Good enough for what? The official inflation numbers say prices have doubled in the past 30 years or so, which fits decently with my subjective assessment. Any small discrepancies between the “true” inflation numbers and the official figures are irrelevant to consumers, and any large discrepancies are paranoid conspiracy thinking.
Thay may be the case where you are. Certainly isn’t the case where I am. Housing doubled in a decade between 2010-2020 while inflation was under 2% in that period. No amount of calling it conspiracy thinking can hide the material effects of that. Most Canadians would laugh at such suggestion. 😄
Well okay, if the inflation is X it doesn’t mean that every single commodity became X more expensive. It’s an average.
Real estate typically appreciates at a rate higher than inflation, partially because land is finite, and partially because taxes haven’t increased at the rate productivity has (so there is more money available to spend on housing).
And if the main expense of most Canadians is so far disconnected from the official inflation numbers then CPI is not a good measurement of inflation in Canada. So for me CPI as computed today, where I live, is not a good enough measure of inflation. Explanations to why that is don’t change that. I’m not saying I agree with the explanation either.
I didn’t say it was “so far” disconnected. As a major component of the CPI, housing inflation substantially influences the total inflation figure.
That said, there’s nothing stopping you from looking up inflation figures for housing specifically if you think those figures are more informative. Those figures are tracked and published, and you can find them with a modicum of detective work. However, that won’t tell you what the overall inflation figure tells you, i.e., the depreciation of money.
Keep in mind though that even this figure might not correspond to your personal experience, as it’s a figure for Canada as a whole, and not specifically for any particular rapidly growing urban centre.
The problem with the housing market (not just in Canada) is that there is a lot of upwards pressure on prices from 9%-ers who can easily afford anything. This is a taxation, not inflation problem.
Recall this conversation started with my joke which you think is invalid because real GDP is inflation discounted. Not how one can find information about another indicator. Housing prices are not part of CPI in Canada. Therefore they contribute to real GDP growth while being the biggest contributor to the affordability crisis in Canada. Hence the deeply sarcastic joke I made in the first place - pay more -> contribute to GDP growth.
Housing prices are not. Some proxies for housing costs are. Woefully insufficient proxies in my opinion. That’s in part because houses/condos are considered capital goods. You can read about it in StatsCan’s docs. Which is pretty stupid in my humble opinion because housing is a necessity and very few people can sell their housing and not buy a similarly priced unit. You will not convince many that CPI works well when for the majority of Canadians (most of us live in urban areas and buy homes because renting is insecure) the cost of buying the necessity of a home, our largest expense, has grown 3.5x faster per year than the rate of inflation.
Look, I’ve been on the other side of this argument, where you are, having the same discussion with others, sitting where I’m sitting right now, explaining to them how it’s a bit conspiratorial to not trust CPI. But this is not a matter of an abstract or philosophical discussion. Given the collective experience we’ve had over the last 15 years, and given how many important things are driven by CPI (e.g. disability benefits, political inaction), discrepancy like that is pretty fucking impactful. And please do not airquote affordability crisis because our homeless population has doubled in the last 3-4 years. It’s now over 15K in Toronto alone.
Good enough for what? The official inflation numbers say prices have doubled in the past 30 years or so, which fits decently with my subjective assessment. Any small discrepancies between the “true” inflation numbers and the official figures are irrelevant to consumers, and any large discrepancies are paranoid conspiracy thinking.
Thay may be the case where you are. Certainly isn’t the case where I am. Housing doubled in a decade between 2010-2020 while inflation was under 2% in that period. No amount of calling it conspiracy thinking can hide the material effects of that. Most Canadians would laugh at such suggestion. 😄
Well okay, if the inflation is X it doesn’t mean that every single commodity became X more expensive. It’s an average.
Real estate typically appreciates at a rate higher than inflation, partially because land is finite, and partially because taxes haven’t increased at the rate productivity has (so there is more money available to spend on housing).
And if the main expense of most Canadians is so far disconnected from the official inflation numbers then CPI is not a good measurement of inflation in Canada. So for me CPI as computed today, where I live, is not a good enough measure of inflation. Explanations to why that is don’t change that. I’m not saying I agree with the explanation either.
I didn’t say it was “so far” disconnected. As a major component of the CPI, housing inflation substantially influences the total inflation figure.
That said, there’s nothing stopping you from looking up inflation figures for housing specifically if you think those figures are more informative. Those figures are tracked and published, and you can find them with a modicum of detective work. However, that won’t tell you what the overall inflation figure tells you, i.e., the depreciation of money.
Keep in mind though that even this figure might not correspond to your personal experience, as it’s a figure for Canada as a whole, and not specifically for any particular rapidly growing urban centre.
The problem with the housing market (not just in Canada) is that there is a lot of upwards pressure on prices from 9%-ers who can easily afford anything. This is a taxation, not inflation problem.
Recall this conversation started with my joke which you think is invalid because real GDP is inflation discounted. Not how one can find information about another indicator. Housing prices are not part of CPI in Canada. Therefore they contribute to real GDP growth while being the biggest contributor to the affordability crisis in Canada. Hence the deeply sarcastic joke I made in the first place - pay more -> contribute to GDP growth.
Housing is part of the CPI in Canada, not sure where you got the idea that it isn’t.
Insofar as there is an “affordability crisis” in Canada, its cause is fiscal, not monetary.
Housing prices are not. Some proxies for housing costs are. Woefully insufficient proxies in my opinion. That’s in part because houses/condos are considered capital goods. You can read about it in StatsCan’s docs. Which is pretty stupid in my humble opinion because housing is a necessity and very few people can sell their housing and not buy a similarly priced unit. You will not convince many that CPI works well when for the majority of Canadians (most of us live in urban areas and buy homes because renting is insecure) the cost of buying the necessity of a home, our largest expense, has grown 3.5x faster per year than the rate of inflation.
Look, I’ve been on the other side of this argument, where you are, having the same discussion with others, sitting where I’m sitting right now, explaining to them how it’s a bit conspiratorial to not trust CPI. But this is not a matter of an abstract or philosophical discussion. Given the collective experience we’ve had over the last 15 years, and given how many important things are driven by CPI (e.g. disability benefits, political inaction), discrepancy like that is pretty fucking impactful. And please do not airquote affordability crisis because our homeless population has doubled in the last 3-4 years. It’s now over 15K in Toronto alone.
People who own real estate are automatically hedged against housing inflation since their property increases in value.
What they choose to do with that increase in value is up to them.
Somehow I doubt any increase in the homeless population is due to home-owners not being able to afford their housing.
Fixing homelessness is trivial and, once again, a fiscal problem and not a monetary one.