Quote:
Originally Posted by trailraat
The bigger issue is the ratio of household income to house price/debt. Most of the previous generation here in Alberta experienced about a 1/3 ratio - now its closer to 1/6-1/8. Most people used to be able to afford a home on a single income - low interest rates, reduced availability of land, and increasing dual income households have been at least partially responsible for an arms race on house prices.
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Goes a lot beyond that as well. High commoditization of housing in places like Van, TO, MTL, Ottawa, Halifax, Victoria, the list goes on, has a lot of folks cashing out of their homes there and moving out to prairie cities and raising the costs out here too. Edmonton has been fairly well insulated but still saw its first real good month over month price increases for what feels like since 2013, and Calgary saw some real price increases this time around before rates started rising.
Overall, unless you’re in Edmonton, Winnipeg, Regina, Saskatoon and to a lesser extent Calgary, it’s getting REALLY hard for any young folks to afford to buy homes. When real wages have been stagnant (if not dropping) in so many places while real home prices have continued to shoot up, it’s becoming a real issue.
Lots of folks like to point out that average new home sizes have increased a lot too, but consider that given land values have shot through the roof, developers on greenfield (and infill) are building the biggest possible houses on the smallest possible plots to maximize their land investments. Why build a 1000 sq ft home on a $150,000 lot to make $300k house sale when you can build a 2000 sq ft home and sell it for $500k? If the consumer market doesn’t want to pay that, developers/agents point at the 1000 sq ft duplexes/multi fam buildings and say there’s your smaller house if you want it.
How that plays into the future, I’m really not sure but just as you’ve noted, debt ratios are off the charts, and that is for people trying their hardest to live within their means. Inflation has (almost) been a god send that its forced the BoC to finally raise rates to cool the RE markets off. Before that, way too much of Canada’s economic growth has been tied to real estate services which anyone can tell you that at a certain point it’s entirely rotten hollow GDP growth.
Lately, I’ve become pretty convinced that in North America (and more specifically Canada), got extremely lucky during which they grew and boomed post WWII while the rest of the world was either so war ravished or not developed enough that we got such a head start and enjoyed incredible luxuries—but that was never and will never be sustainable and was merely a miraculous blip in time, and that we’ll never find ourselves in a similar situation again due to how the rest of the world has been catching up. Where we go from here, I’m not sure, and how you can convince an entire generation that they can only expect a lower economic quality of living going forward, I’m not sure. I’m in my mid 20s, and you can see the signs everywhere. Who has a decent pension outside of government? Who is supporting a family on a single income without being a top <5% earner in their industry and not living in a small town/city? How many jobs out there require substantially higher educational requirements for degrees that have soared in tuition costs, leaving people to enter the workforce later with already high debt loads compared to 30, 40 years ago? The days of skating by and living really well are passing by, as its a global workforce young people in Canada are competing against, not just their neighbours.
Alberta is a hard place to talk about this sort of things, because there are ample opportunities for folks to skip higher education to be tradesmen that can make great money (as they should, nothing wrong with that inherently but it masks the ongoing issue), and oil booms and their resulting busts really distorts economic views as every loves to point to really lean years of the past in the varying points of the 70s and 80s where people were scrounging pennies and living off shoestrings, but that was due to the severe energy price depressions, while on a macro scale Canada as a majority was a lot better off in those times. If young people are struggling a lot today while we’re in alleged economic good times, how bad is bad going to be for young people when times get real bad?
Sorry for the weird rant. None of this is political, just some thoughts on how things are progressing economically in Canada these past few decades.. I wonder a lot about the future and what the right move is for me and mine. I love Canada and it’s been my home my whole life and I hope it continues to be, but something needs to change as the course this country is on sure doesn’t look at that bright.