I know, it’s tough being a Millennial. The Canadian economy is apparently booming, unemployment is nearing historic lows at 6.9%, and you still feel like you’re getting screwed because you can’t afford a house. Well, turns out you are getting screwed. Despite this “booming” economy, the median income for Torontonians hasn’t moved much over the past 30 years, but housing – the single largest expense for most people, has skyrocketed.
Income Hasn’t Changed
If you’re like most Millennials, you have a job that pays a decent wage, but one that doesn’t feel as comfortable as it sounds. Well it’s not just your imagination. The median household income in the city of Toronto hasn’t moved in over 30 years – having added just 0.38%. Ouch.
Housing Has Skyrocketed
Everyone knows there’s a Toronto housing bubble – people are just placing bets on how it will end. Boring! What is interesting, is prices over the past 30 years are still up 188%. The post 90s bubble prices weren’t that much cheaper than pre-bubble prices either. Does this mean you can’t lose money? No, but mortgage interest issues are another story for another day (or ask your parents).
How Did You Get Your Numbers?
Ever read that a transit ride in 1912 Toronto costs $0.02 and think “that’s so much cheaper than today’s $3?” Well it’s actually about the same, because the average person in 1912 earned $2/day. A common practice in finance to eliminate this bias is to use inflation accounting to convert all of the numbers to a single year’s worth of dollars. We’re using 2016 dollars and the Bank of Canada’s inflation numbers in case you were wondering who the heck’s family had a household income of $81,142 in 1976 (they actually earned $19,415).
Sources: Statistics Canada, TREB, Better Dwelling.