Ah yes, let's listen to a bank-owned economist about why new home values actually need to be going up. Sure there's no vested interest there, from the guys who sell you your mortgage 🥴
Average house size in 1960 was roughly 1000 sq ft. Average house size now is roughly two and a half times larger. We've also gone from a near universal 8ft ceiling height to trendy 10ft ceilings. We're using far more material per unit, even as family sizes have never been smaller.
At some point people have to pay attention to consumption habits.
There's still plenty of scope for corporate shenanigans on top of all that, but they're not the whole story.
My impression is that developers like to build more premium housing because they can sell it for higher margins. This is probably a symptom of "houses for investment" vs. "houses for homes". How much my house is worth is largely hypothetical if I'm living in it. I have to live somewhere after all, and if I sell it, I just have to live somewhere else.
I would love to buy a 1500 SQ ft rancher with 8' foot ceilings.
No one fuckin builds them anymore though. 10' high ceilings just means a 25% higher heating bill.
...and a 25% higher ceiling!
/badum
I'll see myself out.
I'm not saying this is the whole explanation. but people have a lot more shit than they used to.
I think some of that is a catch 22: At one point I went from a 1000sq ft house (built in 1956) to a 2500sq ft house (built in 1985). I had a pile of empty rooms, so ended up filling the space with more stuff, stuff that was almost never used.
I changed cities and went down to a 1000sq ft condo. I was kinda stunned by all the extra crap that I had accumulated that was absolutely useless. Ended up giving a pile of stuff to thrift stores and sold some.
To clarify the homebuilding costs are increasing that much isn't because of the population growth.
Additional demand on building materials might push up the prices slightly, but the higher building costs are a result of inflation, higher interest rates and unfilled jobs in the construction industry.
Don't forget plain ol' corporate greed
Yep. One of the problems with relying on interest rates to curb inflation, is that interest rate hikes also make it more expensive to increase supply, ie build more houses (hence stagflation).
I think fundamentally the surge in inflation we are seeing is a supply side issue, less stuff but same or more demand. Between the pandemic and ensuing supply-chain disruptions to the Russian invasion of Ukraine, there has to have been a pretty sustained and severe loss of stuff (especially food) being made with all the resulting increases in prices.
Specifically wrt to housing construction costs in Canada, we should be able to insulate ourselves from much of those bigger underlying problems. The problem also isn't housing costs, that's the symptom. The problem is that housing is expensive.
The article is mostly descriptive of the problems, and it seems more or less on the mark. Not addressed though, and something I ponder, is the role of "housing as an investment" vs. "Housing as a necessity". Developers like to build big expensive houses for higher returns it seems, where what we need is more middle density housing. I think it's getting better, but the article doesn't really go into what sort of houses are being built. Still the problems with lumber supply and concrete will apply no matter what.
We are living during times of excess prosperity but somehow we can't afford to provide needed services to the population... where is all the money going?
Asking for a friend.
Wealth has been concentrating at the top for the past few decades now in ways the modern world has never seen before.
This is US-centric, but Canada hasn’t been much better. https://www.pewresearch.org/social-trends/2020/01/09/trends-in-income-and-wealth-inequality/
Canada is ripe for the picking, we let our telecoms walk all over us.
I wonder how much of our "economy doing great" is just businesses generating GDP from crap like this...
That's a fundamental problem with just relying on GDP. It measures economic activity, not the people's prosperity.
where is all the money going?
Up into space and down to the bottom of the ocean apparently.
That's just the trickle down. Check the pockets and bank accounts, panama papers...
So, group of people who say "just build more"
How exactly are we going to do that affordably?
Build..... Build more building material?
Unironically this, sort of. More construction workers. It's due to a labour shortage, which is pretty expected when you start building way more.
Maybe if companies could settle their offices elsewhere than the three major city centers, Toronto, Vancouver and Montreal, there could also be more space to develop and other labour available from that region.
We wouldn't need to build big high-rise condo projects with nothing but 500 square foot single bedroom apartments due to land constraints.
It's like Factorio
Immigrants, or temporary foreign workers.
We'll need more houses for that, of course, but obviously construction workers build more houses than they live in.
The article doesn't even talk about labour costs, it exclusively refers to the increased materials costs.
I admit I just skimmed it, but a worker shortage actually is mentioned.
Yeah, material shortages are harder, but they're kind of a short term thing due to plant shutdowns and forestry disruptions. I wonder how forestry is going to adapt as the tree line moves north.
Here in BC, record forest fires year after year are certainly having an impact, although the mountain pine beetle fallout is finally also coming to fruition.
It was open season on beetle killed timber for over a decade, creating a glut of timber supply. It's just going to go to waste anyways (up in smoke a fair amount as well). I think most of that beetle kill is done with now, or at least the easier logged stuff.
If we kept up on replanting, it usually takes 20-40 years for most of the tree species harvested in BC to mature, so those replanted trees wouldn't be mature for another 10+ years anyways. Now throw in the heat dome, droughts, etc. and it just gets more fun (and fiery).
I'm not a forester or silviculturist, and I'm not on the logging side of the business, but my impression is that there just isn't going to be as much cheap lumber available in BC, potentially ever. I would chalk a large part of this to global warming, right from the original pine beetle infestation. This means that the underlying problem is bigger than the government of BC can fix on it's own, but I would have hoped to see more vigour in a push for climate action from the people of BC, specifically those whose forest industry jobs are threatened.
Not 20-40 years in BC, but 80-120 years. Good news is that the lands harvested in the 60s and 70s will start to mature in 20 years. But we're going to have a shortfall until then.
What's going on Canada?
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