Article rather specific to the Canadian big cities, in which prices are currently rather high. Some of this house price growth is transient, some is permanent.
How much does land cost? In a place like Toronto or Vancouver, it costs as much as it possibly can. That is to say, since desirable land in these cities is so much more desirable than undesirable land, people will pay as much as they can possibly afford in order to get a good piece of land rather than a lousy one.
What this means in practice for most people is: take all the money you're ever likely to earn, deduct the money you need to spend on other stuff, and what's left over is the amount of money you're going to wind up spending on a house. Sure, you can spend less if you want, but you're going to wind up living in a much worse place, and since (as I just said) the desirable places are much more desirable than the undesirable places, people are willing to give up, say, a fancier car, for the benefit of living in The Beaches rather than Outer Missisauga.
The good news is that things don't actually get worse for people just because they have to engage in this cut-throat competition for desirable land. Like I said, house prices merely soak up all the money that's left over once the necessities are paid for, and if house prices go up considerably in real terms it just means that the prices of necessities have, in real terms, dropped.
There is an obvious solution to the housing problem, which is to fix transportation and take pressure off the market. There's one reason urban housing is so expensive, and it's this: commuting sucks, and finding parking is horrible, and people will pay immense amounts of money not to deal with that shit. Obvious simple and right solution: tax the hell out of the landlords and the very rich, and build the best public transit system the world has seen.
How much does land cost? In a place like Toronto or Vancouver, it costs as much as it possibly can. That is to say, since desirable land in these cities is so much more desirable than undesirable land, people will pay as much as they can possibly afford in order to get a good piece of land rather than a lousy one.
What this means in practice for most people is: take all the money you're ever likely to earn, deduct the money you need to spend on other stuff, and what's left over is the amount of money you're going to wind up spending on a house. Sure, you can spend less if you want, but you're going to wind up living in a much worse place, and since (as I just said) the desirable places are much more desirable than the undesirable places, people are willing to give up, say, a fancier car, for the benefit of living in The Beaches rather than Outer Missisauga.
The good news is that things don't actually get worse for people just because they have to engage in this cut-throat competition for desirable land. Like I said, house prices merely soak up all the money that's left over once the necessities are paid for, and if house prices go up considerably in real terms it just means that the prices of necessities have, in real terms, dropped.