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

[Nite]

Originally Posted by Hecate

And you are wrong wage growth in Canada declined in 2021 and 2022 when compared with inflation.

https://thoughtleadership.rbc.com/we...up%20in%202023.

yes, now add on 2023 and 2024 because my comment was not limited to those 2 years alone.
Overall wage growth since 2021, and especially after 2022, when Canada allowed immigration back into the country, is higher than inflation

[jonny24]

I don't know about you guys, but Nite has convinced me. Everything is fine and we have no problems

[niwell]

It also matters where and how wage increases are happening. A 10% increase for someone making $20/hr isn't going to help much given the rise in living costs in a place like Toronto or Vancouver. But a tech or finance worker getting annual 5% increases on their $150k+ salary is a pretty decent chunk of change even after taxes. Anecdotally the people I know with the largest salaries have received the biggest increases in take home pay since the pandemic, including my wife and to a lesser extent myself (albeit mostly through promotions).

As has been discussed in the stats thread many times percentages don't always tell the whole story.

[Nite]

Originally Posted by niwell

It also matters where and how wage increases are happening. A 10% increase for someone making $20/hr isn't going to help much given the rise in living costs in a place like Toronto or Vancouver. But a tech or finance worker getting annual 5% increases on their $150k+ salary is a pretty decent chunk of change even after taxes. Anecdotally the people I know with the largest salaries have received the biggest increases in take home pay since the pandemic, including my wife and to a lesser extent myself (albeit mostly through promotions).

As has been discussed in the stats thread many times percentages don't always tell the whole story.

Minimum wage workers saw among the largest wages increases in 2023 compared to the average worker which was 4.8%

here is the increase in minimum wages for each province in 2023

Alb 0%
BC 7.0%
Man 13.3%
NB 7.3%
NFLD 9.5%
NWT 5.6%
NS 10.3%
NT 0%
Ont 6.8%
PEI 9.5%
Que 7.0%
Sask 7.7%
YT 6.8%

https://minwage-salairemin.service.c...since1965.html

[lio45]

As stated multiple times already, I don’t disagree that wages are increasing relative to a cherry-picked basket of goods like iPhones and Teslas, but reality is, Canadian wages are going down relative to housing costs and probably food as well (was the case for sure recently, not 100% sure it still is).

Since most people pay for housing more often than they buy new Teslas, most Canadians are seeing their wages going down (i.e. their buying power being eroded).

(More specifically to prevent Nite’s nitpicking, Canadians are seeing their housing buying power being eroded, while their Tesla buying power is strengthening, the net result being, most Canadians have a harder time making ends meet with their lower relative wages.)

[Innsertnamehere]

Originally Posted by lio45

As stated multiple times already, I don’t disagree that wages are increasing relative to a cherry-picked basket of goods like iPhones and Teslas, but reality is, Canadian wages are going down relative to housing costs and probably food as well (was the case for sure recently, not 100% sure it still is).

Since most people pay for housing more often than they buy new Teslas, most Canadians are seeing their wages going down (i.e. their buying power being eroded).

(More specifically to prevent Nite’s nitpicking, Canadians are seeing their housing buying power being eroded, while their Tesla buying power is strengthening, the net result being, most Canadians have a harder time making ends meet with their lower relative wages.)

Wages are growing against CPI, which is a weighted average of what Canadians spend money on.

Teslas are a small amount of what canadians spend money on, so hold a small weight in CPI versus housing which is a large amount.

One critical difference is that the purchase price of housing is not included in CPI as it's not "consumed". Only rent and mortgage interest is counted.

Mortgage interest payments is one of the single largest drivers of CPI inflation right now as basically everything else in the economy (including rent!) is flat or declining right now.

You can check out the breakdowns here if you would like:

https://www150.statcan.gc.ca/n1/pub/...pi-ipc-eng.htm

The purchase of new vehicles is given 5.5% weight in CPI, compared to shelter which is given 28% weight.

[Nite]

Originally Posted by lio45

As stated multiple times already, I don’t disagree that wages are increasing relative to a cherry-picked basket of goods like iPhones and Teslas, but reality is, Canadian wages are going down relative to housing costs and probably food as well (was the case for sure recently, not 100% sure it still is).

Since most people pay for housing more often than they buy new Teslas, most Canadians are seeing their wages going down (i.e. their buying power being eroded).

(More specifically to prevent Nite’s nitpicking, Canadians are seeing their housing buying power being eroded, while their Tesla buying power is strengthening, the net result being, most Canadians have a harder time making ends meet with their lower relative wages.)

Canadian House buying power going down is why house prices are falling. if Canadian house buying power was going up prices would also be going up
This is the mechanism by which increased interest rates cause house prices to fall by making debt more expensive and hence reduce buying power.
The power of interest rates to control house prices is far beyond population growth which is why prices are falling now while population growth is the fastest ever.
This has always been my point

[Nashe]

I'd also like to see one of those wage growth charts without those "does not include contracted / frozen / unionized sectors" caveats. I suspect doing so would drag that wage growth down.

[Innsertnamehere]

The one thing current values aren't close to is replacement cost - so the question is - why is replacement cost so high here?

[WarrenC12]

Originally Posted by Innsertnamehere

The one thing current values aren't close to is replacement cost - so the question is - why is replacement cost so high here?

Yeah, replacement cost effectively sets a floor right? No housing crash at this rate.

[P'tit Renard]

Originally Posted by Innsertnamehere

The one thing current values aren't close to is replacement cost - so the question is - why is replacement cost so high here?

Forcing developers to mainly build skyscraper condos to meet the majority of Canada's housing demand likely plays a big role, along with arcane zoning (like minimum parking requirements) and overbearing building codes.

From a cost perspective, these high rises aren't economical especially after they hit a certain floor count. Cheaper midrise and multiplex buildings are much more common in the rest of the world.

[Truenorth00]

One can say the quote is open to interpretation
But then you look at the LPC's policy actions the last few years and it certainly looks congruent with less charitable interpretations of that quote.

They are toast. Deservedly so. The only question now is whether the next government cares more about the young, or making sure the old have gold plated retirements.

[lio45]

Originally Posted by Truenorth00

One can say the quote is open to interpretation
But then you look at the LPC's policy actions the last few years and it certainly looks congruent with less charitable interpretations of that quote.

They are toast. Deservedly so. The only question now is whether the next government cares more about the young, or making sure the old have gold plated retirements.

The LPC is so brutal to the young, that the CPC can also throw them mostly under the bus, while still getting their votes as the “party that cares the most about the young (of the two)”.

So I wouldn’t expect too much from PP, my guess is he’ll be just slightly less all-in on the maximum generational inequity stuff than JT. Why have any other position? As long as you’re perceived as the youth-friendly option (relatively), you’ll get the votes.

[shreddog]

Originally Posted by lio45

So I wouldn’t expect too much from PP ...

The real question is will he appoint himself the "Minister of Youth" as JT did (so ironically) back in 2015?

Trudeau government still trying to figure out national youth policy

Link

In the end, I guess they did figure out a policy ... the ever popular (to boomers at least) - Fuck em high, Fuck'em low approach.

[jonny24]

Great, now I'm jealous of Toronto Life Guy. All I want is a rural place within commuting distance of Hamilton.... he got a deal at $1.175m too, I'm budgeting about $1.5m for what I want (and will never afford).

[davidivivid]

Considering that median household income may vary importantly from city to city inside each single province, using solely provincial median income will obviously skew the results. Interesting nonetheless.


https://www.royallepage.ca/en/reales...age%20payment.

[goodgrowth]

Originally Posted by davidivivid

Considering that median household income may vary importantly from city to city inside each single province, using solely provincial median income will obviously skew the results. Interesting nonetheless.


https://www.royallepage.ca/en/reales...age%20payment.

Still sort of crazy that the 6th largest CMA is the 5th most affordable.

[Nite]

Originally Posted by goodgrowth

Still sort of crazy that the 6th largest CMA is the 5th most affordable.

Edmonton also proves that cheap housing and rents don't cause or prevent homelessness

[Xelebes]

Originally Posted by Nite

Edmonton also proves that cheap housing and rents don't cause or prevent homelessness

They do put downward pressure on over-crowding.

[Nashe]

Moncton dropped off the bottom of that list like a cannonball.