Canada's economic future

[Pat Coghlan]

People had better enjoy their big houses now, because when they go to sell them there won't be a next generation with the numbers or incomes to purchase them.

Pat, you are a pessimist. You believe that the future will be bad and you believe anyone who tells you what you want to believe.

Lou Dobbs knows his market and he appeals to people like you.

Pat, it's wise advise to ignore people who pander to your prejudices.

What prejudices? Any opinion I hold is a result of having analyzed the facts.

In this case, Lou Dobbs has the facts right. Those in power look mostly after their own interests, rather than the common interests.

Now, back to this thread.

----

This thread lacks simple common sense, and some basic data.

First, the common sense. When a woman (excuse my sexism) chooses to work outside the home, society gains what she can produce extra - but it loses the efforts that she previously devoted to housework. Is society better off? Well, I suppose so because the woman freely chose to enter paid employment (and get taxed for her efforts).

IOW, this discussion above about double income families "driving up the price of housing" is entirely beside the point. Would you say the same if the women entered the paid labour force to become construction labourers to build new houses? (And in effect, that's what happened.)

Sure, you'd have higher family incomes, but you'd also have more houses. Overall, it's a wash. Now, if the women prefer paid employment to staying at home, then there must be a net gain to society.

Well, as I said earlier. In the early 80's a 3 bdrm house I bought cost about twice a recent graduate's salary. Today it's about 4 times.

The buying power of the 2007 new grad's salary is much less than the 1980 grad (relative to the price of a house) so without two incomes (now the norm) this could not have happened.

Second, the data. The average price of a house in Toronto in 1953 was around $11,500 (in 1953 dollars). The average price of a house in Toronto in 2006 was around $350,000 (in 2006 dollars).

In 1953, minimum weekly wage in Ontario was around $19 or 40 cents/hour (in 1953 dollars). In 2006, minimum wage was around $7.25 per hour (in 2006 dollars).

In 1953, a starting elementary school teacher would earn around $1200 annually (in 1953 dollars) whereas a starting teacher now would earn around $40,000 annually (in 2006 dollars).

Do the math. You'll realize that a single person of similar status has more likelihood to buy a house in Toronto now than in 1953.

Where did you get these figures?

Are you suggesting that workers have more buying power today to purchase a house, based on their individual incomes? I would disagree.

Also, remember that in the 1960s, if your gross earnings were $300/month, your net pay was about $270 (10% deductions, vs 30%+ today).

---

A few last points to mention. In 1953, a one week holiday in Cancun was impossible because 747 jets didn't exist - nor did Cancun. In 1953, people died in car accidents because there were no air bags. And in 1953, a B&W TV cost about $100 (in 1953 dollars). You could get a colour Admiral for $1175.

Again, in the 1960s, a family with one income could purchase a home, a car, and sometimes even a cottage. Not possible today.

Bottom line: while there would have still been inflation if most families had remained single-income, the price of housing wouldn't have gone as far out of reach as it has...unless you don't consider $1M for a 2500 sq. ft. house in Calgary out-of-reach.

[geoffrey]

Job grown in the west is mainly low paying and part time jobs. Immigrants many of the time do not like to work these jobs.

You have no idea what your talking about. Have you ever worked out here?

The average income is much higher here than in Ontario, and full time employment far outpaces Ontario as well.

So what up?

[mikedavid00]

Job grown in the west is mainly low paying and part time jobs. Immigrants many of the time do not like to work these jobs.

You have no idea what your talking about. Have you ever worked out here?

The average income is much higher here than in Ontario, and full time employment far outpaces Ontario as well.

So what up?

I already cited stats proving that I am correct. You just ignored them. I also showed post after post of immigrants in Alberta claiming that Albertan's were racist because they simply couldn't get hired.

Were there in 1999? They were hiring people over the phone and flying them out to work white collar jobs with stock options if you just claimed you knew how to work a computer.

The same is *not* happenning in Alberta.

[geoffrey]

Were there in 1999? They were hiring people over the phone and flying them out to work white collar jobs with stock options if you just claimed you knew how to work a computer.

I was in Ontario in 1999. That was the year before my parents decided to move to Alberta for increased opportunity. I absolutely know they made the right choice. They went from average middle class in Ontario to being quite successful out here. I myself have had absolutely absurd opportunity in Alberta. My father, by the way, was in an IT related position when he left Ontario and for the first few years in Alberta.

Right now we are hiring people over the phone and paying full relocation for engineers and financial professionals.

The part-time nonsense is just that. I know of no company that is paying below national averages or giving people part-time work. Companies will do anything for you. I'm in my early twenties, not even fully done my degree and I make give or take twice the national average salary. I did that on my own, no connections used. Applied for a job out of the newspaper and landed it and progressed. That's the Alberta of today. Anyone can have whatever they want if they want to work for it.

Not this underpaid part-time nonsense. Ya, I'm sure some immigrants have issues here. It's not the most tolerant place in Canada. The particular company I work for though is quite good, I'm a minority person in my department as a white male. It's great. Interesting to have such a variety of viewpoints to solve problems.

You've never posted statistics that were verifiable. I'm not just talking your word for it because you say so.

www.statscan.ca

There you can find how much more Albertans make, how many more are full time employed and all that other good stuff so you can stop your immigrant blame game and realise that you need to be responsibile for your own unwillingness to relocate. You want to stay in Ontario, that's fine, but don't complain when that's not where the money of today is.

There is no low paying, part-time crap out here. If there is, it's because someone picked a ridiculous skill set.

Edited July 20, 2007 by geoffrey

[August1991]

Well, as I said earlier. In the early 80's a 3 bdrm house I bought cost about twice a recent graduate's salary. Today it's about 4 times.

The buying power of the 2007 new grad's salary is much less than the 1980 grad (relative to the price of a house) so without two incomes (now the norm) this could not have happened.

You said it, Pat. But you provide no evidence. I provided statistics (and I'll provide links if you want.)

The simple fact is that ordinary Canadians are on average better off now than they were in the 1980s. And in the 1980s, they were better off than in the 1950s. People work fewer hours to get more of what they want.

We can argue statistics if you want.

But Pat - statistics aside - one reason I believe ordinary Canadians are better off now is because they can trade more easily and freely with foreigners. Canadians can travel more and phone more easily abroad. By restricting what a Canadian can do, by limiting a Canadian's freedom to choose, do you really believe that you make Canada a richer country?

Why would you stop a Canadian dealing with a Chinese or an Indian and force the Canadian to deal with another Canadian?

I'm in my early twenties, not even fully done my degree and I make give or take twice the national average salary. I did that on my own, no connections used.

Geoffrey, like much of hinterland Canada, Alberta is a good-time, bad-time resource economy. You apparently have seen the good times.

In the past 10 years, the price of Brent Crude has gone from about $10 a barrel to around $70. Do the math. Is your success due to your skills or outside factors?

Edited July 20, 2007 by August1991

[Pat Coghlan]

Well, as I said earlier. In the early 80's a 3 bdrm house I bought cost about twice a recent graduate's salary. Today it's about 4 times.

The buying power of the 2007 new grad's salary is much less than the 1980 grad (relative to the price of a house) so without two incomes (now the norm) this could not have happened.

You said it, Pat. But you provide no evidence. I provided statistics (and I'll provide links if you want.)

I gave you the evidence in an earlier post.

In the mid-80's, I was making $33K and bought a new 3 bdrm house for $71K. Today, a similar job (starting programmer) earns about $50K, and the same 3 bdrm house costs about $250K.

Please explain how the houses are more affordable, if that's your position.

Programmers didn't exist in the 50s, so I can't make a relative comparison, and I had a difficult time trying to find out what an industry job paid in the 60s so I could compare it to the average price of a house which, in Ottawa, was around $12K.

[jdobbin]

I gave you the evidence in an earlier post.

In the mid-80's, I was making $33K and bought a new 3 bdrm house for $71K. Today, a similar job (starting programmer) earns about $50K, and the same 3 bdrm house costs about $250K.

Please explain how the houses are more affordable, if that's your position.

Programmers didn't exist in the 50s, so I can't make a relative comparison, and I had a difficult time trying to find out what an industry job paid in the 60s so I could compare it to the average price of a house which, in Ottawa, was around $12K.

Is that three bedroom house the same size as the one in the 1980s was? When people talk about affordability, they often don't take into account that house sizes are increasing all the time. Families in the 1950s had under 1000 sq. feet. The average size house in the 1980s was bigger. In 2007, the sizes of houses (as has been reported many times in the media) are often double what they were in the 1950s. In many cases they are triple and quadruple the size of a 1950s house.

Lastly, are these house prices a symptom of a bubble? We are seeing house prices in the U.S. dropping because of a bubble.

[August1991]

I gave you the evidence in an earlier post.

In the mid-80's, I was making $33K and bought a new 3 bdrm house for $71K. Today, a similar job (starting programmer) earns about $50K, and the same 3 bdrm house costs about $250K.

As another poster once said, anecdote is not the plural of data.

In general, it now takes fewer hours of work to obtain the things people want.

This fact largely explains why families have two incomes. It makes sense to work outside the home now because a person can receive so much. In the 1950s, it made more sense to work at home.

[Riverwind]

In general, it now takes fewer hours of work to obtain the things people want.

The data backs up both arguments. Most things have become more affordable in the last 20-40 years (i.e. food, applicances, air travel, clothing, etc). However, housing has become much less affordable. Unfortunately, housing the is the largest cost for most people and has the biggest impact on their percieved standard of living. This means most people feel they are much worse off in the past even though they can afford goods that would have been considered incredible luxeries in the past (fresh fruit in the winter, annual vacations, etc).

[Pat Coghlan]

Is that three bedroom house the same size as the one in the 1980s was? When people talk about affordability, they often don't take into account that house sizes are increasing all the time. Families in the 1950s had under 1000 sq. feet. The average size house in the 1980s was bigger. In 2007, the sizes of houses (as has been reported many times in the media) are often double what they were in the 1950s. In many cases they are triple and quadruple the size of a 1950s house.

Lastly, are these house prices a symptom of a bubble? We are seeing house prices in the U.S. dropping because of a bubble.

I'm talking my original house that I paid $71K for. It now sells for about $250K - perhaps more.

The price of gold is a very good indicator of how prices have changed, i.e., if we take a look at what things cost or what people earned in terms of ounces of gold, I think we can get a better idea.

In Ottawa, the grand prize at the end of the August exhibition was a 1,000 oz. bar of gold ($35,000). Today, that prize would be worth $700K.

[jdobbin]

I'm talking my original house that I paid $71K for. It now sells for about $250K - perhaps more.

The price of gold is a very good indicator of how prices have changed, i.e., if we take a look at what things cost or what people earned in terms of ounces of gold, I think we can get a better idea.

In Ottawa, the grand prize at the end of the August exhibition was a 1,000 oz. bar of gold ($35,000). Today, that prize would be worth $700K.

Isn't housing experiencing unprecedented growth? So much so that some markets are due for a correction? Look at the U.S. prices are dropping quite a bit right now.

As for gold, I can remember when it languished for years in price. It could easily slump again as well.

[Pat Coghlan]

Isn't housing experiencing unprecedented growth? So much so that some markets are due for a correction? Look at the U.S. prices are dropping quite a bit right now.

Well, isn't that my point, that the price has been driven up by so many dual-income families?

Most people are already "in" the market, and can simply "trade" houses at these high prices. Problem is, when they want to sell to newcomers to the market (new grads etc.), the prices are unaffordable. This is what happened to markets like San Francisco before 2000. Prices should have crashed then, but the US gov't dropped interest rates to 1% and lending institutions started giving $500K mortgages to anyone that had a pulse.

Things have started to turn around, and will continue to do so until something like hyperinflation hits.

[jdobbin]

Well, isn't that my point, that the price has been driven up by so many dual-income families?

Most people are already "in" the market, and can simply "trade" houses at these high prices. Problem is, when they want to sell to newcomers to the market (new grads etc.), the prices are unaffordable. This is what happened to markets like San Francisco before 2000. Prices should have crashed then, but the US gov't dropped interest rates to 1% and lending institutions started giving $500K mortgages to anyone that had a pulse.

Things have started to turn around, and will continue to do so until something like hyperinflation hits.

So price falls in the U.S. are also due to dual income families or that the market has been overbuilt? Or that mortgage rates have risen?

[Jerry J. Fortin]

Real estate is subject more than anything else to supply and demand. It is a good economic barometer as well. The real issue that needs to be discussed here isn't simply real estate, it is not standards of living either. The issue that needs to be discussed is nationhood. All the gains we have realized are not the results of our labours but the instead the results of trade. Our labour alone is not able to procure cheaply made foreign products, those products need to get here in order for us to purchase them. This world is at a crossroads of politics and economies. It is time to rethink both.

[Harry Nads]

Real estate is subject more than anything else to supply and demand. It is a good economic barometer as well. The real issue that needs to be discussed here isn't simply real estate, it is not standards of living either. The issue that needs to be discussed is nationhood.

Here here! I thought I was the only who was disgusted by all the "me me me" comments. If it's good for Canada it's good for you. The problem with this country is that people are so damn selfish. They want that big HD 50" plasma TV but they whine about the price. They want to live the good life but they want someone else to pay. To those people, I suggest they move to communist Cuba.

This is Canada. If you want something nice you will pay for it.

[August1991]

Real estate is subject more than anything else to supply and demand. It is a good economic barometer as well.

Supply and demand?

The last time I looked, they're not making any more land. Land values are a good barometer of general economic activity for this reason. Keep in mind that every time someone pays an outrageous price for a property, someone else is pocketing the receipts.

It is in this way that many of the benefits of living in a civilized society become very tangible. For example, if a city passes stringent anti-pollution laws, imposing extra costs on industrial plants, the cleaner atmosphere will show up in higher property values. The government has merely transferred value from industrial plant owners to property owners.

The real issue that needs to be discussed here isn't simply real estate, it is not standards of living either. The issue that needs to be discussed is nationhood. All the gains we have realized are not the results of our labours but the instead the results of trade. Our labour alone is not able to procure cheaply made foreign products, those products need to get here in order for us to purchase them. This world is at a crossroads of politics and economies. It is time to rethink both.

When someone starts mixing words like "nationhood" with economic questions, I usually keep a sharp eye on my wallet. Invariably, the person is developing a scheme for their own benefit at my expense but presented in altruistic form.

All the gains we have realized are the fruit of those who have come before us. They built the roads, taught children how to think and invented new ways of seeing the universe. They discovered a better ligt bulb.

I have a new car now and I was driving silently on Montreal's crappy roads and I looked at the GPS while listening to an MP3 file. Somebody (many people) had to figure out how to do all that. I get the benefits of this technology for a negligible cost to myself.

We are thieves of the past and the future will steal from us.

Trade? Trade is just another word for co-operation. Trade with market prices is a sophisticated form of co-operation.

I'd agree that we in Canada benefit from the past's largesse in part because we trade with market prices. We are a net contributor to the world's collective wealth because we have created a civilized society where markets can function.

Edited July 26, 2007 by August1991

[mikedavid00]

Here here! I thought I was the only who was disgusted by all the "me me me" comments. If it's good for Canada it's good for you. The problem with this country is that people are so damn selfish. They want that big HD 50" plasma TV but they whine about the price. They want to live the good life but they want someone else to pay. To those people, I suggest they move to communist Cuba.

This is Canada. If you want something nice you will pay for it.

'Here here' is so 1998.

Canadians are not selefish - wel let the whole world come here. Even if they have HIV. I feel that we are the least selfish poeple in the world. We take pay cuts to ensure that someone from another country can get his share of Canada. We just had vietnamese in TOronto give money to pay for a childs surgery here in the sick kids hospital when there are current waiting lists to treat our own.

THe CBC and our gov't welcomes and congratulates this.

I think we are more than giving. We even protect terrorists.. give money to mosques and hindu temples, come on man. Canada is very giving unlike any other country i know.

[ScottSA]

We are thieves of the past and the future will steal from us.

Very excellent. Is that an original?

[guyser]

Even if they have HIV.

Wrong .

If they dont pass the test, they dont get in. Showed the Immigration Canada website the last time you said this.

[jbg]

Ok.. someone here please tell me what productivity is? 'Productivity' is reminding me a lot of terms like 'baby boomers' and 'global warming'.

Dollars of GDP produced per man hour of labor.

Essentially, a society's productivity measures how much of a life-style it can afford.

[Pat Coghlan]

Well, isn't that my point, that the price has been driven up by so many dual-income families?

Most people are already "in" the market, and can simply "trade" houses at these high prices. Problem is, when they want to sell to newcomers to the market (new grads etc.), the prices are unaffordable. This is what happened to markets like San Francisco before 2000. Prices should have crashed then, but the US gov't dropped interest rates to 1% and lending institutions started giving $500K mortgages to anyone that had a pulse.

Things have started to turn around, and will continue to do so until something like hyperinflation hits.

So price falls in the U.S. are also due to dual income families or that the market has been overbuilt? Or that mortgage rates have risen?

Well, dual-income families certainly helped prices rise to the high levels from which they are now falling.

Care to guess what's going to happen to those $1M homes in Calgary owned by plain old middle class folk?

[jdobbin]

Well, dual-income families certainly helped prices rise to the high levels from which they are now falling.

Care to guess what's going to happen to those $1M homes in Calgary owned by plain old middle class folk?

House prices didn't rise swiftly when the majority of people were single income?

[jbg]

House prices didn't rise swiftly when the majority of people were single income?

Not as fast. They really started jumping in late 1970's when most women went to work.

[jdobbin]

Not as fast. They really started jumping in late 1970's when most women went to work.

You'd have to show me some numbers that link the two things.

If dual incomes are the source of houses rising in price, then what is the source of their falling in price?

It is all a rather confusing. House prices seem to be affected by supply and demand. Lower interest rates have brought many people into the market and now we are seeing bidding wars for houses.

This has stalled in the U.S. and the market has retreated. Why? Because the supply is great and the demand has lowered. Has there been a change in how people are dual income relationships?

[ScottSA]

Not as fast. They really started jumping in late 1970's when most women went to work.

You'd have to show me some numbers that link the two things.

If dual incomes are the source of houses rising in price, then what is the source of their falling in price?

It is all a rather confusing. House prices seem to be affected by supply and demand. Lower interest rates have brought many people into the market and now we are seeing bidding wars for houses.

This has stalled in the U.S. and the market has retreated. Why? Because the supply is great and the demand has lowered. Has there been a change in how people are dual income relationships?

It's obviously not a uni-causal relationship, but to argue that dual incomes don't play a part in driving any market common to both income earners would be ludicrous. The only way you could argue otherwise is to claim that each newly working female didn't increase the family income but merely took some of her husband's from a finite pot.