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How B.C. has transformed the thrifty into millionaires and made millennials feel poor

June 19th, 2017 · 8 Comments

I got asked earlier this year by Nick Rockel, the editor of BCBusiness, to write a story based a cascade of financial data about Canadians that Environics Analytics had gathered. Since I’m obsessed with this general topic — how we spend money in ways that we don’t acknowledge, the impact that money and possessions (or lack thereof) have on our sense of well-being, behavioural economics — I jumped at it.

One of the factoids that I noticed almost immediately was that millennials in B.C., Vancouver especially, have more money socked away in investments than millennials in any other part of the country, by a significant margin.

It didn’t take much to figure out why. It’s because they haven’t been able to put it into real estate, since that feels out of reach for many of them — even those whose household incomes are very healthy six figures.

I put out a call on Twitter asking if anyone wanted to talk about this, not expecting much. My experience in journalism has been that people don’t like talking about their financial lives, either because they’re embarrassed at how they spend or they just think it’s a private matter.

But, boy, was this different. I got so many calls and emails from frustrated and enraged millennials on this issue that it was like standing in a windstorm. My story aside, any politician who remains deaf to this level of anger is in trouble.

Here’s the story I wrote as a result. Thanks again to all who shared their stories.

 

 

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  • Andrew

    Alternate title: “A boomer learns that housing is expensive and young people are struggling. Who knew?!” (said kindly) The above typifies the problem we have re: housing. That you were even able to be somewhat surprised is mind boggling given that you’re arguably more aware of the ‘zeitgeist’ than the average person. Thank you for writing the piece!

  • A Taxpayer

    “If rentals had somewhat more security of tenure…”

    That is one of the reasons people buy and partly explains the fact they are willing to double their monthly outlay to buy rather than rent. Giving people more security of tenure can only mean less flexibility for landlords and makes developing rental properties less desirable. This will not help the shortage in supply of housing.

    There is danger in implementing solutions without understanding the full consequences of that action. Much of the increase in the cost of housing can be traced back to the decision of central banks to implement policies that have kept interest rates artificially low for the last 8 years as this has caused inflation in the prices of assets like real estate, stocks and bonds. People cashing in on real estate are not doing as well as it might seem since the money that is freed up is only earning a third of what it generated prior to these low interest rates.

  • A Taxpayer

    I would have more sympathy for millennials if they didn’t disproportionately support the policies of the Green/NDP party – increased energy costs through policies that favour “green energy”, opposition to pipelines that contribute to our economy, opposition to Site C (which actually would produce green energy), new social programs like day care when we can’t afford the existing ones – which will only leave them with the bills to pay in the future. If they understood economics they would be supporting policies much more conservative than even those contained in the Liberal platform. There is no free lunch.

  • Andrew

    You’re ascribing to me a course of action that I did not advocate. Rather than some convoluted and extensive system of restraints on how landlords manage their tenant relationships (re: security of tenure) that is bound to negatively impact investment in rental housing, from where I’m sitting the ideal solution is simply a balanced market with enough rental supply such that every rental transaction is not under duress. Take the desperation out and reasonable market actors will find each other.

    Put simply: We need way higher vacancy rates. We need that “shock absorber” back.

  • Lewis_N_Villegas

    I have sympathy for all British Columbians. They look and feel a lot like… well, me.

    This fantasy garden that the real estate industry building mega-projects on top of mega project sites paid for by the provincial government and approved by the un-elected, unrepresentative council of Mayors taking turns to sit at the feeding troth has to end.

    The Liberals got this question wrong last election http://wp.me/p1yj4U-S8 and lost the government.

    The NDP and the Greens got these two issues right http://wp.me/p1yj4U-Tp and won a minority.

    Fortunately, for those of us that use current events rather than sugar or substitutes to sweeten our morning coffee, the real issues that confront us—like the hemorrhaging of the middle class be they millennials or yuppies or any other dumb label you care to attach—were not discussed during our most recent election.

    I’ll hava refill, please!

  • A Taxpayer

    My mistake but it is a rare comment that supports the use of market forces to solve problems unless it is someone telling us that carbon taxes will send a price signal to the market and we will consume less energy. (Although they also say increasing the minimum wage does not send a price signal to the market to use less labour. Maybe the market has selective hearing).

    However, given that there appears to be an imbalance between the supply of and demand for rental housing, something is impeding the market from reaching equilibrium. What do you think it is and how do we fix it without unintended consequences?

  • A Taxpayer

    Ever since the election, I have had sympathy for all British Columbians, just not as much for those who whine about their circumstances while at the same time voting for parties that makes an already difficult financial future more difficult for themselves.

    I do agree that what you call the “hemorrhaging of the middle class” a very serious challenge because the people that would be middle class haven’t disappeared, just the jobs that would give them the life style of the middle class. Not everyone wants to be a barista at Starbucks with a BA in Tibetan Throat Chanting but not everyone can be a software engineer at Microsoft either. We need the jobs in between like those that are building the Site C dam and those that would be building the Trans Mountain pipeline.

    I think the Liberals did touch on this issue as their campaign was about job creation but it was more of an indirect reference. It was more front and center in the US election and Donald Trump got that question right and was elected President.

  • Lewis_N_Villegas

    I address conditions in the universities here http://wp.me/p1yj4U-1bt. Reports are that 80% of Humanities papers aren’t cited once. So there too ‘a group think’ has taken over suppressing the vast majority of the opportunities.

    For example, the understanding of classical liberalism is that the ‘disappearing jobs’ are what we elect governments to manage. We’ve now switched governments federally and (it would seem) provincially. That’s got to mean something. A functioning economy fires on all cylinders, not just new tech and public and private mega-projects (skytrain-and-towers, pipelines, dams and increasingly these universities themselves).

    But if you had read the second link I provided, then you would have my views on why the Site C dam and the pipeline are non-starters.

    As for the new U.S. president… let’s wait and see. He’s a tower millionaire. I visited central Manhattan when the Trump tower was brand new. While I saw a lot of jobs there, I didn’t see the kind of neighborhood I recommend for Canada or anywhere else. The amalgamation of the five boroughs to make and then feed the kind of monster that is Manhattan, beginning in the first decades of the 20th century, probably lies at the bottom of the challenges we are facing.