Canadians House Poor in Comparison to Americans

housePoorLong believed to be the richest of middle-class incomes across the world, Americans recently fell behind Canadians in this distinction. While this would seem to dismay many in the U.S., the true numbers reveal that Canadians are actually more house poor than their American counterparts and their take home pay is estimated to be far less.
The average home price in Canada is just over $400,000, compared to the American average home price of $266,000, in Canadian dollars. The average take home pay in Canada often does not cover the expense of buying a home, with Vancouver continually noted as one of the most expensive cities in the world. Even though Americans are, on average, spending more than 30% of their income on housing costs, that is a small figure compared to some areas of Canada, where up to 45-50% of income is spent on housing costs. This difference leaves many Canadians house poor in comparison to their American neighbors.
Housing prices have soared in areas such as Vancouver, Toronto, and Calgary, and appraisals put the average Canada home price at fifty percent higher than in the United States, according to recent reports from Bank of Montreal Financial Group (BMO). The gap between home prices in the two countries was even wider in recent years at more than sixty percent. This difference in housing prices is due in part to the 2008 recession and the slower recovery of the American real estate market in comparison to the quick recovery of the Canadian housing market. Some estimates indicate that the housing price gap between the two countries will continue to improve over the next several years, leaving Canadians less house poor than American homeowners.
With the United States economy expected to soar in 2015, the outlook for Canada hinges on their neighbors growth. The housing economy in Canada is expected to continue to climb, with housing prices expected to increase, albeit at a modest rate. This will further push Canadians into a house poor distinction, although housing prices are expected to climb in the U.S. as well, perhaps leaving the American neighbors with more money going towards housing costs and less money in their pockets.
Reports from BMO economists assert that the housing growth seen in Vancouver, Toronto, and Calgary will begin to cool a bit, in part due to oil prices dropping. British Columbia, overall, is expected to remain fairly secure. On the other hand, growth in Ontario and Quebec is expected to pick up. Much of the Canadian economy and economic growth depends in oil prices, as well as exports of lumber, which will increase with housing demand increases in the U.S.
Overall, the call for a crash in Canada’s housing market is not likely to happen anytime soon – despite continued declarations in recent years that the bubble is about to burst – and the characteristic of being house poor will continue to be granted to Canadians for some time to come.
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