Loosely defined as a phenomenon that transmits collective delusions of threats, whether real or imaginary, through a population in society as a result of rumours and fear. Sound familiar? I thought it might. If you didn't know better you'd think we were talking about black magic, but I'm afraid this is something far more disquieting -- this is the Vancouver real estate market.
Over the last couple of years I have seen many of my clients, both new and long-time, go from concerned and worried to downright frantic about the housing market here. Many people, especially first time home buyers are desperate to get into the market and although realistically some know that they can't afford it, they are going to the top end of their budget to get into the market.
They feel like if they wait they will be shut out entirely. In addition to these panic-stricken first time buyers are home owner in different parts of the country who have purchased a home and are now falling behind on mortgage payments, or are being forced to live on such a meagre monthly sum to ensure their mortgage is paid and so they have no real quality of life.
Others have maxed out budgets and lines of credit, taken on second jobs, and are generally behaving, well, kind of crazy.The frantic desperation to own now seems to have engulfed all of Vancouver in a type mass hysteria; no doubt brought on by the never-ending discourse on our housing affordability issues.
This collective anxiety is not misplaced however. The best and most recent illustration of proof lately being the 'Code Red' campaign; an effort undertaken to encourage our politicians to address the "broken" housing market in Canada; particularly within metro Vancouver and metro Toronto.
A UBC policy professor, Paul Kershaw, is the author behind the new study, which supports the goals of the campaign. In it, Kershaw gives some startling figures.
Consider this: today the cost of a home in Metro Vancouver is more than triple what it was between 1976-1980. B.C. has seen a greater drop in earnings than any other province between the same period, with full-time earnings down $9,000 for 25 to 34 year-olds compared to 1976-1980.
As Kershaw also points out, these numbers are heavily exacerbated by the increased cost in other areas such as commute time and childcare. In the report he states, "One way we can compensate for [that] is to no longer let childcare cost the equivalent of a second mortgage, time at home on parental leave cost the equivalent of a third mortgage, transit a fourth mortgage or student debt a fifth mortgage."
When it comes to advising clients in a heated climate such as now, let me first say this: very rarely are good decisions are made when emotions are high. Quite to the contrary, more often then not they cloud good judgement. I have always and will continue to advise my clients never to max out their budget. This is for obvious reasons, but also less obvious ones as well.
Interest rates won't stay low forever; and market changes can happen at any time just like the new 15% foreign tax implemented abruptly. Exploring all options for those with real estate fever--whether that be starting out with a small investment property or moving further to get into an affordable home should be really be on the conversation table.
In the meantime, try to stay calm and save on.
Follow HuffPost Canada Blogs on Facebook
Follow Atrina Kouroshnia on Twitter: www.twitter.com/atrina_