Detrimental house price trend

"By 2026 only three out of 10 of today's 10-year-olds will be able to afford to buy a home when they have families of their own if we stick to current building rates."

British government's

summary response to

the Barker Review

I suppose the sentiment, our children are our future, is in serious peril if house price trends continue on their merry, unchecked way.

The latest house price figures from across Canada apparently didn't surprise anyone. From a high of well over $700,000 in Vancouver to a low of $142,000 in New Brunswick, there is much disparity in this great land of ours. In the GTA, the average hovers around the $400,000 mark, but aware people like you and I know this figure is still misleading, particularly here in Caledon. And, real estate professionals have upped the search parameters to include homes in the $2 million range (now considered more commonplace).

Most 4-bedroom homes in Bolton will run you between $400,000 and $500,000, roughly 8 times what they were 30 years ago. Just think, in 1982 (25 years ago) you would buy a brand new subdivision home in Caledon Village for $90,000.

In the last 15 years alone, car prices have risen roughly 60% and inflation-adjusted hourly wages have gone up only 10 cents since 1991. Will wages double in the next 15 years? (Yes that was a rhetorical question, unless of course you're a civil servant.)

People think that as house prices rise (and they have consistently for years) the better off we all are. What you have is the same people, earning the same money, living in overpriced homes that cost more and more to maintain on a regular basis. We are literally drowning in our own material excess.

We're also (mistakenly perhaps) firm believers that our houses are vaults for value - a veritable recessionproof bar of gold that represents our personal wealth (or debt considering few homes are paid off).

Real estate agents talk about "curb appeal, staging" and investing a few bucks to spruce the place up for potential buyers. It's like kicking the tires of a used car on a lot, not making one of the biggest decisions of your life. Houses are commodities, like pig's feet and soy beans. While we dress them up with hardwood and imported granite, the reality is they're structures that lack both warmth and sentiment in today's out-of-control market.

Things are not likely to improve, but skyrocket to unforeseen heights.

A CIBC World Markets study predicts house prices will double by 2026. Imagine those same subdivision homes in Bolton hitting the $1 million mark when our kids are in the market. Will you have the extra cash to lend them for the down payment? The study based its predictions on demographics, low interest rates, constant immigration and "new mortgage products" that will make homes more accessible.

Don't you love bankspeak? There was a time when banks wouldn't lend you money if you didn't have sufficient savings, a very good job and collateral. Today, there are all sorts of "mortgage products" and fancy number-crunching that will allow anyone to get in over their heads, with the blessing of your friendly, neighborhood mortgage lender.

The fact of the matter is, Canadians (people all over) tend to spend more than they earn. Twenty years ago, workers typically saved roughly 20% of their takehome pay. Guess what that amount is today? A big, fat zero. People are even cashing in their nest eggs - pensions, insurance policies, etc. North Americans are being crushed under the weight of massive debt - mortgages, car payments and credit card charges. These figures are almost as impressive as house prices! In all, Canadians owe $750 billion in personal debt.

All of this saddens me, in many respects. I am sad on pay day - a typically joyous day of the work week. I'm sad because the money I earn doesn't belong to me - it's gone literally before I can cash my cheque.

Any money "left over" goes to my children, to pay for their needs and their future. I often tell people who ask that there's a very good reason why I drive a second-hand

purple mini-van; stretch the times between haircuts, and wear "gently used" clothing. And we don't live beyond our means, not by a long shot.

It also makes me sad to explain modern economics to my nine-year-old. She can barely grasp what a million dollars is, let alone the effort and luck required to earn it, save it and spend it! How do I tell her the housing market will be affordable when it's her time and that average houses will cost $1 million? What does the future hold for my youngest daughter, who's about to turn two? And how do I tell my six-year-old son that his dream car will cost him $200,000 when he's old enough to drive?

I will continue to wear hand-me-downs as long as I need to, in order to ensure their future. I will continue to drive my purple vehicle for as long as parts are available, if it means giving my kids a shot at the slightly tarnished brass ring.

The insanity won't stop without some prodding.