The mechanism of Net Present Value can be a real bear sometimes. Particularly when interest rates fall for over forty years, housing costs soar and your wages don’t keep up.

In 1985, for example, the median home price was about $81,000, but rose by 406 percent to about $426,000 in 2023. Obviously, any taxes, insurance, and down payments that are proportional to the home price were far lower in 1985 than they are now. Moreover, as home prices quintupled from 1985 to 2023, median household income only increased by 241 percent, rising from about $23,000 in 1985 to $84,000 in 2023.

If Pulte really wanted to see homes become more affordable, he would push for less monetary inflation and for lower federal deficits. He would push for the Fed to reduce its balance sheet of mortgage backed securities.

I’m sure the new PM will be able to fix all these problems, right? Perhaps a few more taxpayer bailouts with cute titles like the Ontario Together Trade Fund will do the trick.

The Canadian Federation of Independent Business released a report Wednesday based on a survey of 187 small-to-medium-sized businesses in the automotive sector, from parts suppliers to repair shops, and found that tariffs are already having an impact.

Their revenue has declined by 13 per cent, on average, and half of them reported that they have paused or cancelled investments due to uncertainty caused by the Canada-U.S. trade war, which could lead to billions in lost revenue or missed investments, the report said.

A recent addition to the news category of No Surprise There. Average Joe Voter would happily choose lower debt service costs and more free stuff from the government over unaffordable housing any day, since he cannot grasp the connection between those two phenomena in the first place.

Nearly two-thirds of Canadians (64 per cent) say they desperately need interest rates to fall, given the financial constraints they’re under. Over one-third (36 percent) report feeling anxious or stressed about their financial situation, while one-quarter say they’ve had to stall life plans (26 per cent) or are constantly putting out financial fires due to an endless stream of unexpected costs (24 per cent).

Higher interest rates coupled with rising unemployment are throwing the marginal consumer out of the cottage market in a big way.

Saddle the economy with enough debt and you’ll find that fewer and fewer people will have the means to afford a house. It’s all about the concept of Net Present Value.

Politically, however, the central bank’s efforts to force down interest rates—which has required monetary inflation—has been justified on the grounds that it “increases homeownership.” Moreover, Federal policymakers since 2008 doubled down on subsidizing home purchases with the bailouts of Fannie Mae and Freddie Mac in 2008.

Yet, none of this has produced more affordable homes. It has only led to price inflation. This has been great for Wall Street and those who already own assets. It’s been a disaster for younger people and first-time home buyers.