A tale of two Canadas: Where you grew up affects your income in adulthood
theglobeandmail.com
theglobeandmail.com
In the last couple decades, it's become affordable to mine tarsands. The oil boom has meant people in those places make a lot more money. Naturally, they are making more money than their parents did.
The other green area is Toronto. If you're 40-50 in Toronto today, you probably bought a house in your late 20s or early 30s, which has now quadrupled on value.
All of that to say, many of the places where mobility is rising may be short lived. In reality, we may be an entire country of low mobility, except for the few lucky areas.
What would be the theoretical optimum?
[1] http://www5.statcan.gc.ca/cansim/a05?lang=eng&id=2030027 look for "Owned dwelling"
[2] https://en.wikipedia.org/wiki/Home-ownership_in_the_United_S...
Your link to US data shows just how far home ownership fell during the financial crisis. Canada is close to the same peak as the US.
That's almost 25% of the entire population of Canada!
Those places have insane, ridiculous housing costs. People keep moving farther and farther away, even commuting 1-2 hours just because of that, which then drives up housing costs in the next sets of cities and towns. Many other places are much more affordable.
[1] http://www.crea.ca/housing-market-stats/national-average-pri...
[2] https://www.census.gov/construction/nrs/pdf/uspricemon.pdf
The US housing market is getting close to overheated at this point. The Canadian one is already cooked.
The US market has a few hot spots, but nothing like what Canada is dealing with.
Looking at this chart, I can't see how Canada is lagging anyone. Not even sure if this includes the 30% rise in Toronto (our largest city) this year.
http://www.greaterfool.ca/wp-content/uploads/2017/06/CANADA-...
Canada is lagging behind the US in average home price. As shown above, the average US home price is $5,000 more. As you can also see from the links I provided, Canada's housing market grew by 4.3% YoY (May 2016 to May 2017), while the US market grew by 16% in the same period.
The US housing market appears hot, Canada's not so much (outside of Toronto and Vancouver).
The following chart is drawn from the Federal Reserve Bank of Dallas’s International House Price Database. It’s an index (100 = prices in 2005) of real, or inflation-adjusted house prices, and it drives home just how much more inflated Canadian house prices are than at the U.S. bubble’s peak. The chart also includes Japan and its mammoth housing bubble of the 1980s—which is more akin to what’s gone on in Canada.
> Housing is nowhere near that expensive. You can build a brand new mansion for less than that.
I doubt you can build any house, let alone a mansion, anywhere in Canada for that price. At least anywhere a person would want to live. From what I've read, permitting alone would cost that much in Vancouver before you even break ground.
> Canada is lagging behind the US in average home price. As shown above, the average US home price is $5,000 more.
I wonder if this is apples vs apples? Is "home" the same for both? Also, one has to consider earnings - affordability is what really matters (well, to local buyers anyways).
Housing in all of Canada has been in a massive bull market for 20 years with the only noteworthy correction being the short pause after the 2008 crisis. Based on local earnings, a house is going to be historically expensive anywhere, and batshit insane in some places.
For $800k? What are you spending your money on? A modest home should be nowhere near that much, at least where the majority of Canadians live.
> At least anywhere a person would want to live. From what I've read, permitting alone would cost that much in Vancouver before you even break ground.
The vast majority of Canadians do not live in Vancouver. Nor do they live in Toronto.
The fastest growing community in Canada is Warman, SK[1], with 55% growth from 2011-2016. If that impressive influx of people doesn't indicate desire to live in the location, I don't know what does. I'll grant you that mansion is subjective, and it is difficult to link to something that hasn't been built yet, but here is a recently built large (2800 sq. feet), stylish home in the region listed at under $800k[2].
> Housing in all of Canada has been in a massive bull market for 20 years with the only noteworthy correction being the short pause after the 2008 crisis.
Are you still conflating the Canadian housing market with the Toronto and Vancouver housing markets? There are several provinces where the average home price is in decline.
[1] http://www12.statcan.gc.ca/census-recensement/2016/dp-pd/pro...
[2] https://www.realtor.ca/Residential/Single-Family/18086922/61...
> Are you still conflating the Canadian housing market with the Toronto and Vancouver housing markets? There are several provinces where the average home price is in decline.
These discussions are ridiculous. Other than a few isolated places, housing across all of Canada has been going up substantially for well over a decade. That the entire country has not gone parabolic like Toronto and Vancouver does not mean it is not outpacing inflation substantially.
Continue to deliberately misunderstand at your leisure.
The average Canadian home price in 2005 was about $250,000 CAD. The average home price today, excluding Toronto and Vancouver, is about $300,000 CAD (in 2005 dollars). That is 1.6% average growth per annum.
1.6% real growth is substantial? It is not nothing, but I think you're being a tad overdramatic. If any other asset class only returned a measly 1.6%, we'd call that disappointing.
The story is, of course, quite a bit different once you include Toronto and Vancouver. But that's been the entire discussion up to this point, so I'm sure I don't need to reiterate that yet again.
https://www.theglobeandmail.com/real-estate/the-market/canad...
How the country is growing 2% overall when the most populous region by far grew at 30% last year, and nowhere noteworthy is going down. 6.5M/36M x .3 = 5.4% national growth just from the GTA. We also have no inflation in Canada despite housing affordability being a major issue.
Your guess is as good as mine.
What 30% pace? Real growth has been 1.6% per annum. Now I'm absolutely certain you are confusing Toronto with the rest of Canada. The vast majority of Canadians don't live in Toronto. It is not representative of anything related to Canada as a whole.
> How the country is growing 2% overall when the most populous region by far grew at 30% last year
You're going to have to ask CREA, the official source for home prices in Canada. That is what they have reported. I can only go by what they have given.
If we can believe Zolo, who isn't exactly official but provides more comprehensive data: Toronto has declined by almost 8% in the last quarter and is barely up at all over the past year. Are you sure about this 30% YoY? Perhaps you're looking at the wrong period?
If one person owns all of the property, ownership rates would be pretty much 0%.
Owner occupied rate would be a more interesting metric.
There will be flaws. Not all homes are equal. People share ownership. Etc.
That certainly extends beyond Canada
Coming from one of those rare spots surrounded by deep green of the rather populous southern Ontario, it's a lack of education and resources and connectivity.
Three of the schools I went to when I was young have been closed permanently and razed. There remains one because I switched high schools midway through by claiming I couldn't receive all of the courses I needed at my local school (which was true).
When I was in the second grade the school wanted to advance me by five years after comprehension testing. My parents declined because they were worried I'd become unsocialized and no other push was made. At that point the school essentially pushed me to the side and had me make up my own work to do outside of standardized testing and major projects. By high school severe apathy and boredom had set in. To get anything out of it I spent most of my time in the library or on the newly introduced internet. This is the late mid-late 90's.
Key points:
* no public transportation * no private transportation connecting to cities * low number of open jobs outside minimum wage for young people * factories shuttered from the late 90s to early 2000s due to shifting tech and industry and slow adoption in this area * low funding for schools, frequent closures * public schools that remain tend to have lower resources rather than concentrated resources
I live in Toronto, now -- there have been times where I had to white knuckle my way through to get by here, yet. I'm working on it. That said, Canada (even my home county) is a great place to live and grow up, and its getting better.
Which is an important but under-appreciated fact.
And I expect that your theory is right. :-(
Your point still stands of course, I just thought that should be pointed out.
You also have to remember that social mobility can be skewed by wealth distribution. Let's say a person goes from earning $75K to $100K in Canada. That might mean you moved from the 3rd quintile to the 5th quintile. But the same person moving from $75K to $125K in the US might only move from the 3rd quintile to the 4th, even though the US person overall improved their situation more.
For example if you look for people worth $30million+ per million people, Canada has 186 while the USA has 126. That's about a third more per capita.
And watching the video, you find that 42% of the children of the bottom 20% in the USA wind up in the bottom 20%. Very little of Canada does anything like that poorly.
http://inequality.stanford.edu/sites/default/files/Pathways-...
The US does not do well on social mobility. Generally, poor families stay poor and rich families stay rich.
Also to be clear, the problem you cite does not exist. This is a percentage relationship between father-son earnings and doesn't have anything to do with quintiles or the magnitude of those earnings.
And after a few google searches, it appears that others have called out the challenges as well[1] and tried to work with other data sets. This analysis found very little different in income mobility between the US and EU and overall...
Canada has the most downward mobility while the U.S. has the least, with Sweden in the middle. We find some differences in upward mobility but these are somewhat smaller in magnitude.
[1]http://www.sciencedirect.com/science/article/pii/S0927537114...
I'm only partially kidding; all the best people in my class making the most money moved to the US immediately upon graduation.
For those born in the US, there's less movement and that's exactly what would be expected in a system that has been relatively meritocratic for multiple generations. Regardless of whether of the previous generation excelled due to cultural or hereditary reasons, their children will likely inherit both. Children also inherit money, which is a factor. However, if money were the primary factor, poor immigrant families would tend to remain poor and they don't.
The times when there's a great deal of mobility between generations of native populations is when there's a change in structural obstacles (or benefits). This can be seen especially clearly in Jewish populations in the US when various discriminatory regulations were removed early last century or with (ethnically) Asian Americans later in the century. In both cases, many families made rapid gains in relative income and wealth. In the subsequent generation, children of the winners generally kept winning and metrics of "social mobility" displayed a decline, even though society had become objectively fairer than it had been two generations before.
This isn't to say society is "fair" now, only that simple inter-generational economic mobility comparisons poorly answer the question of where a conscientious person with no money would have the best chance of success.
Well, tons of poor latinos and other would argue otherwise.
The immigrants children born in the US would be american. not immigrants. However, they are obviously going to get a lot of culture from their parents. They might get a second language when young, different customs, and more than likely different food. This was my grandmother. Most of her brothers were educated and lived decent lives, most definitely better than their parents.
My father - and his brothers and sisters - were split in how well they've done. The older children did just as well as the previous generation. They had less influence from the grandmother, but still carried a lot of traditions forward. The younger children had a rougher life after their father died (the older children were better able to cope).
My generation is likely the last that'll carry some of the traditions forward. We are basically normal folks. We have fond memories of eating Syrian food at Grandma's house, and most of us can cook a bit of it. It isn't often enough for our children to have fond memories of it. My generation really isn't passing that stuff along, even though it is part of our memory, our identities, and we might even talk about it in casual conversation. It just isn't a distinct enough part of our identity to pointedly pass along.
Unfortunately as a society we are running in the other direction. :-(
If you read the FA, you see the same is the case in Canada. In general though the US has very low mobility for a developed nation. Canada is fairly average for a developed nation.
The income quintile boundaries are set nationally, but the movements are divided locally, there is no such requirement for balancing in a single area. In theory, a single location could have 100% of people moving into the national top quintile.
edit: I'm referring to the chart called Rags-to-riches income mobility
I would like to see what it is like for a small sliding scale. Give me the same data with the ability to slide it over a 10 year or 10 month period. Do the smaller population areas flip back and forth between "mobile" and "immobile"?
What gets lost in the statistics is how many people ran away screaming from these places and now live all over the world making far more money than their parents or neighbours dreamed of.
It is interesting to run into people during Christmas and find out where they live and what they do now.
Even a glance at the map disproves your point. BC outside of Vancouver and Victoria is relatively socially conservative, but it's a sea of red due to the lack of labour demand in those rural areas.
Perhaps he looked at a map[1]? I have to admit, while there are some clear deviations, as I flip between the two images the areas with the highest mobility do seem to follow the Conservative-leaning areas. It is definitely not a perfect 1:1 mapping, but interesting nevertheless.
What really stands out to me though is that the areas with arable land[2] (and oil) generally have the most mobility. Makes me wonder if the food and energy commodities boom from a few years back has skewed the numbers?
[1] http://wpmedia.news.nationalpost.com/2015/10/na1020-election...
[2] http://www.statcan.gc.ca/pub/16-002-x/2015002/article/14133/...
You're judging by "geographic space taken up". Your conclusion is actually that geographic land area leans to the right, or more prosaically, that liberals move to cities and that coincidentally, oil was found in a right-leaning province.
I believe I understand what you and the parent are getting at, but it appears to be of a different discussion.
Sure, if you want to completely ignore the effect of two of biggest economic developments of the past quarter century.
Namely, the oil boom in (conservative) Alberta and the fisheries collapse in the (liberal) Maritimes.