Editorial: Salaries not keeping up with home prices

Editorial: Salaries not keeping up with home prices

The entire Island is experiencing low inventory and high demand

It doesn’t take a close examination of spreadsheets full of numbers to know that real estate in the Cowichan Valley is selling, and selling fast.

Even Cowichan Lake, traditionally an area where prices are lower and homes might sit on the market longer, is seeing rapid turnover, with properties selling almost before the for sale sign goes up. There’s even the threat of bidding wars.

In the rest of the Cowichan Valley the brisk pace of sales is also evident, as real estate signs that go up one day have a “sold” sticker plastered over them the next.

The entire Island is experiencing low inventory and high demand according to the Vancouver Island Real Estate Board’s monthly summary for July. The benchmark price for a single family home in Duncan has skyrocketed to $407,700 — that’s up 18 per cent over the same period last year.

This is great for those looking to cash out of their home and move somewhere less expensive. Not so great for those looking to get into the market for the first time.

Because salaries have not kept pace with real estate price growth.

We would venture to say most people in Cowichan aren’t making 18 per cent more now than they did last July, and that’s just a year’s growth. It’s been decades of a steep climb in housing costs.

The pace does not seem sustainable. The portion of your paycheque going to your mortgage (which most people cannot get a home without) has ballooned over the years. That ratio of what you make compared to what your home costs has become more and more skewed.

We’re not quite yet at Vancouver or Toronto levels of crazy, where homes under $1 million are scarce (and these are homes that just a decade ago would have gone for a more Cowichan-like figure).

Most people cannot take on $1 million debt.

The equation needs to change, or something’s going to give.