Buy if you love Canada

This editorial first appeared in the December 25, 2006, issue of Maclean’s magazine:

Buy if you love Canada

How much are Canadians worth? The short answer: a lot. Last week’s study by Statistics Canada, "The Wealth of Canadians," was so full of good tidings one scarcely knows where to start. The total value of Canadians’ assets is up 42 per cent since 1999, to a staggering $5.6 trillion. And the net worth of the median Canadian family now stands at $148,400.

Curiously, most reporting on this study fixated on the increase in household debt, which also rose substantially to $760 billion. This was widely seen as evidence that Canadians are finding themselves deeper in debt and worse for it. A closer look reveals not a dangerous predilection for careless spending, but rather an astute investment in both personal wealth and social stability.

According to StatsCan, three-quarters of total household debt is mortgages. Credit card debt is a mere 3.4 per cent. This great emphasis on mortgage debt has pushed the rate of home ownership in Canada from 59.6 per cent to 61.9 per cent over the past six years. It’s a statistic worth celebrating. But can we do even better?

The financial benefits of owning your own home are substantial. It represents the bulk of Canadian families’ personal assets as well as a kind of retirement savings program. But the country as a whole also gains from broad-based home ownership. In many ways, the homeowner is the modern version of Thomas Jefferson’s yeoman farmer, the bedrock of democracy and political participation. Owning a home means having a stake in the functioning of society. Homeowners tend to be regular voters, are more engaged in their local institutions, and contribute to their neighbourhoods in ways that renters do not. Rising home ownership rates reflect a general sense of optimism in Canada. Even higher levels of debt would thus be welcome, if it meant more Canadian families were getting their own bit of land.

It is an odd thing, then, that no politician or political party seems interested in championing the Canadian dream of home ownership. Low inflation and corporate competition have resulted in innovations such as zero-down mortgages and 35- or 40-year amortizations, making mortgages more affordable. But at the same time, a great many government policies seem specifically designed to drive home prices upward. Greenbelts, mandated density rules and other forms of restrictive planning conspire to frustrate home ownership by making houses more expensive, particularly in larger urban centres. "Sprawl" is the pejorative urban planners use when they wish to ignore the benefits of owning your own home.

The Australians, by contrast, embrace this dream. "We should encourage and nurture the aspirations to home ownership," said Peter Costello, the treasurer of Australia, this past summer in lamenting the various local planning barriers to growth in his country. Home ownership rates in Australia are nearly 70 per cent, among the highest in the world. Yet the federal government wants to push it even higher because the benefits are so obvious and wide-ranging. Is there anyone in Canada who will take up a similar crusade?


Posted by David Shieh- Abbotsford Real Estate Agent