I own a completely bog-standard 1972 split level, in the south-central part of British Columbia. The city I live in has some of the highest housing costs in Canada. Only a few rare cities across the entire country have higher housing costs.
I have been putting together a small building permit to replace windows. In doing so, I put in a request for any and all info that the city has on my property, to see the data that the city has. Lots of interesting things popped out, including when it was hooked up to city sewer, and so forth.
But the most interesting? The original selling price.
Back in 1972, the minimum wage was $2/hr. For a full-time job, you earned about $4,000/yr. Doesn’t seem like much, no? I meant, according to the flip side of the one-third rule, any home should cost no more than 3× your annual wage. That means a home that would be at most $12,000.
So guess how much my own home sold for once completed?
$15,900.
And that is a brand-new, mid-range, mid-sized home that is still perfectly adequate for any normal modern family who doesn’t have extensive hobbies like I do, such as trying to stand up a medium-sized library or an entire woodworking shop or a separately-cooled 200ft² walk-in root cellar for home-canned food storage or setting up a server room with 48U datacentre cabinets and extensive cooling down to 14℃. Yeah, I am a bit of an outlier.
But the point is that this brand-new home would have been – in 1972 – only slightly outside the means of someone ON MINIMUM WAGE.
Other homes in the area, older pre-owned homes, would have likely been within the price range of someone on minimum wage.
Imagine that… working for minimum wage, and still being able to purchase a full-sized, detached home in a decently-sized town.
So what is minimum wage today, in BC? $17.40. This equates to $34,800.
This also equates to a one-third rule of $104,400 for the maximum price for a home for anyone on said minimum wage.
What are home values in my city like, right now? $1,010,000 is the median value of a detached single-family home as of the second quarter of 2024.
That is 9.67× higher than it should be.
Either that, or minimum wage needs to be $168/hr, or 337,000/yr.
Hell, you can’t even get a 50-yo bachelor apartment for less than $600k in this city.
No wonder young people are checking out of society, and giving up on societal expectations to have families and save for retirement. Because they can’t afford to satisfy those societal expectations.
You want a home with sufficient room for children, with a yard for them to play in, just like your parents and grandparents could afford? You need a wage of at least $180k/yr purely for the primary wage earner – more if both parents work, to pay for requirements like child care that the second parent would normally do – to afford anything on it’s own separate plot of land, much less a brand-new median home.
And when the median wage in this town is right around $40,000/yr – half of all working-class adults make more, half of them make less – that just isn’t a rational or possible goal.