I think we can all agree that house prices in Canada are out of control, at least in any places where one might still find a job: Consider these numbers in urban areas around the country: To use the two most egregious examples, in Toronto the average price of a detached, single home is now $965,000, while in Vancouver it has soared to a whopping $1.36 million! Even in little old Guelph, nearly an hour outside Toronto, house prices have skyrocketed, with the average price now $323,939, and over $400,00 anywhere near the university. Even outside of cities, in rural areas, house prices have continued to climb sharply over the past decade, putting them out of reach for many working people. At the risk of understating the case, there are few places left where an average single-income family is able to afford a permanent place to live.
Each year, I do the math for my students in class on what it costs just to run a house in today’s world, and their eyes are opened. Even at current low interest rates, the monthly mortgage payments are out of reach for most; even if they can barely afford the payments, these are prey to fluctuations in interest rates. In the Eighties, interest rates rose precipitously almost overnight, doubling people’s mortgage payments, forcing many to walk away from their homes. After the mortgage, there is heat, electricity, property tax, insurance, ongoing repairs, before you even put anything in the house or food on the table.
Yet, as the Church teaches, everyone, especially every family, has a right to private property which, at the very least, is a house with a small yard. A apartment on the 19th floor, nothing more than some plaster, drywall and aluminum floating 200 or so feet off the ground, is not private property, especially if it is rented. Private property is an owned home on a piece of God’s good Earth, a place where one can seek refuge and privacy, where others may only enter with permission. A man’s home really is his castle.
Such ‘castles’ are becoming rare indeed. Perhaps in the near future we will all be living in Blade Runner-type micro-apartments, already becoming popular in urban centres. There are, in all likelihood, a complexity of factors leading to this crisis in housing, but I think the most fundamental is that we allow homes to be bought and sold, renovated and flipped, divided up and rented, like houses on a Monopoly board. The rich are always trying to find a place to park their money, hopefully in places that will make even more money, or at least save them money (in the form of tax write-offs and what not). And one of the best places of late to park extra cash is in the ever-hot, and getting hotter, real estate market. Land, and houses, in general, do not decrease in value, at least not of late, and especially not anywhere near an urban centre. Where else can you double your money in a few short years?
Hence, like your little brother buying up houses on Boardwalk and Park Place in those endless games of Monopoly (curiously, a Depression-era board game, the 80th anniversary of which we celebrate this year), the rich, the nearly-rich, and the would-be rich speculate in real estate, driving up the price ever-higher, as they buy up more and more of the limited and restricted quantity of houses and land in our cities and towns.
This speculation, however, drives out those very people who most need the houses, to use them as homes for themselves and their families.
I enjoy strolling and biking, even roller-blading, through cities, and have traversed the streets and byways of many of the urban centres across Canada, and some in the U.S. I wonder, as I see the array of stately, and not-so-stately, homes, how many sit empty? Many certainly seem empty, or at least nearly so, especially in the more upscale areas. I almost never see children in the streets, nor rarely anyone sitting on porches, or in front yards. In how many houses with four or six bedrooms house dwell a lonely old couple, who never had time for children in their bureaucratic careers? On the other side of the coin, how many houses are gutted and divided up into multiple-dwellings, so they can make more money for their landlords?
There are extreme versions of this tendency, in movie stars and moguls who own seven or eight houses across the globe, staying in them only a few weeks, or even days, a year.
There was a time, just before, perhaps, my brief lifetime, where a family making a middle-class wage could easily afford a house in the middle of Toronto; back then, houses cost, perhaps, one year’s salary. Many people did not even need a mortgage to buy a home, but could save up for one, pay for it outright, settle in and start a family. Money was put away for the future and invested, rather than dissipated on interest payments to a bank on a quarter-century-long mortgage (and, with some simple calculation, you will discover just how much money mortgages make for financial institutions).
Those same homes bought just one generation ago are now worth, ten, twenty, even thirty times their original price. This increase is many times greater than the rate of inflation, due, in large part, I posit, to the speculation in real estate, the one investment still sure to increase in value, and increase it has.
So the working class, who built and continue to build our nation (see Leo XIII’s principle discussed in a recent column that ‘it is by the labor of working men that States grow rich’) are now shut out of what should be the primary fruit of their work, a house they can call a home. In a bitter irony, those who build the homes cannot afford to live in them.
The only way it is still possible for some families to own a house is for both the husband and wife to work. This, however, leads inevitably to a neglect of the children, sent off to daycare, and precludes the legitimate choice to raise a large family, and/or to teach one’s children at home, should one so decide.
Even this dual-income ownership is becoming close to impossible, as real wages deflate, the spectre of unemployment looms, and house prices continue to rise into the stratosphere.
One grim consolation is that the whole housing market is a bubble about to burst, and economists debate about this. Are house prices radically disengaged from their real value? Will there be a housing market crash, sending prices plummeting? That will cause a lot of pain to a lot of people, many of whom are already over-leveraged on their homes, holding onto the massive debts of their mortgages that they then would then have little hope of repaying. The rise of interest rates of even a few percent could mean an increase of $400 or more on an average city mortgage. One good fruit of such a home-pocalypse, I suppose, is that prices would eventually return to a more sane and affordable level.
Then again, we would not want Detroit, where a collapse in the auto sector led to a mass exodus from the city, with houses abandoned, and left to the rats. You can now buy a house in some parts of the Motor City for a dollar, but good luck keeping it maintained. They are currently demolishing whole sections of Detroit, blighted by entire neighbourhoods of neglected, boarded-up homes filling up with rainwater.
Pope Saint John Paul II, as usual filled with good counsel, declared in Centesimus Annus, the encyclical commemorating the 100th anniversary of Rerum Novarum, that some things do not fall within the strict logic of the free market. We may posit that the ‘strong juridical framework’ within which he declares the economy must operate, should ensure that homes are available to those who need them most, and are not priced out of reach. Such availability is already ensured with necessary items like food, water, medicine, education and so on.
I am no socialist, and am not suggesting that these necessary items are always ensured in the right way in our own economy (I will write again on the medical system in particular, but see the waste in our university establishment). Trust me, I do believe in the free market and strong incentives to industriousness. People should have to work and pay for their homes; we see the disasters on reservations and welfare ghettoes where houses are just given away basically for free.
That said, I do think there should be some control over the buying up of houses, and that, one way or the other, we must return, by custom and by law, to the notion that a house should be a home. It should be possible, and is a scandal that it is not, for those raising families to own a place they can call their own, not least for their own dignity. Furthermore, as Saint Thomas teaches, besides the benefit to the owners, widespread ownership of private property ensures greater peace, order, stability and solicitude in society. Those who own land also love their country and local community more, and feel a far greater sense of ‘belonging’. For we all want a place that we can call home.
…Or do we? Perhaps I should say we ‘should want’, for with the decline in the family, and the decision amongst more and more of our youth to forego marriage for a life of various experiences (including serial ‘trial marriages’, or just transient ‘hook-ups’ aided by contraception, sterilization and abortion), perhaps our generation does not even want a home, but are content to flit from place to place, city to city, dissipating their sterile youth before they wake up near middle-age, burned out and joyless, with no place to call home. Unlike Dorothy, it will be difficult for the red slippers to bring them back at that point.
But that, dear reader, is a societal disaster I may consider in another column. For now, I will end on a note of hope, hoping against hope that if houses are once again made affordable, at least for those who want them, then, perhaps, our land, and the streets of our cities and towns, will once again be peopled with homes, filled with laughter, love and joyful mayhem. And a bit of street hockey would not hurt either.
February 28, 2015