Housing Bubble II: The Quest To Build Enough Homes Where People Actually Need Them

[Curmudgeon]

Originally Posted by toaster

Are you serious? Because they can't afford places? I've never seen a more out of touch post on here. Couples making incomes over 200k+ are only getting approved for mortgages that could get you not even get you a shoebox bachelor unit in Toronto. So they max out to buy anything, and think about paying for parking and other things after.

Yep, and just to add some perspective, the median household income in Toronto after tax is about $85,000.

[hipster duck]

Edmonton FTW:

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[Acajack]

Originally Posted by Curmudgeon

Yep, and just to add some perspective, the median household income in Toronto after tax is about $85,000.

Is that really after tax? Stat Can income numbers are generally gross (so before tax).

[suburbanite]

Originally Posted by Acajack

Is that really after tax? Stat Can income numbers are generally gross (so before tax).

Before tax average household income is over $100,000, which makes sense with two individuals earning $50,000+. Median is probably lower.

[Innsertnamehere]

Originally Posted by Curmudgeon

Yep, and just to add some perspective, the median household income in Toronto after tax is about $85,000.

The usual caveat of median household incomes not being representative of median working incomes of those in the house-buying stage of life, and that the lowest 30-40% of households have never been homeowners in the past, applies.

The median homeowner has always been an above-median income earner and median incomes for age brackets entering the housing market is higher than the median across all age brackets.

even 20 years ago when housing affordability and home ownership rates were at record highs, the median Canadian income earner would have barely been making it into the "home ownership" class.

We also have to remember that at this very time we are in a transitional interest rate environment which has led to (Temporary) absolutely terrible mortgage payment rates. A similar thing happened in the late 1980's that most people in their 60's would be happy to explain to you about how painful it was as a homeowner. Like that time, this time will transition to lower, more normalized mortgage payments again as well.

[MonkeyRonin]

Originally Posted by Innsertnamehere

The median homeowner has always been an above-median income earner and median incomes for age brackets entering the housing market is higher than the median across all age brackets.

even 20 years ago when housing affordability and home ownership rates were at record highs, the median Canadian income earner would have barely been making it into the "home ownership" class.

Either way, the gap between median income and median house cost (or rent, for the matter) has grown significantly.

[Marshsparrow]

Originally Posted by MonkeyRonin

Either way, the gap between median income and median house cost (or rent, for the matter) has grown significantly.

replace "median house cost" with avocados, cars, clothes, gas, eating out, vacations, etc, etc, etc are all true...

[Innsertnamehere]

Originally Posted by MonkeyRonin

Either way, the gap between median income and median house cost (or rent, for the matter) has grown significantly.

Absolutely - it's just bad data to conflate median household incomes with the median household incomes of homeowners or new home buyers, both today and historically. It creates an overly dark view of housing affordability which would stretch across all time periods. Doesn't mean the window of housing affordability hasn't shifted towards higher income brackets, but it also isn't accurate to say that a median household income should be able to afford a median home price.

[yaletown_fella]

Originally Posted by Curmudgeon

Yep, and just to add some perspective, the median household income in Toronto after tax is about $85,000.

Thats probably based on households with 2 breadwinners, not a single breadwinner.

[Coldrsx]

Airdrie receives $24.8million for 900 units of housing. That seems disproportionate and odd given how poor transit options are and most households require two cars. Oh Canada.

https://www.airdriecityview.com/loca...ousing-8398053

[hipster duck]

Originally Posted by Marshsparrow

replace "median house cost" with avocados, cars, clothes, gas, eating out, vacations, etc, etc, etc are all true...

What? No. Most of those are consumer goods that have appreciated less than the rate of inflation. Clothes? Clothing has gone up 0.09% per year - a t-shirt has the same sticker price now as it did in 1990.

The things that have gone up in price are:

1. Labour-intensive goods/services whose inputs cannot be outsourced to low wage countries, and,
2. Assets

Housing is both of those things. It has to be built on site with local labour and local land prices, and it's something people invest in expecting a return.

[1overcosc]

Originally Posted by hipster duck

What? No. Most of those are consumer goods that have appreciated less than the rate of inflation. Clothes? Clothing has gone up 0.09% per year - a t-shirt has the same sticker price now as it did in 1990

One caveat to this observation about tangible goods getting cheaper, is that these goods are not as durable as they used to be which cancels out much of the price cut.

Sure a refrigerator was 3 times more expensive in 1970 but back then you bought one refrigerator and it lasted for the rest of your life. Now, most refrigerators break after a few years. So the drop in price is cancelled out by the fact that you have to buy them more often.

As a real world example, when my grandpa died, when we went through his stuff, we noticed his winter boots were 40 years old. The colour had faded but they still functioned as winter boots (ie. Kept feet warm & dry). I don't think there's a single winter boot on the market now that will last 5 winters let alone 40!

Average cost of goods may have dropped a lot relative to incomes, but I suspect that the total amount spent on goods hasn't dropped by nearly as much.

[niwell]

The same can be true for clothing - "fast fashion" is probably much cheaper than anything in 1990. But the tshirt that costs the same today as then is likely to be of much lower quality. I have friends in the music industry and actually sourcing quality blanks (tshirts) results in an end-cost that's $40 or more to make even minimal profit. A decade ago it was $25-$30.

Our 3 year old washing machine that came with our house died a few months back and was essentially unfixable. My good friend who recently bought in Barrie had the same experience except it was every single appliance except (thankfully) the stove. No idea of the validity of this but was told by the tech who looked at our washing machine that stuff built around COVID has a particular drop in quality and he's seen a lot more failures than slightly older machines.

[hipster duck]

Originally Posted by niwell

The same can be true for clothing - "fast fashion" is probably much cheaper than anything in 1990. But the tshirt that costs the same today as then is likely to be of much lower quality. I have friends in the music industry and actually sourcing quality blanks (tshirts) results in an end-cost that's $40 or more to make even minimal profit. A decade ago it was $25-$30.

Sure, but quality aside, the cost of dressing yourself has gone down. I think if you looked at the poorest members of society, and compared how much of their income is spent on clothing, and whether they have fewer clothes in their wardrobe than their equivalents did in 1990, you'd find that spending on clothing has gone down, while the number of clothes people own has gone up even in the poorest income brackets.

There's no equivalent of that in housing.

BTW, I'm not supporting fast fashion from a sustainability or worker's rights perspective, I'm just noting that comparing housing to consumer goods in terms of price appreciation is wrong (maybe even insulting).

[suburbanite]

I don't know how anyone can look at the housing situation and come away saying "oh well, inflation is everywhere" .

Housing is such a localized good where global supply chains and general worldwide economic conditions make up a small portion of the cost to deliver. You can't outsource developable land or drywallers.

[niwell]

Originally Posted by hipster duck

Sure, but quality aside, the cost of dressing yourself has gone down. I think if you looked at the poorest members of society, and compared how much of their income is spent on clothing, and whether they have fewer clothes in their wardrobe than their equivalents did in 1990, you'd find that spending on clothing has gone down, while the number of clothes people own has gone up even in the poorest income brackets.

There's no equivalent of that in housing.

Absolutely. Wasn't trying to suggest otherwise - the quality issue when it comes to clothing is more something that personally irks me. Unlike clothing and most consumer goods there's no "cheap but lesser quality" option when it comes to housing.

[whatnext]

Originally Posted by hipster duck

Sure, but quality aside, the cost of dressing yourself has gone down. I think if you looked at the poorest members of society, and compared how much of their income is spent on clothing, and whether they have fewer clothes in their wardrobe than their equivalents did in 1990, you'd find that spending on clothing has gone down, while the number of clothes people own has gone up even in the poorest income brackets.

There's no equivalent of that in housing.

BTW, I'm not supporting fast fashion from a sustainability or worker's rights perspective, I'm just noting that comparing housing to consumer goods in terms of price appreciation is wrong (maybe even insulting).

There should be an environmental tarriff on cheap, "fast fashion" to reflect the damage its production does to the environment.

[Xelebes]

Fast fashion was and still is a tax loophole, meant to be a bone for local clothes manufacturers. The manufacturers still left and we still have fast fashion.

[ssiguy]

The biggest 2 issues that have sent the cost of living soaring past the middle class in the last 30 years have been the ones that have the biggest impact on the average family........housing & cars. If housing had just kept up with inflation, a condo in Vancouver would be $100k, a townhomes $200k and a house $300k. Your T-shirt maybe a bit cheaper but if you are spending 4X as much on rent/mortgage, it means nothing.

Remember, back in the 70s/60s, you had 3 or 4 kids, often only the Dad working or Mom also but just P/T and if you had even a marginally decent job, it secured you a middle class lifestyle. This is made even more glaring when you consider that people required MUCH lower levels of educational attainment to get a decent job. All this while personal debt loads were one-third what they are today.

There is no 2 two ways around it, in the last 40 to 50 years, the standard of living in Canada has collapsed and anyone who thinks otherwise, never lived in that time period. Back then, a tent was for camping and you went to the bank to get money not food. If you had told anyone back then that in 2024 Canadians would be living in tents and people would be lining up for food, it would have been considered an apocalyptic scenario and it would have caused mass hysteria and now we have become so use to it that it is written off as "part of life".

[lio45]

Originally Posted by Marshsparrow

replace "median house cost" with avocados, cars, clothes, gas, eating out, vacations, etc, etc, etc are all true...

Not at all. Especially not for gas and vacations.