It’s an interesting enough infographic, but leads to several questions:
– What would the inflation-adjusted graph have looked like 10 years ago? What about 40? (Hypothesis: the average member of the generation just starting their careers has never been able to afford the average home in larger cities.)
– What’s the definition of a “home.” Does it mean Single Family House? The ideal of everyone owning a standalone house that’s dominated housing discussions since at least the second world war was always an unsustainable model that eventually has to transition into a broader range of housing options.
– Are we comparing family-unit-income to cost-of-home, or individual income to cost of home. If the units aren’t matched up (expecting one person to pay the entire cost of a home inhabited by a whole family) then of course things will look unaffordable.
End result: I feel like there’s a lot of hand-wringing about house prices. But most of these cities are still growing, and that’s what allows house prices to continue to climb.
I think the definition of ‘home’ is largely unchanged – albeit the size of the typically constructed home is now larger.
Why does ‘a growing city allow house prices to climb’? A growing city should be growing along with its population, in which the supply/demand ratio is largely stationary. There is nothing inherent about growth that causes prices to rise beyond incomes (and looking at 1991-2001 they basically didn’t). Without additional funding, the only thing that should allow people to pay more is increased income/funding. (foreign money [external to local wage … not distinguishing how far it is foreign] and an increasingly indebted society are really the only reasons that the price rise has been ‘allowable’, because wage income does not cover the change).
There are certainly other sources for similar data. All seem to tell similar story.
Neil wrote: “What would the inflation-adjusted graph have looked like 10 years ago? What about 40? (Hypothesis: the average member of the generation just starting their careers has never been able to afford the average home in larger cities.)”
In 1978, at the tender age of 23 and less than three years out of BCIT, I bought a modest house in southeast Vancouver in for about $50,000. It was easily achievable on my ~$15,000 disposable income despite 8.5% interest rates (which went as high as 18.5% within the next 5 years). I have several friends who fared similarly, so I disagree with your hypothesis.
18-34 is too wide an age gap, IMO. What 18 year old who isn’t filthy rich should be able to by any house, anyway? Now if the cohort was, say, 28-39, I’d be more interested, as that includes the bulk of the family-forming members of our late-blooming society.