If you follow the proceedings of your local city or town council, in any community across Canada, you have heard someone angry about a threat to their property values.
The right of a homeowner to ever-rising property values must be enshrined in the Charter of Rights and Freedoms somewhere (I must have missed it).
And yet, property values have fallen. And they are likely to continue to fall for a while, thank goodness. Because if property values keep rising at the rate they've been going up during the past quarter century, it'll destroy the Canadian economy.
If you bought a $250,000 house in the Fraser Valley 25 years ago, it's now worth about $1.4 million. That's a 460-per-cent increase!
In 2000, the average annual wage for a full-time worker in Metro Vancouver was $46,806, and now it's $72,406, a 54.6-per-cent increase. If the price of housing had only gone up by as much as wages, that $250,000 home would only cost $390,000 today.
Real estate, rentals, mortgages, and the construction industry now represents a full 28 per cent of Canada's GDP. You think this country runs on oil and gas, or manufacturing? Nope. Both are dwarfed by the amount we feed into the housing industry.
People have compensated for the spiralling prices in various ways 鈥� they switched from buying houses to townhouses, from townhouses to condos. Younger people are increasingly borrowing from their parents (who are borrowing against the inflated values of their homes).
But the fever may have broken. Slower rates of immigration, housing reform, and the construction of new rental buildings have combined to halt home price growth.
Which is good, because the growth in housing prices wasn't just sucking money out of the wallets of new homeowners, it was robbing from every other aspect of our economy.
The economy isn't a strict zero-sum game, but when you have an imbalance like the one created by the deranged increase in the cost of housing, all that money has to come from somewhere.
In the case of housing, it's come from everywhere.
People who are paying 40, 50, 60 per cent of their income for housing have less for everything else.
Less for retirement savings, for college funds for their kids, to consider starting a family at all. Less for going out to movies, live concerts, comedy shows, bowling nights, sporting events. Less for investing or starting a new business. Less for clothes, cars, toys, everything. As more and more people are paying more and more for housing, it's slowly drawing money from every other part of the economy.
One reason we've managed to tread water for 20 years is that productivity and technology have improved. Other goods, like clothes and food, have gotten cheaper over the same time as housing costs were exploding.
But our recent bout of high inflation, alongside the biggest spike in housing costs ever seen in this country, has blown up that equation.
The cost of your house needs to drop. It's not a retirement savings plan anymore. It's an anchor chained to the economy, and it's dragging it down.
