Korean Job Discussion Forums

[mises]

Here it comes:

http://www.globeinvestor.com/servlet/story/RTGAM.20080924.wmortgage0924/GIStory/

[mindmetoo]

As someone in the market soon to buy a house, it's good news for me.

[seoulteacher]

[quote="mises"]
The median house prices in Canada in 2006 with price change from year prior in brackets:
http://www.cbc.ca/canada/british-columbia/story/2006/06/14/bc_house-prices20060614.html
# Vancouver: $518,176 (+23.7%)
# Victoria: $515,755 (+15.6%) (A)
The median income in Vancouver is $57,926 (B)
http://www.ccsd.ca/pr/2003/censusincome.htm
This suggests the median family in Vancouver can "afford" (in the way we used to use that word) a 180-200k house. Again, the median price is 500k+.

mises, you raise some good points: I have wondered how a median income Vancouver family can today afford to buy a median priced house.

The standard ratio of income to purchase price used to be 30:100, if I remember correctly; consistent with your $57,926: $180-200k ratio.

However, the norm today is a two-income household, so - assuming equal income for each of those two - an affordable house would be more like $360-400...tho' this is still significantly less than the 500k+ median price.

How do they do it, eh?

[riverboy]

My concern is the valuue of the Won. Will I be stuck with 150 million worthless banknotes?

[mindmetoo]

[quote="seoulteacher"]

mises wrote:

The median house prices in Canada in 2006 with price change from year prior in brackets: http://www.cbc.ca/canada/british-columbia/story/2006/06/14/bc_house-prices20060614.html # Vancouver: $518,176 (+23.7%) # Victoria: $515,755 (+15.6%) (A) The median income in Vancouver is $57,926 (B) http://www.ccsd.ca/pr/2003/censusincome.htm This suggests the median family in Vancouver can "afford" (in the way we used to use that word) a 180-200k house. Again, the median price is 500k+. mises, you raise some good points: I have wondered how a median income Vancouver family can today afford to buy a median priced house. The standard ratio of income to purchase price used to be 30:100, if I remember correctly; consistent with your $57,926: $180-200k ratio. However, the norm today is a two-income household, so - assuming equal income for each of those two - an affordable house would be more like $360-400...tho' this is still significantly less than the 500k+ median price. How do they do it, eh?

I have read that so many people are in the pot trade that there's a lot of unreported income, producing an odd mismatch between home prices and reported income.

[mises]

[Ya-ta Boy]

Ya know, it's one thing for regular wood or stone houses to melt down; it's an entirely different thing for igloos to melt down. Could you stave it off long enough for us to build some pipelines down to the deserts?

Sorry, guys. I just couldn't resist.

This thing is very likely to bring a lot of pain to people all over the place. It's unfair. Perhaps those north of the border should also reconsider any anti-government anti-regulation scenarios. It didn't work out all that well for us.

[mises]

The Canadian housing boom actually speaks to how the American one was a monetary phenomenon. There were no ALT-A liars loans in Canada. We already have much of the regulation of the mortgage industry that you might want.

What we also had was David Dodge in charge of monetary policy and huge capital account surpluses that fueled a speculative asset bubble. And Canadians felt that it was economically natural.

[khyber]

I was listening to a cbc radio program dealing with this specifically. The reaction to this report actually leans more against its findings; the most skeptical stating "Sometimes banks will publish reports like this as a form of PR".
In a call in show on cbc a different economist said that about 40% of canadian mortage loans are sub prime.

[mises]

The sub-prime thing in Canada is slightly different. As houses rose very quickly in value they became unaffordable to most consumers. To deal with this the banks started issuing 40 year, zero down loans which as I understand are about 30-40% of all loans issued since 2004. Whereas in the United States, people were not required to document their income, assets and debt, the Canadians were.

What this means is that Canadians are more able to deal with their payments than were the Americas IF housing prices do not decline. They would be paying for their homes for 40 years, but could manage. In the US, so many loans were given to people who had no ability and/or intention to pay them back.

In the end, the two markets will crash in very similar ways. While us Canadians like to play up our differences with zee Americans, we are still far more alike than different. The old saying that we are more financially conservative than Americans has been blown apart as we now have more consumer debt P/C than do they. And we're going to feel the pain just as bad as are they.

[khyber]

thank you for the explanation mises

[mises]

Oh my:

http://calgaryrealestatemarketblog.files.wordpress.com/2008/02/long_term_relationship_between_calgary_house_prices_and_alberta_economic_activity_diverge_large.png

Why can't we post pictures anymore?

Anyways, Calgary is screwwwwweeeedddd.

[Jandar]

[fiveeagles]

What companies should we short?

[mises]

Anything related to housing. All of it.