Edmonton Housing Bubble?

I thought this topic might be interesting because of all the headlines about economic uncertainty in the world today.  The question is, “Are we in a housing bubble in Edmonton?”   For the most part, people I speak with are optimistic about the Edmonton/Alberta economy.  I do occasionally read or hear bubble talk, the theory that Canada will have a USA style housing meltdown.  The Bank of Canada Governor Mark Carney also has been talking about the overheated real estate market.    

I think the best way to answer the bubble question is to look at the numbers.   A great study was written by Robert Bruegmann PhD http://www.demographia.com/dhi.pdf  He looks at the relationship between median household income and median home prices in cities around the world.  Edmonton was ranked #1 in the world as the most affordable major housing market outside of the USA.   Yes, #1 in the world! Edmonton’s median household income in 2011 was $84,100 and the median home price was $293,000.  Divide the house price by the household income in Edmonton and the answer is 3.5 times.  Compare that to Vancouver, the second most expensive housing market in the world at 10.6  times!   Or, you could live in Detroit and really save at 1.4 times.

This study only looks at gross income and not after tax income.  Albertans pay some of the lowest tax rates in Canada, so our affordability in Edmonton is even higher.  A dollar goes a lot further in Edmonton than it does in many other Canadian cities outside Alberta.  Interesting study, yes?