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>This means that my family's wealth has increased by $75,000 per year just from owning our home. That's more than the median income in Canada! I live in Toront

>This means that my family's wealth has increased by $75,000 per year just from owning our home. That's more than the median income in Canada! I live in Toronto as well, and did penny pinch from the time I graduated (2016) to buy to buy my 1st condo here in 2020. I keep hearing statements like these, but if we're being honest unless this was an investment property, a 2nd home or you were moving away to a different city altogether, money is only made on paper. While the condo price has gone up, so has the prices of all the other houses. If you were to sell your condo to realize your gains, the next property you buy has gone up proportionally as well.

epups 3y ago
Ok, but people who did not buy a home ten years ago still have to compete in the same housing market, and they didn't earn an additional $75,000 every year from their labor.
- parthdesai 3y ago
  First, I know it fully well how bad the housing market here is. Second, that's my point, unless it's an investment property or if you're selling and leaving the city altogether, you haven't actually earned $75,000/year.
  - epups 3y ago
    > Second, that's my point, unless it's an investment property or if you're selling and leaving the city altogether, you haven't actually earned $75,000/year. Yes, you have. You can take loans against your property value, for example. But even if you sell and put the money right back into another inflated asset, you still actually earned it.
    - parthdesai 3y ago
      Sure, you can take out HELOC against it, and but you're playing a very dangerous game when interests do rise. That has literally been happening right now.
      - medvezhenok 3y ago
        Yes - the point is, by staying in your house you are now consuming more housing than you were before, even though it’s the same exact house. The wealth is quite real - it just doesn’t feel that way since the experience of it doesn’t change
  - stanski 3y ago
    He has, that's the point. He has an extra $75,000 per year that can go into a new home, than those who didn't have a home to sell.
  - willis936 3y ago
    Nothing about these gains are imaginary. Imagine this person rented the entire time instead of buying. They did buy, so let's imagine they decided to sell today and rent instead. How did they just convert those imaginary gains into real ones?
    - parthdesai 3y ago
      Because the rents have gone up equally in the city? I rented a 1 bedroom condo back in 2017 for $1700/month. The same unit is around $2600/month now. So the price to either rent or purchase the same unit in the city has gone up significantly regardless.
      - willis936 3y ago
        Okay but they'd be paying the higher rate regardless. On the hypothetical "rent the whole time" track they have much less money than the "bought ten years ago" track they actually took. In both cases housing costs more, but in the latter they have hundreds of thousands of dollars more in easily liquified assets.
      - medvezhenok 3y ago
        You’re still missing the point. The gains are real - you not willing to give up your house to realize them) or insisting that you need another house in exchange) doesn’t make them not real. Yes, every other homeowner is sitting on the same gains, so relative to them, it feels like nothing has changed. But relative to the non-owners, you have been given a free handout of wealth. Which you are « consuming » by staying in the same house you were in before. If the rent has gone up, then your house you live in is now producing 2600 dollars of value per month rather than 1700 (even though it feels like nothing has changed to you)
    - vintermann 3y ago
      Exactly. You need a place to live, and other places to live have become more expensive too, but you own more of the place you live thanks to appreciation. You don't have to sell it either to realize the gains, you can borrow against it to make more money for instance, opportunities they certainly wouldn't have had without the appreciation.
  - dotnet00 3y ago
    You have gotten $75k/year though. Take two people X and Y, both have $500k in the bank. X buys a house with it, Y sticks to renting. A few years later, they want to move to another place with the same costs. X's house now sells for $1M and he is able to buy a new place for the same money, thus his new house effectively only cost him the $500k he had spent years ago. Y, having not bought a house previously, now has to pay $1M, which he does not have.
epistasis 3y ago
Let's be clear: none of the condo or homeowners "deserve" these economic gains, they are merely a wall that is raised ever higher to ensure that new entrants to the country are forced to pay their wages to existing homeowners' valuations. Which is what makes complaints that it somehow doesn't benefit homeowners all the more outrageous: saying that "sure I'm on the other side of this wall, but I can only use my wealth to stay in this side of the wall" minimizes an absolutely huge unfair advantage you have over people unlucky enough to be born after you or not have wealthy parents.
- junofan 3y ago
  Also (in general) I don’t think most people would be so sanguine if their condo lost $75k/yr over 8 years.
  - neltnerb 3y ago
    Not to even get into how weird it is that something that is literally in worse condition at the end than the beginning, just like a car, increases in value instead of decreasing. And even more that this is the assumption, despite it being based entirely on demand and not at all on quality.
  - throw__away7391 3y ago
    This is the scary bit for me. It doesn't take much imagination to speculate that homes are possibly dramatically overvalued at present and current prices are unsustainable. This can't end well.
    - psunavy03 3y ago
      The only time home prices collapsed was when the mortgages underlying them were shown to be funny money. This is largely not the case right now, at least in the US. I can't speak for Canada, but the US largely has a supply problem which can't keep up with demand.
  - smsm42 3y ago
    My house lost about 60-70k from the top one of the years (I suck at timing the market). I couldn't care less - I'm not going to sell it anytime soon, and this price is imaginary anyway, and the imaginary price recovered half of it since then, and I still have no idea how much it would be priced when I am going to sell - but I'll be worrying about it then, no point in doing it now. Of course, if that happened every year for 8 years, that would probably be weird, but that would also mean I could buy houses with my pocket change by the end of it.
smsm42 3y ago
Are there cheaper places in Canada? In the US, if you can work remotely, you can get better and bigger house 2x-3x cheaper than, say, around the Silicon Valley or any similarly priced cities, and still earn hi-tech salary. Of course, you need a remote-friendly job (which may cut off some opportunities) and you need to agree to live in a place that is not the first destination for every fashionable band out there, but it's possible.
- hylaride 3y ago
  Historically, the maritimes (Atlantic) provinces and Manitoba and Saskatchewan were relatively dirt cheap, but their home values have skyrocketed since covid and WFH, especially in Nova Scotia.
- Tiktaalik 3y ago
  Yes this is possible but can come with significant challenges. Seems like the biggest affordability gains has come from people moving entire provinces. There's been a huge exodus out of Ontario and into the relatively more affordable Alberta and Nova Scotia. In general prices of homes in the few medium and small towns in desireable provinces like Ontario and BC have also exploded upwards, so while sure in absolute terms there are "more affordable" homes in other smaller towns, the gap isn't quite so big as one would think. The very low supply of homes in smaller towns have also kept their prices lofty. IMO Canada in comparison to the USA seems to not have nearly as many medium and smaller cities one could downshift to. In many parts of Canada it very quickly becomes remote and rural. Outside of the Vancouver there are a handful of small towner but quickly you'll find "towns" so small that the only store in "town" is the combination gas station/liquorstore. The problem here is 1) low supply of homes 2) few if any services.

epups 3y ago

Ok, but people who did not buy a home ten years ago still have to compete in the same housing market, and they didn't earn an additional $75,000 every year from their labor.

parthdesai 3y ago
First, I know it fully well how bad the housing market here is. Second, that's my point, unless it's an investment property or if you're selling and leaving the city altogether, you haven't actually earned $75,000/year.
- epups 3y ago
  > Second, that's my point, unless it's an investment property or if you're selling and leaving the city altogether, you haven't actually earned $75,000/year. Yes, you have. You can take loans against your property value, for example. But even if you sell and put the money right back into another inflated asset, you still actually earned it.
  - parthdesai 3y ago
    Sure, you can take out HELOC against it, and but you're playing a very dangerous game when interests do rise. That has literally been happening right now.
    - medvezhenok 3y ago
      Yes - the point is, by staying in your house you are now consuming more housing than you were before, even though it’s the same exact house. The wealth is quite real - it just doesn’t feel that way since the experience of it doesn’t change
- stanski 3y ago
  He has, that's the point. He has an extra $75,000 per year that can go into a new home, than those who didn't have a home to sell.
- willis936 3y ago
  Nothing about these gains are imaginary. Imagine this person rented the entire time instead of buying. They did buy, so let's imagine they decided to sell today and rent instead. How did they just convert those imaginary gains into real ones?
  - parthdesai 3y ago
    Because the rents have gone up equally in the city? I rented a 1 bedroom condo back in 2017 for $1700/month. The same unit is around $2600/month now. So the price to either rent or purchase the same unit in the city has gone up significantly regardless.
    - willis936 3y ago
      Okay but they'd be paying the higher rate regardless. On the hypothetical "rent the whole time" track they have much less money than the "bought ten years ago" track they actually took. In both cases housing costs more, but in the latter they have hundreds of thousands of dollars more in easily liquified assets.
    - medvezhenok 3y ago
      You’re still missing the point. The gains are real - you not willing to give up your house to realize them) or insisting that you need another house in exchange) doesn’t make them not real. Yes, every other homeowner is sitting on the same gains, so relative to them, it feels like nothing has changed. But relative to the non-owners, you have been given a free handout of wealth. Which you are « consuming » by staying in the same house you were in before. If the rent has gone up, then your house you live in is now producing 2600 dollars of value per month rather than 1700 (even though it feels like nothing has changed to you)
  - vintermann 3y ago
    Exactly. You need a place to live, and other places to live have become more expensive too, but you own more of the place you live thanks to appreciation. You don't have to sell it either to realize the gains, you can borrow against it to make more money for instance, opportunities they certainly wouldn't have had without the appreciation.
- dotnet00 3y ago
  You have gotten $75k/year though. Take two people X and Y, both have $500k in the bank. X buys a house with it, Y sticks to renting. A few years later, they want to move to another place with the same costs. X's house now sells for $1M and he is able to buy a new place for the same money, thus his new house effectively only cost him the $500k he had spent years ago. Y, having not bought a house previously, now has to pay $1M, which he does not have.

epistasis 3y ago

Let's be clear: none of the condo or homeowners "deserve" these economic gains, they are merely a wall that is raised ever higher to ensure that new entrants to the country are forced to pay their wages to existing homeowners' valuations. Which is what makes complaints that it somehow doesn't benefit homeowners all the more outrageous: saying that "sure I'm on the other side of this wall, but I can only use my wealth to stay in this side of the wall" minimizes an absolutely huge unfair advantage you have over people unlucky enough to be born after you or not have wealthy parents.

junofan 3y ago
Also (in general) I don’t think most people would be so sanguine if their condo lost $75k/yr over 8 years.
- neltnerb 3y ago
  Not to even get into how weird it is that something that is literally in worse condition at the end than the beginning, just like a car, increases in value instead of decreasing. And even more that this is the assumption, despite it being based entirely on demand and not at all on quality.
- throw__away7391 3y ago
  This is the scary bit for me. It doesn't take much imagination to speculate that homes are possibly dramatically overvalued at present and current prices are unsustainable. This can't end well.
  - psunavy03 3y ago
    The only time home prices collapsed was when the mortgages underlying them were shown to be funny money. This is largely not the case right now, at least in the US. I can't speak for Canada, but the US largely has a supply problem which can't keep up with demand.
- smsm42 3y ago
  My house lost about 60-70k from the top one of the years (I suck at timing the market). I couldn't care less - I'm not going to sell it anytime soon, and this price is imaginary anyway, and the imaginary price recovered half of it since then, and I still have no idea how much it would be priced when I am going to sell - but I'll be worrying about it then, no point in doing it now. Of course, if that happened every year for 8 years, that would probably be weird, but that would also mean I could buy houses with my pocket change by the end of it.

smsm42 3y ago

Are there cheaper places in Canada? In the US, if you can work remotely, you can get better and bigger house 2x-3x cheaper than, say, around the Silicon Valley or any similarly priced cities, and still earn hi-tech salary. Of course, you need a remote-friendly job (which may cut off some opportunities) and you need to agree to live in a place that is not the first destination for every fashionable band out there, but it's possible.

hylaride 3y ago
Historically, the maritimes (Atlantic) provinces and Manitoba and Saskatchewan were relatively dirt cheap, but their home values have skyrocketed since covid and WFH, especially in Nova Scotia.
Tiktaalik 3y ago
Yes this is possible but can come with significant challenges. Seems like the biggest affordability gains has come from people moving entire provinces. There's been a huge exodus out of Ontario and into the relatively more affordable Alberta and Nova Scotia. In general prices of homes in the few medium and small towns in desireable provinces like Ontario and BC have also exploded upwards, so while sure in absolute terms there are "more affordable" homes in other smaller towns, the gap isn't quite so big as one would think. The very low supply of homes in smaller towns have also kept their prices lofty. IMO Canada in comparison to the USA seems to not have nearly as many medium and smaller cities one could downshift to. In many parts of Canada it very quickly becomes remote and rural. Outside of the Vancouver there are a handful of small towner but quickly you'll find "towns" so small that the only store in "town" is the combination gas station/liquorstore. The problem here is 1) low supply of homes 2) few if any services.