Or I guess it's going to be more like an on-going project. This comes after a little discussion about home prices in my city. While out driving on the weekend, we saw that my boyfriend's old house is for sale. It was built in 1981 and worth about $70,000 at the time. Today it is listed at $265,000 and a family member joked that we should buy it because 'it's a good price'. We disagree. What makes 'a good price' these days, in my region and across many parts of Canada. I do not live in a huge city, it's the 5th or 6th smallest - which means we are at the bottom for population because there are not many 'cities' in Alberta lol. First I looked at avg income but it varies online.... (one site says 2009 was to be between $27,000 and $52,000 depending on if you are male or female). Some sites say $78,000 or $90,000 household income. But the range is pretty close so you get the idea.... $50,000 top end for avg individual income, let's say $80,000 for family.
Next I looked at avg home sale prices in 2009 and various sites range from $240,000 to $260,000. Whoa... average?? That's almost three times the higher avg of family income, let alone individual.
I was curious what things look like south of the border so I chose Great Falls, Montana. It's the same distance away as Calgary (actually a bit less), the population is almost the same as my city, same kind of people live in and around the area - farmers, ranchers, hydro power, oil, gas, etc..... but I nearly fainted and died when I looked at the property markets. $90,000 for a lovely home almost identical to mine - except mine would go on market for about $230,000 here. What is wrong with this picture? For $260,000 down there, I could get a house on a piece of land near the city, a shop, a few acres, 2-3 car garage... but just outside the city here you are looking at FAR more than that. What gives?
For kicks we also looked at Las Vegas and nearly choked to death there as well. Palm Springs... same. I am sure some people would say that things have gone bad down there, so I can't judge by that - however I also looked up a few pages that showed former 'avg home prices' in those areas before 2000 and they were still less than half of what they were in my city. The avg earnings for Great Falls was a bit lower than here, around $45,000 individual at several sites I checked - but the homes are only double that, not 3 to 4 times more. It is truly bizarre.
So when our family member said 'that's life' when I said no, a house that cost $70,000 to build should not be $265,000 today, I decided to start collecting some data on similar cities in Canada and the US to compare. I wanted to tell her that the prices here are high because people fell for it, but I decided not to say that since she herself bought a $400,000 home a couple of years ago and is most likely going to lose a lot of money on it when they decide to sell (original plan was to buy it and then sell it in 2-3 years to make a profit and buy a condo)...... It's a very lovely home but when you are hitting retirement age, is that a good decision to make? Scary.
I also noticed lately that a lot of older people are suggesting it's a bad idea for us to be renting right now --- but it occurred to me that when they were my age, THEY were still renting too. And yet house prices were ridiculously low. Yes, high interest rate, but $500 a month is all my dad's mortgage was, now they are 3 times that or higher in this city. Gee, which one would I rather pay?
So my own project is to look around at prices and compare. Should we be sucked into paying this much right now? Or is it best to wait and see what happens because things could come crashing down up here and we will breathe a sigh of relief that we were not financially devastated by it......