A few years ago, when I lived in Calgary, I was shocked to discover that most of the new condos in town were built on land that had been used for farming and grazing in the past.
It was an especially shocking revelation because the Calgary area has historically been one of the most environmentally friendly cities in the world.
I could easily imagine that many of the residents in the city were also struggling to make ends meet on their $200 a month rental income.
One of the first things that came to mind was the possibility of a “rental tax” that would apply to renters to help finance the construction of affordable housing.
I knew that the government was actively exploring such a tax, but I never expected it to be such a politically divisive issue in Canada.
This was the year of the Harper government’s re-election.
After the election, it was revealed that the Conservatives had introduced a bill to levy a “property tax” on the purchase of new homes, with a $5,000 “cost of living adjustment” tax being levied on renters.
It quickly became clear that this tax would be unpopular.
In the lead up to the election I attended the launch of a campaign to oppose the tax, which was funded by the Canadian Alliance for Climate and Housing.
The coalition of grassroots groups that opposed the tax said that it would increase rents for renters by $20 a month.
Many of us supported this idea, believing that such a high tax could be justified on the grounds that it was necessary to fund the construction and maintenance of affordable homes.
A lot of Canadians were very sympathetic to the coalition’s position.
But they were also worried that it could be implemented unilaterally and could lead to the building of more expensive rental housing.
The government argued that it had no intention of imposing such a large tax, that the housing market was already in a position to cope with such an increase, and that it might be justified in a few years’ time when the market would have stabilised.
The Conservatives were right about the timing of this recovery, but they were wrong about the cost of living adjustments being levied.
Since then, the price of housing in Canada has dropped, and the number of people renting has dropped dramatically.
The rental market has now stabilized, and there are more people renting than ever before.
But the price for a home in Canada is now so high that it is now the second highest in the OECD.
In fact, the cost for a new home in Toronto, the second most expensive city in Canada, is more than double that of a new-build home in Vancouver.
The housing market is so competitive that it has pushed many Canadians into ever-higher-priced rental apartments.
In Calgary, the average price of a single-family detached home is now $1.2 million.
But if you buy a detached house, you are now spending more than twice that amount on rent.
The Canadian government has argued that the reason that the prices have fallen so much in Canada compared with other OECD countries is that the average home price in Canada now exceeds the average annual income of Canadian households.
That is, the median income in Canada exceeds the median household income.
This is an extraordinary argument, but it also understates the degree to which the housing sector has been overvalued.
The median income of households in Canada today is $48,400, more than 10 per cent higher than it was in 1995, when the last recession ended.
Inflation is now far less severe than it has been in the previous decade.
The average Canadian household now spends more than half of their income on rent, compared with less than 30 per cent in the 1990s.
A majority of households now live in rent-stabilised accommodation, up from around 35 per cent just a decade ago.
The cost of housing for all households in the country is now less than the cost to build it.
This means that housing costs are lower now than they were ten years ago.
In a country where the median family income is $51,200, the real estate market has grown by nearly $1,000 in the last decade.
That means that many Canadians now live rent-strapped and the cost is far more than the price to build a new, more affordable home.
This makes the situation even more concerning for those of us who live in and around Calgary.
As we’ve discussed, the city is the heart of the oilpatch, and one of its main employers is the oil and gas industry.
When you add up the cost per unit of real estate to the price that a house is selling for, the impact of the rising cost of rent on our living standards has a serious impact.
The fact that the price is rising so fast is a problem for the broader economy, which is affected by a number of factors, including the cost that a home is buying and the availability of financing.
The real estate boom of the 1990-2001 period helped to drive the economic growth of Alberta and Saskatchewan,