An RBC study released this week concludes people aged 35 to 45 are, thanks to their mortgages, carrying dangerously large debt levels that could put them in deep trouble if interest rates go up or the housing market comes down.
These grown-up Generation Xers largely bought their homes from 1999 onward. After two decades of an average home appreciation of 0.3 per cent per year, appreciation jumped to 4.6 per cent per year since that time, the study noted.
This news will come as cold comfort to Generation Y, which now finds itself priced out of home ownership entirely.
Whether you assign blame to foreign millionaires or local ones, the effect is the same. People making middle-class wages are either overextending themselves or becoming resigned to the fact they will rent forever.
The problem is, Generation X is in so deep now, they’ll fight ferociously any effort to bring housing values back into the realm of sanity. And anything that brings the housing market back down in a hurry is likely going to crush more than a few sectors of the economy with it.
There’s no one person or policy to blame for this conundrum. Although there’s no doubt that our society’s lack of ample acceptable alternative options to the large single-family home with a lawn and a two-car garage has helped create the problem. Renting is considered a temporary situation and co-ops, while excellent, are simply not being built anymore or supported by the federal government.
The cost of housing is ever present either in the foreground or the background of most any debate we have now, whether it’s at the council table or the dinner table.
It’s just sad that there’s no way to have the debate without pitting one generation against another.
