Pete McMartin: Canada’s home-ownership class war is just getting started | Ezine Daddy

What is coming is the economic stratification of Canadian society, caused by the huge gap between owning a home and renting a home.

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There it was, in the April 8 issue of the Vancouver Sun, the juxtaposition of two different stories that perfectly illustrated Canada’s imminent class war.

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Let’s call it the great divide.

One side of this divide was on page 2 with a blurb for the regular video feature, “Conversations that matter.” In it, a guest is invited to speak about topics from his or her area of ​​expertise. The guest on this day’s issue was Nicole Garton, an attorney specializing in wills and probate.

Your theme?

The Great Wealth Transfer.

It’s so called because when the baby boomers shuffle off the stage, it’s expected to transfer more than $30 trillion in assets to the next generation.

Garton’s concern is the orderly transfer of these assets – that is, the inheritance of these assets without causing friction between families.

“If the rich can’t handle it,” Garton said, alluding to some of the uglier public battles over inheritance among billionaire families, “how can the average medium-to-small family business hope to navigate the choppy waters of inheritance? ”

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Talk about a first world problem. Money is such a burden, isn’t it? Poor Gen-Xer babies fighting over Mom and Dad’s lake house. I had to laugh at the casual pretentiousness inherent in Garton’s discussion—especially in relation to another story that ran in this April 8 issue.

This other story ran on page B1 and concerned the less privileged side of the great divide.

The story was headlined: “Increasing uneasiness among renters.”

Now there is a conversation that matters. Rents in Canada’s major cities have skyrocketed, and no more than in Vancouver: a two-bedroom apartment averages a whopping $3,050 — a sum that rivals mortgage payments and eats up paychecks without producing equity — an economical one Treadmill. Rental costs have risen so much in the country’s major urban centers that they have outpaced renters’ ability to save for a down payment on a home. Which renter, saddled with sky-high rents, can save a million dollars in his lifetime?

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This is not an isolated phenomenon affecting the unfortunate few: this is the norm. Dan Fumano, columnist for the City of Vancouver Sun, pointed out in the April 20 issue, “Slightly more than half of Vancouver households rent, census data shows, and city officials expect that proportion is likely to increase as Vancouver continues to grow becoming a city of renters. ”

But the fevered nationwide debate on house prices has been all about home ownership and how the soaring house prices have affected the next generation. Deputy Prime Minister Chrystia Freeland called the housing market a “intergenerational injustice”.

“We have had better chances today to buy a home and raise a family than young people, and we cannot have a Canada where the rising generation is excluded from the dream of home ownership.”

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Freeland is wrong for several reasons.

For one thing, the current economic challenge is not intergenerational. It’s generational. What is coming is the economic stratification of Canadian society, caused by the huge gap between owning a home and renting a home. This gap will not only haunt the next generation, it will only widen in generations to come.

Second, Freeland is wrong to see the difficulty for the next generation of owning a home as monolithic. It is not. Not all Gen-Xers and Millennials are created equal.

Remember that $30 trillion out there waiting to flow to mom and dad’s heirs? Some Gen-Xers and Millennials will receive extremely generous inheritances, whether just from the sale of mom and dad’s house — or houses in many cases.

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In 2019 and 2020, multiple property owners held between 29 percent and 41 percent of the housing stock in Ontario, BC, Nova Scotia and New Brunswick, new data from the Canadian Housing Statistics program shows, life-changing for some, and not just the immediate ones heirs, but for their future generations.

I’ve seen this before in my own suburban area, which has seen an influx of young families who are so wealthy they wouldn’t think twice about buying a property where an empty lot is $1 million and then the old house demolishing—usually a small, one-story cottage—and building large two- and three-story houses. You’ll mostly see Audis, BMWs and Mercedes in their driveways and even the occasional cabin cruiser on a trailer. As an older, long-established neighbor said to me, shaking his head, “Where do they get the money from?”

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On the other hand, there is also a migration of young people here. All my children and the children they grew up with have been evicted from the neighborhood. For example, my daughter and her family moved to the Gulf Islands, where she and her husband both found jobs and could therefore afford to buy a home—one with a sizeable mortgage.

Think of the contortion involved. They had to distance themselves from their support group – their parents, grandparents and siblings. They had to compromise their work career, which was promising when they rented in the Lower Mainland. They had to limit their free time and the educational opportunities for their children.

And yet they are better off than many others. You will eventually inherit money from my wife and me. But what about the kids whose parents have rents or don’t have the kind of assets that would improve their children’s lives immeasurably?

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“That’s what I’m most worried about,” said Tsur Somerville, director of UBC’s Center for Urban Economics and Real Estate, “the split between the landowning class and everyone else. And in this economy, the rich keep getting richer.

“You cannot have a democracy where there is a stark, vast disparity in wealth and opportunity for a group whose parents are homeowners and wealthy and between people who are not. Our society is built on the idea that you have a reasonable opportunity for self-improvement — you know, pulling yourself up by your bootstraps. But you can’t pull yourself up by your boot straps when your boots are nailed to the ground.”

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