Argus Posted September 14, 2014 Report Share Posted September 14, 2014 (edited) The average price of a house in Canada is just over $400,000. The average price of a house in the United states if about $200,000. Given the Americans don't pay any mortgage interest (tax deductible), that makes housing in the US even more affordable than the numbers would first suggest. Why? There's no point talking about the mortgage mess down south. It certainly made a radical reduction in house prices in many jurisdictions, but new houses are being built and sold at half the price they fetch in Canada, and you have to presume they're doing so at a profit. Why? If you can build a new 1500 square foot house across the border for $250k, why does it cost $500k here? I'm not talking about downtown Toronto or Vancouver. Even in Newfoundland and Nova Scotia average house costs are way over the US average. Is land so sparse and hard to find in Newfoundland? It's not in Ottawa, but my house, which is probably worth around $400,000 could be bought for half that fifty miles south of here in New York state. In fact, I saw a real estate show last week on TV which featured a very nice place in Florida on a canal for $130,000. It was bigger and newer than my place. What are the additional housing costs in Canada that aren't faced by US home builders who can construct houses, even in cold areas, and sell them, for a profit, at half what Canadian home builders charge? I don't know if this is market forces at work here as compared to red tape and taxes but where home prices were once 3 times an average salary they're now up to 6. And still rising. Where it was once said people should pay no more than 1/3rd of their income on housing people are often going up closer to 50%. Of course, this locks a lot of Canadians out of the housing market and leaves them in rentals, which in turn spurs the cost of rental apartments, which does nothing good for the poor. I'm not going to do a scan for all trades, but just checking carpenters and their salaries doesn't seem to show Canada is all that much higher than in places like California, New York, Wyoming and Florida. The cost of materials should be roughly the same. So that leaves land prices. Why would land prices be so much higher in Canada than they are next door? God knows we have a lot of it. Anyone have any ideas on this, or what, if anything, can/should be done about it? Edited September 14, 2014 by Argus Quote Link to comment Share on other sites More sharing options...
jacee Posted September 14, 2014 Report Share Posted September 14, 2014 insulation? central heating? I don't know. It is odd. Quote Link to comment Share on other sites More sharing options...
eyeball Posted September 14, 2014 Report Share Posted September 14, 2014 Why would land prices be so much higher in Canada than they are next door? God knows we have a lot of it. Anyone have any ideas on this, or what, if anything, can/should be done about it? Maybe it's like certain wines where perception and subjectivity are as big a factor as anything. Our land might just simply be nicer in people's minds. I think my land might have the added value of being located in a region that may be coming up a climate change winner. It's in a Goldilocks zone of isolation and proximity to big cities and it's a beautiful place, something that is reinforced daily by comments of visitor's I deal with. Rental income is pretty good too. Just about everyone in the sticks hereabouts is renting out the 'back 40'. Quote Link to comment Share on other sites More sharing options...
Bob Macadoo Posted September 14, 2014 Report Share Posted September 14, 2014 I don't know. It is odd.I don't believe so.1) The majority of Cdns live in greater metro areas as opposed to generally distributed Americans. Metro areas are going to be by nature more expensive. This will dictate market forces in rural areas. 2) Americans have volumetric competitive advantage. Go to Home Depot in TO and Halifax......There is marked difference in the price of material.....now look at HD in Atlanta. 3) Americans receive and apply credit more liberally with respect to construction especially on the small business front....this spurns distribution to supply of qualified contractors. 4) Housing market fluctuations down south trample bubbles more quickly than here. Our market inflencers (gov't, banks, brokers, etc.) do their damnedness to grow that bubble because they want to avoid any pain associated with a deflation let alone a pop. Quote Link to comment Share on other sites More sharing options...
Argus Posted September 14, 2014 Author Report Share Posted September 14, 2014 I don't believe so. 1) The majority of Cdns live in greater metro areas as opposed to generally distributed Americans. Metro areas are going to be by nature more expensive. This will dictate market forces in rural areas. I can buy a place in New York or LA for no more than the cost in Ottawa, and a lot less than the cost in Toronto 2) Americans have volumetric competitive advantage. Go to Home Depot in TO and Halifax......There is marked difference in the price of material.....now look at HD in Atlanta. I don't buy this. Thirty four million people is plenty. During the recent fuss about higher prices in local Wal-Marts and Targets than in their American counterparts what it all boiled down to is they charge more here BECAUSE THEY CAN, not because of inherently higher supply costs. 3) Americans receive and apply credit more liberally with respect to construction especially on the small business front....this spurns distribution to supply of qualified contractors. I haven't seen much evidence of this. All I've seen is complaints about how impossible it is to get credit down south for small business and would-be homeowners. In any case, given how low credit costs have been the last five years I don't think this can be the reason. 4) Housing market fluctuations down south trample bubbles more quickly than here. Our market inflencers (gov't, banks, brokers, etc.) do their damnedness to grow that bubble because they want to avoid any pain associated with a deflation let alone a pop. I have to assume their banks, brokers and governments try to do the same. You might be correct that ours have more influence on a smaller, more centralized market but even so that doesn't account for the enormous difference in the cost of land, never mind the cost of construction. I can buy an actual house in Florida, a nice one for less than the cost of the empty plot here, and I don't mean 'here' in Ottawa, but empty land ten or twenty or thirty minutes to the south or east or west. Quote Link to comment Share on other sites More sharing options...
Shady Posted September 14, 2014 Report Share Posted September 14, 2014 How is the average house cost $400,000? What is it minus Toronto, Vancouver and Montreal? Quote Link to comment Share on other sites More sharing options...
bush_cheney2004 Posted September 14, 2014 Report Share Posted September 14, 2014 Canada is not the U.S. Housing is cheaper in Mexico too....so what ? Quote Link to comment Share on other sites More sharing options...
Argus Posted September 14, 2014 Author Report Share Posted September 14, 2014 Canada is not the U.S. Housing is cheaper in Mexico too....so what ? Housing is cheaper in Mexico because Mexico is a third world country. The US is not a third world country and it's economic health is not dissimilar to Canada's. Quote Link to comment Share on other sites More sharing options...
On Guard for Thee Posted September 14, 2014 Report Share Posted September 14, 2014 I'd say BM's comment with regard to volume is a big piece of the puzzle. As he points out, check the price of a 2x4 in a HD here and then down south. They probably sell 10 to our one and they only have to ship them a portion of the way to market. Quote Link to comment Share on other sites More sharing options...
Argus Posted September 14, 2014 Author Report Share Posted September 14, 2014 How is the average house cost $400,000? What is it minus Toronto, Vancouver and Montreal? The average cost in Newfoundland is almost $300,000 if that's a clue, that's quite a bit higher than it is in the American northeast, which is the most expensive part of the US to buy a house. Saskatchewan is almost the same . http://crea.ca/content/national-average-price-map Quote Link to comment Share on other sites More sharing options...
Argus Posted September 14, 2014 Author Report Share Posted September 14, 2014 I'd say BM's comment with regard to volume is a big piece of the puzzle. As he points out, check the price of a 2x4 in a HD here and then down south. They probably sell 10 to our one and they only have to ship them a portion of the way to market. Most of those 2x4s originate right here, you know. We ship wood to them, not the reverse. HD doesn't charge higher prices because of higher costs. It charges higher prices because it figures Canadians have a higher disposable income, are used to paying high prices, and they can get away with it. Quote Link to comment Share on other sites More sharing options...
bush_cheney2004 Posted September 14, 2014 Report Share Posted September 14, 2014 Housing is cheaper in Mexico because Mexico is a third world country. The US is not a third world country and it's economic health is not dissimilar to Canada's. Lots of things are cheaper in the U.S. compared to Canada...not just housing. Get over it....they are different countries with different market dynamics, capitalization, tax policies, population, weather, political system, infrastructure, federal housing support systems, etc., etc. Quote Link to comment Share on other sites More sharing options...
cybercoma Posted September 14, 2014 Report Share Posted September 14, 2014 Lots of things are cheaper in the U.S. compared to Canada...not just housing. Get over it....they are different countries with different market dynamics, capitalization, tax policies, population, weather, political system, infrastructure, federal housing support systems, etc., etc. "Get over it" is about all you can muster? Thanks for your invaluable contribution. Quote Link to comment Share on other sites More sharing options...
bush_cheney2004 Posted September 14, 2014 Report Share Posted September 14, 2014 Most of those 2x4s originate right here, you know. I doubt that....the U.S. produces more board feet of lumber than Canada each year. Quote Link to comment Share on other sites More sharing options...
bush_cheney2004 Posted September 14, 2014 Report Share Posted September 14, 2014 "Get over it" is about all you can muster? Thanks for your invaluable contribution. Yes...one shouldn't go through life constantly whining about what things cost in another country. Where's the love for Canada and paying for the "good life" compared to that "dung heap" (your words) to the south. Krikey...what a fickle crowd. Quote Link to comment Share on other sites More sharing options...
On Guard for Thee Posted September 14, 2014 Report Share Posted September 14, 2014 And you keep losing those softwood lumber issues. Quote Link to comment Share on other sites More sharing options...
Argus Posted September 14, 2014 Author Report Share Posted September 14, 2014 I doubt that....the U.S. produces more board feet of lumber than Canada each year. And uses it all, and imports more from Canada, lots more. Quote Link to comment Share on other sites More sharing options...
bush_cheney2004 Posted September 14, 2014 Report Share Posted September 14, 2014 And uses it all, and imports more from Canada, lots more. No, as the U.S. also exports lumber products, particularly hardwoods. Canadian softwood imports are less than domestic U.S. production. Average housing costs in Canada will always be higher than costs in the U.S. if only because of basic math. Quote Link to comment Share on other sites More sharing options...
Peter F Posted September 14, 2014 Report Share Posted September 14, 2014 What BC says...very true. All sorts of things must be taken into consideration. bush_cheney2004, on 14 Sept 2014 - 4:26 PM, said: Lots of things are cheaper in the U.S. compared to Canada...not just housing. Get over it....they are different countries with different market dynamics, capitalization, tax policies, population, weather, political system, infrastructure, federal housing support systems, etc., etc. And one other: Maximizing profit. Constructors have found that the consumer is obviously willing to pay such a 'high' price. Would anyone excpect the constructors to seek minimum profit? Quote Link to comment Share on other sites More sharing options...
overthere Posted September 15, 2014 Report Share Posted September 15, 2014 Of course, this locks a lot of Canadians out of the housing market and leaves them in rentals, which in turn spurs the cost of rental apartments, which does nothing good for the poor. No, it does not leave a lot of them in rentals. About 69% of Canadians own their homes, about 65% in US, 67% in UK and so on. Most of Western Yurp is within a few % points too. Quote Link to comment Share on other sites More sharing options...
cybercoma Posted September 15, 2014 Report Share Posted September 15, 2014 Yes...one shouldn't go through life constantly whining about what things cost in another country. Where's the love for Canada and paying for the "good life" compared to that "dung heap" (your words) to the south. Krikey...what a fickle crowd. Right. The concern is about what things cost in another country. You couldn't miss the point more if you tried. Not that you're ever really interested in the actual point of any of the threads, unless they have to do with military hardware or weapons porn. Quote Link to comment Share on other sites More sharing options...
bush_cheney2004 Posted September 15, 2014 Report Share Posted September 15, 2014 As usual, you don't get the point because you are too busy hating on 'merica ond 'merkins. No matter...I found a Canadian who does a very good job explaining the same basic math that escapes you. He/She even opines that the resources to search for housing are better in the USA. http://www.fabulouslybroke.com/2011/05/canada-vs-u-s-comparing-the-cost-of-homes-by-city-canada-seems-to-be-100-more-expensive-on-the-whole/ TO WRAP UP Canada is not that much larger than the States The States is 10 times more dense in population compared to Canada Canada has less human-friendly, livable land than the States (think polar bears and empty tracts of land) The States has more choice in urban cities — you have at least 25 places to choose from! Canada has 5. Canadian houses with my unscientific comparison above, cost 2 times more than in a comparable American city Quote Link to comment Share on other sites More sharing options...
Bob Macadoo Posted September 15, 2014 Report Share Posted September 15, 2014 The average cost in Newfoundland is almost $300,000 if that's a clue, that's quite a bit higher than it is in the American northeast, which is the most expensive part of the US to buy a house. Saskatchewan is almost the same . http://crea.ca/content/national-average-price-map Nice cherrypick. Prices in St. John's have skyrocketed due to Oil. More demand than supply. Let's check oh lets say NB with nonresource economy ballooning the market....hmmmm $170k...Halifax.... $280k...interesting $400k. Quote Link to comment Share on other sites More sharing options...
Bob Macadoo Posted September 15, 2014 Report Share Posted September 15, 2014 I can buy a place in New York or LA for no more than the cost in Ottawa, and a lot less than the cost in TorontoBullshyte. You got $1.5M for NY?http://www.trulia.com/home_prices/New_York/New_York-heat_map/ I don't buy this. Thirty four million people is plenty.Not when it consists primarily (80%) in (3) markets hundreds of miles apart.All I've seen is complaints about how impossible it is to get credit down south for small business and would-be homeowners. In any case, given how low credit costs have been the last five years I don't think this can be the reason.It's not the cost of credit but its volume and application of use. When everyone down south is hanging out a shingle that means plenty of remodeling/building which drives costs/supply. Quote Link to comment Share on other sites More sharing options...
Smallc Posted September 15, 2014 Report Share Posted September 15, 2014 If there are 5 urban areas in Canada then there are 6 by default. Quote Link to comment Share on other sites More sharing options...
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