Thursday, May 10, 2012

Saskatchewan house prices and wages since 1990

Here is the average weekly wage in Saskatchewan since 1990.

Here is the average weekly wage and house price in Saskatchewan  indexed from 1990.

Here is how it all looks when we adjust for inflation and index the growth from 1990.


No doubt there has been a boom in house prices, but wages have barely outpaced inflation over the last 22 years.  Anybody else still waiting for a wage boom?
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3 comments:

  1. Hey Kevin, thanks again for your work here.

    I just wanted to get your thoughts... Recent billion dollar losses are being reported as "mistakes" by JPMorgan right now. http://www.latimes.com/business/la-fi-0511-jpmorgan-chase-20120511,0,4625412.story
    and
    http://www.maxkeiser.com

    Do you think it's events like these (unwinding of derivatives) in the major banks that will ultimately be the tipping point for the canadian housing market (and here in Saskatoon)?

    Thanks for any thoughts,

    -Jonathan

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  2. They could, but as I don't really follow that stuff that much, even though I read Zero Hedge almost every day, I can't really say either way.

    I believe that the tipping point has already hit many markets in Canada, but some places like Saskatoon, Winnipeg and Toronto have not had a downturn yet. It was credit and emotions that drove these markets upward, so whatever negatively affects credit and emotions will pull the market downward. But it's coming. Vancouver, once the hot spot, is absolutley wobbling right now and everyday the bubble stories grow louder.

    My bet is that there are a combination of things that will lead to a downturn in real estate, debt fatigue, demographics, tighter credit availability, a hard landing in China, a default or two in Europe.

    Interest rates may go up, but not like what happened in the early 80's.

    Garth Turner says a 15% shock to real estate and then a melt for years. I would not disagree with him. This may sound crazy coming from me of all people but if a person locks in for a 10 yr mortgage under 4%, and isn't highly levered, it is not necessarally a bad thing to buy if you believe in such a scenario. Especially if monthly rent is not that far from a mortgage payment, stable job, not moving for a few years etc. But the problem is that many first buyers are stretching themselves too much to buy and are highly leveraged. The trick is that one never wants to be negative equity. I will do a post on this and crunch some numbers.

    ReplyDelete

  3. Ok, thanks a lot for your thoughts Kevin! -Jonathan

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