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Saskatoon House Price increase vs. Income Increases

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This chart says it all.  I have seen it in a series of City of Saskatoon presentations but you can read it in this report by the City of Saskatoon.  The bottom line is the key.  Incomes are flat.  House prices are soaring.  The boom isn’t being shared by all.  There is more context in the 2012 Saskatoon Housing Business Plan (and an updated chart)

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 You can compare our household income growth to other cities here (we do quite well) but the problem is that relative to our housing costs, we are not doing well at all.   Take a look at the StatsCan 

 

5 Comments

  1. Carter says:

    What are you proposing as a solution?

  2. Rob Huck says:

    But the chart doesn’t say it all. In fact, it leaves out the most relevant information.

    Increases in housing prices correspond more closely to increases in demand.

    How many more people have moved to the city since 2005?

    And why are they moving here? Because there are increased job and economic opportunities in saskatoon.

    While all change impacts people differently, especially in different socio-economic strata, the net benefits of increased economic activity outweigh the costs.

    Another problem with the graph is that it’s the average house cost, rather than the median. There has been a huge increase in the number of higher-cost houses, which creates a disproportionate increase in the average sale price. That’s not to say the median hasn’t increased tremendously, but it wouldn’t be as much as the above graph indicates.

    Finally, the cost of housing is only one factor in the overall quality of life. For example, Detroit has homes for sale under $100, but no one is exactly clamouring to move there, for many reasons.

  3. Rob Huck says:

    Oh, and the graph doesn’t take into account the proportion of income which is spent on housing. A more informative chart would indicate the change in ratio of housing prices over total (after tax) income.

    I can appreciate what the city is trying to do, and I’m sympathetic to the issue. I just think the chart is misleading and not very informative.

    1. Rob, I agree with what you are saying and there is a more complete story to be told. The Conference Board of Canada has a chart that shows disposable income rising but it is dwarfed by housing prices.

      My point (as it often is around here) is about housing prices and the impact on the working poor and lower middle class but I see your broader point as well.

      When the new neighborhood guides are published, we will be awash in new census data and I promise new and some kick butt graphs.

  4. Sean S. says:

    Generally agree with all points made. What concerns me is the level of debt being taken on my young couples who are immediately buying homes instead of spending a few years renting.

    These families are moving largely into new areas (Hampton, Stonebridge, Blairmore, etc…) with homes largely in the 300K plus range. The average 5% downpayment is $15-20K and a 25 yr mortgage puts monthly payments around $1,300-1,500 (at 3%, which is as low as we will likely ever get). Add in another $500 for utilities/taxes/etc, payment on 1 or 2 cars, and yearly travel (not to mention landscaping costs). I haven’t even touched on those with kids.

    I wonder how many of these families are either barely breaking even and/or accumulating debt month-to-month, given the pressures I’m well aware of in my own families financial situation (which is alot more reserved than many I know). Given all that, I can’t really blame the Fed Gov for clamping down hard on mortgage lending rules. All it will take is either a downturn in the economy in SK/Saskatoon (which is a question of when, not if, in a resource based economy – though we do at least benefit from diversity in our resources) or a correction in our housing market and many of these families will be hard-pressed to keep up with their accumulated debt.

    A similar thing happened in Alberta around 2008, the oil/gas sector slid slightly, house prices declined and suddenly maxed out families where either selling their homes at a lose or racking up significant debt trying to stay afloat.

    Anyhow, not sure if I have any specific point to this rambling, but its what I think of when I see that graph and then take a look around my neighbourhood.

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