Homes are becoming less affordable in Canada, but in terms of gold, the price of an average home in Canada is now at 1988 levels (7 kilos)! What’s really decreased is the purchasing power of our wages due to inflation.
Why hasn’t this been reflected accordingly in CPI numbers?
- CPI is underreported because of its structure (e.g., reducing the weight of items when people stop using them, sometimes due to unaffordability).
- Technology is continuously driving down manufacturing costs, reducing the price of essentials.
- Home prices aren’t directly included in CPI—only rent costs are factored in.
As Milton Friedman, 1976 Nobel Prize winner in Economics, said: "Inflation is just like alcoholism. In both cases, when you start drinking or when you start printing too much money,the good effects come first, the bad effects only come later."
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