🚀 go-pugleaf

:   leclercl> location. It would seem that if a land cartel is really
:   leclercl> operating in Ottawa, as may be the case, why aren't people
:   leclercl> complaining about it? Losses due to this must add on the
:   leclercl> order of many thousands of dollars of extra costs to
:   leclercl> people's mortgages and rents *each year* (ie. way more
:   leclercl> loss than the GST, or the social contract which everyone
:   leclercl> is complaining so much about).
: 
: But what would the loss be to all those people who see their house
: price drop by 75%?  What percentage of people who inhabit the city own
: their own homes?
>By my calculation, Louis had suggested a 40% decrease.  Your point,
>though, is still valid.

This thread sounds interesting so I will throw a few more comments in.

First it is illegal to operate a cartel in Canada and if you can show that 
one is operating it can be shut down. But, your statements are real and 
the reason they are is because of who owns the lands.

Economics has this interesting term called "oligopoly" (I hope I am using
it correctly) where a very small number of people/companies control
the majority of a business. If you do your research you will find that
most of the development lands are owned by a handful of companies in 
Ottawa. So all they need to do is watch what the leader sets the house
price at and all his competitors will set their price accordingly for the
equivalent product. No cartel, but complete price control. Each company 
can also take a turn at being the leader without formely discussing pricing
with its competitors. That is easy. Put a new house style on the market, set
the price and your competitors who will not want to loose market share
will build a similar house for a similar price.

Additionally, associations of builders, architects, plumbers, and on and on
have meetings to discuss various parts of their professions. These people are 
there to communcate their ideas about products to each other.
So once you know about something new, and you have material costs
and labour costs then how long do you think it would take for someone 
who knows his or her job to determine the approximate price of a competitor's
product. 

>(stuff removed)

>I have noticed that the average price of a home in Ottawa starts
>at about what one person earning $40K/year or about $80K to $100K
>plus another 10 to 25% for the down payment.

>It seems to me, a small surprise, that a LOT of new houses sell
>for about twice that - the amount two $40K/year earners can
>afford.
>
>In other words, we (people who can afford or barely afford it)
>have driven house prices up to their current level.

>I'd be curious to know if anyone has studied the difference
>between average saleries and house prices across Canada?

This is all about "what the market will bear". You are right about the 
pricing seeming to be too tightly couple to your salary. Well it is.
There are all kinds of polls, surveys, census to determine the exact
demographics of you and your neighbors. Some of this information can 
be narrowed down to a couple of blocks in a specific neighborhood.

Secondly, there is currently a larger proportion of 2 income families 
then in the past. Consequently, a larger proportion of disposable income
will be present. Most people have been taught to invest money in their
homes. 

Third issue, if you get the stats on homes from the 50s, 60s, 70s.... you
will find that the general size of houses are increasing. A bigger house
costs more money to build. All those fancy ammenities like 2 car garages,
on-suite master bathrooms big enough to hold a dinner party of 8 people
costs more money. The stupid is those demographics. We told them what we 
wanted, the builders satisfied our wants and then we were asked to pay 
for it.

There are a lot of factors that determine the price. Location, demand, features
local politic climat. I have just commented on the supply and demand aspect
of this whole process.

We must take ownership for our actions. Many things in this society are 
driven solely by money. Consequently, increasing our expectations will probably
result in increased expenditures. We must be careful to clarify what we
need and what we want. It would be nice to own a 3000 sq. ft. home with
all the amenities. I don't need it, and I certainly would not want to clean
it.

-- 
Cheers

| Lory Neal McCafferty       | Internet : lory@bnr.ca | to err is human...   |
| Bell Northern Research     | Phone : 613-763-4129   | it takes a computer  |
| P.O. Box 3511, Station C   | FAX : 613-756-4845     | to really screw up!  |
| Ottawa, On. K1Y 4H7 CANADA |                        |                      |