Whenever I see the phrase 'think tank' I cringe - basically a company that develops opinions, and is probably funded by another company that wants a certain opinion.
There is no housing crisis, at least not in this country. In fact since I started in real estate in 2006, it's become increasingly easier for people to purchase homes, particularly for the first time. Land Transfer Tax is being waived, there are 0% options (recently extended to investment properties as well), longer amortizations, etc.
Interestingly, many current opinions (be forewarned, this link is slightly self-serving to our industry) say that we're going to have a great year, and prices will hold reasonably steady with 2007.
From The Whig Standard:
If you want a good price on a house and you don't mind living 19 hours north of Kingston, consider moving to Thunder Bay.
The northern city may be the western world's most affordable housing market, according to a survey released yesterday by the Frontier Centre for Public Policy, a Winnipeg-based independent public policy think tank.
The survey of 227 housing markets in Canada, the U.S., the U.K., Australia and New Zealand found Kingston is among 40 moderately unaffordable housing markets.
An online calculator provided by the centre (http://www.fcpp.org/main/citycal.php) indicates the median cost of buying a house in Thunder Bay is about $233,000 less than in Kingston and takes about four years less to pay off, based on the Thunder Bay annual median household income of $58,500.
Despite being ranked, "moderately unaffordable," Kingston fared a lot better than most communities surveyed. A total of 38 were deemed "seriously unaffordable," while 90 were labeled "severely unaffordable."
Canada had three communities in the top 25 least affordable markets and eight communities in the top 25 most affordable markets category.
Thunder Bay was marked the most affordable of all 227 with it costing only 1.8 times the median household income to buy a home.
While it may cost a lot more to buy a house in Kingston than in Thunder Bay, Frontier Centre policy analyst David Seymour said the Limestone City is in pretty good shape.
That's because it's only 0.2 basis points off the median multiple of three that marks the line between an affordable market and an unaffordable one.
"Kingston is in a pretty good position overall," said Seymour. "It's only 0.2 of the median multiple basis point from from two- to three-year affordability zone where the average family can realistically pay off their house and go on to have a good lifestyle without too much trouble."
The 48-page report claims there is a housing affordability "crisis" that is making it difficult for people to buy their own houses. It blames "prescriptive planning" or "smart growth" strategies that aim to restrict the outward growth of cities.
The report says unless homes are in short supply, demand does not drive up prices. Instead, it says, house prices rise as a result of prescriptive planning that sets urban boundaries and drives up the price of property. House prices are also pushed up by infrastructure charges, which communities charge suburban developers who then pass the cost to home buyers, the report says.
"You can have smart growth, but bear in mind that there's a cost and that's the cost to housing affordability to Canadian families," Seymour said.
In Canada alone, there are huge disparities in affordability as well as the rate of change.
For example, in Vancouver 41 per cent of the median household income was required to pay the median mortgage in 2000. By 2007, 71 per cent was required, the report says.
In Ottawa, 18 per cent of the median household income was required to pay the median mortgage in 2000. By 2007, this had risen to just 25 per cent, the report says.
The harm caused by unaffordable housing doesn't just hurt household budgets, Seymour said.There are also social consequences, he said.
With home ownership more out of reach for younger households and lower income earners, it's more difficult to save for retirement. Thus, national pension systems and government assistance programs are more heavily burdened.
The extra money going into paying the mortgage also doesn't get investment in the local community, Seymour said.
While this is the first year Kingston has been examined, he said this city doesn't appear to be in danger of becoming a less affordable housing market.
"The key driver behind housing affordability ... [depends on] the attitude of municipal planners and people being able to purchase and develop land at the city fringes," Seymour said.
A quick look at this municipality's website convinced him that city planning staff are "reasonably reflexive and accommodating" to developers, he said, adding that Kingston also appears to have a lot of space around it, which helps.
"As long as municipalities are prepared to allow people to keep building, then there's no reason why house prices have to go up any further," Seymour said.
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