to confuse the masses.
But I wonder why we even bother asking the truth from 'the insiders'.
Would tobacco industry ever say that its products are injurious to health? Or would pharma companies ever say that their drugs can cause problems? Or would a realtor ever say that it is a bad time to buy?
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