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A senior economist at BMO Nesbitt Burns recently put together a chart on housing that some people view as sign of impending apocalypse. Other are thrilled about what they see.

Displayed under the headline Your House Makes More Than You Do, the chart tracks house prices in the town of Woodstock, Ont., since the mid-2000s The interesting part comes right at the end – an almost vertical line showing a 31.7 per cent increase in prices in the past year. According to a survey by the human resources consulting firm Morneau Shepell, salaries this year will increase by 1.9 per cent.

The Canadian Real Estate Association/Haver Analytics/Handout

The chart is like a Rorschach Test of housing in that people see different things when they look at it. I found that out after attaching the chart to a tweet recently. “Yup,” one enthusiastic Twitter user commented. “And, don’t forget it’s tax-free.”

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Others are worried. “It’s all out of balance,” one Twitter user said. “Looks like a bitcoin [chart],” said another. “Probably just as sustainable, too.”

The economist behind the chart, Sal Guatieri of BMO Capital Markets, said asset prices normally start to raise red flags when they consistently come in ahead of growth in incomes. But that’s exactly what’s happening in cities across Canada, notably in Ontario. “Draw your own conclusions,” Mr. Guatieri said.

My conclusion is that, thanks in large part to the pandemic, housing prices have come too far, too fast. The pandemic gave us low mortgage rates and a hunger to move to bigger homes with bigger yards. In an abnormal time, we have an abnormal housing market


Subscribe to Carrick on Money

Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.


Rob’s personal finance reading list

Ten big money mistakes

The internet is packed with lists about money mistakes – this is one of the few with anything new or interesting to offer. Smart takes on saving, spending and earning.

Left the city and never looked back

Seven city dwellers talk about relocating to smaller communities in the pandemic. Read this to better understand the flow of people out of downtowns across the country. These people seem happier. Now for the results of a recent poll suggesting that close to 30 per cent of Canadians would like to move to a smaller community. Finally, some thoughts on how careers might be affected when people move out of the city and close proximity to their place of employment.

Cheap housing does exist, sort of

A listing of housing markets across the country that are above and below the national average price. Below average sounds good until you realize that the January national average resale price was $621,525, up 22.8 per cent over the same month last year.

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The people have spoken – food inflation is a thing

Some real life comments from people on their grocery costs following a report from Statistics Canada that food inflation overall rose just 1 per cent in January on a year over year basis.


Ask Rob

Q: I have a question about the lack of a credit score number on my free Equifax report.

A: Your credit report, which you can get for free from credit monitoring companies like Equifax and TransUnion, summarizes your history as a borrower. It’s separate from your credit score, a number on a scale to 900 that reflects how responsible you’ve been in repaying what you owe. Credit scores are increasingly available at no cost from banks, credit card companies and sellers of financial products. Here’s a rundown on credit reports and credit scores from the federal Financial Consumer Agency of Canada.

Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.


Today’s financial tool

The Responsible Investment Association offers this screening tool to help connect people with socially responsible investment products.


The money-free zone

A small slice of loveliness – Magnolia, by J.J. Cale.

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ICYMI

What I’ve been writing about
  • The failure of online brokers in serving retirees goes beyond clogged phone lines (for Globe Unlimited subscribers)
  • Today’s freakishly low mortgage rates can’t last. What will pandemic home buyers do when they rise? (for Globe Unlimited subscribers)
  • Four ways to make a last-minute RRSP contribution if the stock market is making you nervous … and three to avoid (for Globe Unlimited subscribers)

More Rob Carrick and money coverage

Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.

Even more coverage from Rob Carrick:

Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.

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