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  • Is it weird to feel, well, maybe not optimistic but at least less pessimistic about a home maybe being affordable in the next 5-10 years?

    (Admittedly, I do wonder how that would affect friends who scraped everything together to get something in the last few years.)

    • It won't happen unless using housing as a speculative assets is unprofitable.

      • Was housing an unprofitable speculative asset 20 years ago when housing was affordable?

        Or, in your opinion, what changed in capitalism in the last 20 years?

        • What changed is 20 years of incomes falling behind inflation and more wealth consolidated into the asset owning class. Generational wealth got siphoned to the 1%, leaving millennials set back and gen-z to start with nothing and their labor undervalued to boot.

          Capitalism progressed.

          With this kind of housing plan, enough real assets might be injected back into the working class (and temporarily withheld from capitalists) to roll that imbalance back two or three decades. And we'll have about that long before we find ourselves right back here again, unless we've finally mustered the global solidarity to tax capital and profit enough to sustain middle class wealth and pull up anyone below middle class who's willing and ready to accept the aid. Or at the very least, drive wages much higher, for as long as capitalists are in fact still largely dependent on human labor.

          Hopefully the big parts of Carney's plan will be revenue-neutral (i.e. sell the houses at cost), lest next time around we find both the working class and the government wrung dry and leveraged out of options. Pessimistic as that outlook is, though, at least it buys us more time to finally agree robber barons were bad.

          • What changed is 20 years of incomes falling behind inflation

            That wasn't the case in Canada (or in the States I believe.) Real wages (wage growth accounting for inflation/CPI) increased every year until the pandemic. Even then, inflation outstripped wage growth but not by much:

            https://www150.statcan.gc.ca/n1/pub/14-28-0001/2020001/article/00006-eng.htm

            more wealth consolidated into the asset owning class. Generational wealth got siphoned to the 1%, leaving millennials set back and gen-z to start with nothing and their labor undervalued to boot.

            Similarly, the timing doesn't really line up for this. If you've read Piketty's arguments about Capital in the 21st century, inequality has been taking off since the mid 70s. So maybe there's some sort of tipping point but that seems a little odd.

            But, we do both agree that this supply of homes is a good thing and worth fighting for, so that's groovy!

            • According to the article you linked, there is no housing crisis, since our income has kept pace with cost of living. 🤨 I'm struggling to contradict that with hard data, but I don't believe it for a millisecond. (Or to put it less argumentatively, I don't understand how that data fits into the bigger picture.)

              Anecdotally, I as a very early millennial was very lucky to get my first and current house during a brief window where I'd finally mustered the means and housing prices hadn't yet completely galloped away. That was after over a decade spending more on rent than a mortgage would cost but next to nothing on transportation, and without having children, which was an economic non-starter even if I'd wanted them. (My partner and I did lots of cycling year round and bought a cheap utility vehicle before a house only because it was a prerequisite to accessing cheaper semi-rural housing.) If I could have gotten into a house 5 years earlier, I'd have about double the net wealth today. If my parents had been able to financially support me -- heck, even just house me -- through university, I'd have easily been able to do just that instead of graduating with what back then seemed like a tremendous student loan debt burden. It would be quaint today.

              I view my place in history as straddling the tipping point of Canada's cost of living (not just housing) crisis. I've since watched others in my same field but with a later start on life have basically no chance to advance. Their inflation-adjusted junior professional salary is similar to what mine was, but between student loans and exploding rent they'll take even longer than I did just to be able to start saving for a down payment. By then…

              I tried to source some proper data to more clearly demonstrate my point, but when it comes to charting historical trends, I don't think Stats Canada could be more obtuse if they tried. So I'm falling back on this confluence of formula and policy changes to vaguely gesture in the general direction of my point:

              • CPI calculation and budget recommendations that used to allocate shelter around 25% of income (early 80s) and now is at 30%
              • household debt-to-disposable-income ratio: 110% in 1999, 127% in 2007, 173.1% in 2021
              • various policy changes like reducing maximum amortization periods, the First-Time Home Buyer Incentive, or the Home Buyers' Plan (a key reason I was able to buy a home), and the introduction of the CMHC itself -- all housing market controls aimed at postponing increasingly infeasible home ownership and/or hedging against growing household debt risk

              The time span I "repurposed" before wasn't meant (by me) to indicate a tipping point of this wealth transfer. Rather I was ballparking that as how far this housing plan could roll back the trend (which is to say not all the way, and arguably the 70s isn't the true beginning either). Saying income has fallen behind inflation may be technically false, yet each new generation is still starting with less while their predecessor's wealth is/was siphoned into passive income for the investors backing mortgages and then buying the houses outright from retirees left with nothing to pass onto their children. Even if income is outpacing inflation, it's still falling short of the rate at which speculators can out-compete new generations for assets.

              Anyway, imperfect a solution as it is, I'm all for this housing initiative because a) regardless we need more housing and especially the type not being provided by the free markets, and b) it'll disrupt the most egregious exploitation of the working class -- the new generations with the least means starting out by paying high rent for the privilege of owning nothing and getting nowhere while the rich pad their war chests to snatch up even more of the finite assets.

              • Ahhh, I see the confusion. Inflation is generally excluded as a measure of inflation (which is super helpful in this context, otherwise you'd be in for a bit of circular reasoning.)

                it's still falling short of the rate at which speculators can out-compete new generations for assets.

                This was always the case. It's not like in the 90s or early 00s, home buyers could magically outbid those with deep pockets.

                I'm not claiming housing is now affordable but nothing has really changed in the fundamentals of capitalism that would explain the rise of housing prices.

                What has happened, imo, is that unsurprisingly, population growth outpaced home starts (poke around the housing start data yourself, it's neat AND more home starts were of the type people didn't intend to live in forever (apartments, which is why there's now an odd glut of small condos in larger cities) AND land near desirable large cities became more scarce (do what you will, hard to increaelse the amount of land) prices rose quickly.

                All this to say, it's easy to blame speculators and the wealthy but it's not a particularly convincing argument as those already existed in large numbers well before housing became unaffordable.

                Anyway, glad we're both for the housing initiative!

                • Aw dang, I was all set to upvote and let lie. But I feel compelled to clarify I do not blame the speculators nor the wealthy (really, I don't), nor do I think the apparent prosperity of the 90s belies there being consistent problems going back even further than that and even just in terms of housing. A poorly engineered structure does not become flawed only as it collapses, and it was never going to end any other way. I see no reason to expect the moment it actually starts to be particularly special or interesting. If it were, I might have believed I could predict it. If I really could, there's be good money in that.

                  Ok so my rant continues for a while and it sounds like I might be preaching to the choir anyway. I'm pretty much doing it for my own benefit of getting these thoughts out at this point -- so no hard feelings if you're done. 😛

                  TLDR takeaway: I concur. Hooray for building more housing -- even if it's an imperfect solution, and even if a deeper problem remains.

    • They are still living in that house instead of renting.

      The only difference is that the house application won't be theirs biggest savings plan.

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