Quote:
Originally Posted by lio45
And as I pointed out to you in the other thread, that net worth, for most, is likely nearly entirely in the form of equity in their principal residence. Not all of it can be accessed and spent.
Also, the very top skews greatly the average. A handful of individuals with net worths in the billions will raise the average for everyone. The conversation was about how likely it is, or not, that "ordinary one percenter" Canadians are the ones buying these properties for several millions in cash apiece, so if you let the very top skew the average, you'll have a distorted picture.
To illustrate this: the average net worth of Canadians is $207,300 per person (StatsCan, 2013).
But if you ask typical Canadians randomly selected on the streets, most of these ordinary Canadians will likely not be in a position, individually (it's per person, not per household, which is more like $500k), to make a $200k all cash purchase on the spot.
To sum up the argument (which is exactly the same position I had in the other thread) : I really really doubt that most people making $150k net per year can ever afford to pay $3M + demolition costs, all in cash, to acquire an empty lot in Vancouver.
We can just agree to disagree and/or keep that for a thread where it won't be so off-topic  |
If you are going to attempt to make new points about a different conversation why not just make them in the original thread? This thread is a popular Canada subforum topic and is only a couple notches down from the election thread.
For the record, none of what you said in the quoted section above about "what you were trying to say" was actually said in this thread. They are new points of view you are bringing up. Fine and fair enough.
StatsCan doesn't have data on top 1% individuals, they last tracked top 20%, which indicated net worth north of 1 million for this 20% cohort.
Yes, you are right, averages are skewed by the extremes (in both directions), certainly an individual making 150k a year in straight income and only that income could not easily plunk down 3 million in cash. But then again, the average individual who pulls in 150k in income also generally has a diversified portfolio of investments, which pull net worth and wealth up, including stocks, real estate investment, business investments, and a portfolio of capital gains generating investment instruments. I would wager the average 150k+ earner investment portfolio looks very different from the average 70k earner, such that these factors play a much bigger role in overall wealth.
I would also wager that 150k+ earners are much more susceptible to rather massive fluctuations in income. Things like stock options are only reported as income when the shares are disposed of.
Finally, single family detached homes in metro Vancouver are a rare breed, there are only 300k SFH in all of metro van and importantly, that number is decreasing as previously indicated. If each 1% household in Canada (350k people) bought a house in metro Vancouver there would be no more supply left for anyone else. Market over. In the actual city of Vancouver, there are just 47k SFH homes, down almost 50% over the past 10 years, and the 3 million houses are isolated to a few rich neighbourhoods like West Van.
Even if we are only talking about a hundred thousand Canadians who potentially could make the investment in 3 million dollar homes (which itself is less than about 33% of the top 1%), only a fraction of these individuals would need to participate in the Vancouver market to drive supply and demand.
Again, I'm not trying to say that foreign investment is not a factor in Vancouver real estate prices, but these SFH in Vancouver are a scarce resource, getting scarcer, and Canada itself generates plenty of cash only buyers who can play in this market if they wanted too. For the record, I do doubt that many Canadians would bother paying cash only, with interest rates so low it is a poor use of capital and these 1% individuals generally have financial helpers who know this.
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