Canadian incomes have only increased by 3 percent since 2012

Canadian incomes climbed a paltry three percent between 2012 and 2015, according to the latest data released by Statistics Canada today. The median after-tax income of Canadian families and unattached individuals stood at a dismal $56,000 in 2015, a mere 0.4 percent increase from the year before.

In 2015, Canadians who were single and under 65, (not married or in a common-law relationship) had a median after-tax income of $29,400. That basically means that half of non-senior single Canadians earned less than $29,400, and the other half earned more.

Another statistic worth mentioning — single-parent families had a median after-tax income of $45,700, less than half the median after-tax income of two-parents families. That number was virtually unchanged from 2012 to 2015, indicating that we have barely seen any kind of income growth for single parents in Canada.

Home prices rise, incomes remain flat

Let’s all pause for a moment and reflect on the fact that most Canadians have experienced very little wage mobility in the last five years. By contrast however, the cost of living sure hasn’t stagnated since 2012.

The best example of this is home prices in Canada. In January 2012, the average price of a residential dwelling in Canada (townhouses, condos, houses) was roughly $350,000. By June 2015, that number had risen by 30 percent to $450,000.

So, just so we are all clear, our incomes have risen three percent between 2012 and 2015, but owning a home has gotten 30 percent more expensive in the same time period.

Rent data, a key factor in assessing the cost of living, doesn’t paint a much brighter picture of how unaffordable our country has become, especially large cities like Toronto and Vancouver.

It’s misleading to lump rent in all towns and cities across Canada into one category, but if you just take a look at Toronto, rents have climbed at least 30 percent since 2012.

Data from Urbanation, a website that has been tracking the Toronto condo market since 1981 estimates that the average rent for a 1 bedroom condominium in Toronto hovers at around $1990. Back in 2012, that number was perhaps $1600, maybe slightly less.

Of course, incomes in Toronto trend higher than the national average, but not nearly high enough to justify a 30 percent increase of the cost of owning or renting a home in the short span of four years.

Cheap credit fills the income-cost of living gap

The obvious question upon crunching income and cost of living data is how exactly have Canadians been purchasing homes or keeping up with rent? A big part of that answer is debt.

Household debt has climbed tremendously since 1981, but its steepest increase took place in the early 2000s — that trend continued when the Bank of Canada began its low interest rate policy, just after the 2008/2009 financial crisis. In 2011, Canadians owed $1.50 for every dollar they earned. As of 2016, we owe $1.67 for every dollar earned, the highest household debt to income ratio amongst G7 ratios.

(Just for the sake of comparison, back in 1990 when home prices were significantly lower, Canadians were in the black — they owed $90 dollars for every $100 earned).

In late 2016, the credit monitoring agency TransUnion came out with a report that pegged the average Canadian’s credit card debt at a three-year high of $3610.

Statistics Canada will only release the results of their 2016 income survey this time next year, but considering that home prices have climbed even more drastically in 2016, expect affordability to remain a serious issue for the next little while.