How can it be good news when the costs of a basic human need (shelter) increases by five per cent annually?
Let’s do a little math. Let’s assume the average home today is valued at $300,000 and the average household income is $90,000. If real estate prices rise five per cent each year for the next 25 years (that’s what we want, right?), when your kids are ready to buy, the average home will cost about $1 million; and if wages increase by two per cent per year for 25 years, household income will be about $148,000. Your grandchildren will be much worse off: after 50 years of five per cent annual increases, an average home will cost about $3.4 million; after 50 years of two per cent annual wage increases, average household income will be about $242,000.
Okay, the example is extreme, but it does illustrate the problem: at some point the price of housing will rise above people’s ability to fill the basic human need of shelter. Housing will be just another investment opportunity for those with the cash.
What can we do? I suggest the following: one, restrict sales of local properties to local buyers — this will curb speculation and ridiculous price increases; and two, the municipality set aside properties for a local NPO to develop into affordable housing — some units can be rented according to ability to pay.
Suppose that every household could divert just $1,000 per year from the cost of shelter to “disposable income”; with 10,000 families in the area, $10 million would be injected into the local economy each year for food security and spending in local shops. Think of the new businesses and the jobs they would create.
We can solve three major problems: homelessness, high unemployment, and rising food prices.
If this interests you, contact me: ivan@basicneedsfirst.ca
Ivan Quinlan
North Cowichan