Your house made more money than you did during a pandemic. Hold the cheering.
The Bank of Montreal published a research note titled “Your House Makes More Than You Do,” by senior economist Sal Guatieri (2021). It brings attention to the fact home prices are rising faster than the incomes of the people living in them.
We did our own research and found out some alarming statistics for the West Island based on Guatieri’s thesis.
Firstly, keep in mind that Statistics Canada (2021) reported that the average incomes in Quebec in 2020 increased only 6.9%, to which the current unemployment rate (Feb. 2021) rests at 8.2%. These are not signs of a growing, thriving economy.
Concerning home prices in the West Island, Centris reported that in the final quarter of 2020 prices increased as much as 35% in Ile-Bizard/Ste-Genevieve. Like the economist Sal Guatieri noted for Woodstock Ontario, home prices in the West Island have greatly outpaced household incomes and the economy during the pandemic.
For Ile-Bizard/Ste-Genevieve as an example, the benchmark price of a home increased as high as $177,450 in the final quarter 2020, compared to a year before. The annual family income in that area is only $115,686 (2018) - much lower. The house made more money than the people inside of it in just a quarter! The same can be said for other areas of the West Island.
There’s an issue highlighted here – home prices are rising faster than incomes. Not because of a fast increasing population, or a rapidly growing economy. Other economists have been quoted saying “this is a ‘big-red flag’ on our local economy” (Pittis, 2021). Unless employees start requesting income increases of 35% every month, it will more than likely leave many first-time homebuyers and renters without housing in the West Island for generations to come.