If anyone has a book/documentary suggestion on understanding what is going on, would appreciate it.
http://www.amazon.com/Progress-Poverty-Industrial-Depression...
Progress and Poverty, by Henry George
> This classic work is an enquiry into the cause of industrial depressions and the persistence of poverty amid advancing wealth. Published in 1879, it was admired and advocated by great minds such as Albert Einstein, Winston Churchill, Leo Tolstoy and Sun Yat-sen in China. Henry George lived through a period of American history which witnessed the closing of the frontier, and he noticed the dramatic deterioration in the condition of labour once that happened.
Read it, it's great.
According to Numbeo.com's cost of living comparisons, SF is a bit more expensive to rent in than London, and a bit cheaper to buy in. But of course, these are very generalised/averaged numbers, not looking at anything as specific as "the bay area".
SF
Apartment (1 bedroom) in City Centre 3,321.03 $
Apartment (1 bedroom) Outside of Centre 2,580.00 $
Apartment (3 bedrooms) in City Centre 6,393.33 $
Apartment (3 bedrooms) Outside of Centre 4,928.57 $
Price per SQM to Buy Apartment in City Centre 14,819.28 $
Price per SQM to Buy Apartment Outside of Centre 9,543.88 $
London
Apartment (1 bedroom) in City Centre 2,510.87 $
Apartment (1 bedroom) Outside of Centre 1,700.43 $
Apartment (3 bedrooms) in City Centre 5,099.81 $
Apartment (3 bedrooms) Outside of Centre 2,985.64 $
Price per SQM to Buy Apartment in City Centre 23,868.09 $
Price per SQM to Buy Apartment Outside of Centre 12,413.72 $
Anyone who calls Zone 4 central is deluded.
But you may have a point in that London being the only game in town has a lot of competition among the workforce. Also, I believe it costs much more to employ someone there and there are many more protection for employees. For instance, it is very difficult to fire someone in the UK and it is not that way in the USA.
Simply put: I could quit my job today and have a month of interviews lined up in a few days in SF. In London? Not enough companies to sustain that.
That leads to companies competing for talent on wages.
London is great but it never really got a tech boom like SF did.
Vancouver has hints of insanity, but Toronto's pricing is entirely rational for the current financial reality -- more and more people, and more and more money, bidding up a fixed amount of housing. It has significant ongoing migration from around the world, so if you're a new grad who wants to live downtown, well your dollars are competing with dollars from around the globe. That's how those things are supposed to go.
The fly in the ointment is, of course, low interest rates, and minor movements would be catastrophic. Which is exactly why I think low interest rates are essentially the fundamental reality in the US and Canada -- they have been structurally stratified, and any increase would cause economic devastation that would cause the rates to drop again.
When I look at the GTA, prices make no sense to me. Million dollar homes in Markham, 600K townhomes in Mississauga? What incomes justify this?
I do agree with you on the "low interest rates or else" theory. Even a few points increase will cause people at the fringes to exit the market. And that has potential to topple everything over.
Housing is an interesting economic phenomena because people are often willing to pay whatever is possible to pay, so if you have 100 houses in an area and a single working adult in 100 households, prices will fit the ability of a single working adult. Now get rid of inequality and have the second adult working, and prices simply explode to fill the ability to pay of both adults. And so on. It's how we run to stand still.
With interest rates rising, the bid for housing will drop accordingly and many of these investment properties would immediately be put on the market to extract full value from them which would cause a glut of supply. This would further cause prices to fall.
This would be a good time for someone with a huge cash downpayment (or cash outright) and the prospect of actually living in the place full time to purchase a property in these areas.
Honestly, until then it makes more sense to rent if you can't afford to pay cash outright due to maintenance fees, property taxes and so on. In NYC buying a condo with 20% down is foolish right now, for instance. Especially if interest rates do indeed begin to rise. Better off saving as much cash as possible and waiting for rates to rise which should cause plenty of investment properties that are rarely lived in to go on the market to quickly harvest the proceeds.