Why hasn't the "booming economy" of Saskatoon led to an affordable cost of living?

Not a day goes by without hearing something like " we do not want to go back to what it was like before".  I have nothing against the city growing in population or economy.  It's just that I hate when someone tries to blow sunshine up my &^*.  Are Saskatoonians better off now than compared to 2006?  Well, it depends on where you are on the scale.  But as a whole, the increase of wages has not kept up to the increase of in the cost of living .  In my view, increased wages is what counts, not GDP growth, not population growth, job growth.  It is wages.  Money in my pocket.  And if wages have not kept pace with rents and house prices, there is a definite problem.

So let's go back in time to 2006 and look at some Saskatoon Economic housing measures to see how the cost of living has changed.

• Average house price to average household income ~ 2.7 ( alarm bells ringing after a ratio of 3)
• Average house price to average household income after tax ~ 3.3 ( alarm bells ringing after a ratio of 4)
• Medium Multiple ~ 2.6 ( alarm bells ringing after a ratio of 3)
• Monthly affordability for average bungalow with taxes + utilities ~ 30% (alarm bells ringing after 32%)
• House Price to Earnings ~ 18 ( alarm bells ringing after a ratio of 20)
• 48% of rental households in Saskatoon paid over 30% of their income towards monthly rent. (CMHC in 2005, anything over 30% is unaffordable)

Looks like house prices and rents were fairly valued in 2006.  Not undervalued like some people think.

Compare that with today's measures

• Average house price to average household income ~ 4.2 ( alarm bells ringing after a ratio of 3)
• Average house price to average household income after tax ~ 5.4 ( alarm bells ringing after a ratio of 4)
• Medium Multiple ~ 4.3 ( alarm bells ringing after a ratio of 3)
• Monthly affordability for average bungalow with taxes + utilities ~ 40% (alarm bells ringing after 32%)
• House Price to Earnings ~ 25 ( alarm bells ringing after a ratio of 20)
• Over 50% of rental households in Saskatoon pay over 50% of their income towards monthly costs (anything over 30% is unaffordable)

It looks like housing is very unaffordable for renters and first time buyers now compared to just a few years ago.  Never mind the fact that first time buyers have to worry about boat loads of debt as well.

From 2006 to 2010, the average house price in Saskatoon increased 84.5% (160k to 296k)
From 2006 to 2010, the average 2 bedroom apartment monthly rent increased 53.6% ($608 to $934)
From 2006 to 2010, the average weekly wage in Saskatchewan increased by 19% ( $710 to $846)
Here is how it looks in graph form.

So what could push up the cost of living to make it unaffordable? It's the debt.  I do not have numbers for Saskatoon, only Saskatchewan.  Saskatoon has probably followed the same trend as Saskatchewan.

Even with our booming economy, the value of mortgage debt has doubled as a % of our Provinces GDP.

Much of our housing boom is based on debt.  It is why ALL booms go bust.  Sadly, policy makers, business leaders believe it is different here and this time.  And for the people in important places who see the writing on the wall but do nothing, shame on them.

If we truly want a great province that does not hinge on boom/bust times, the cost of living for everybody should be affordable. What would be better?  High house prices that leaves less money available for families to spend in the local economy? ( This money is funneled  away from the people to the banks with higher mortgage debt)  Or lower house prices which leaves more money left over for families to spend in the local economy?  In a consumer spending economy of 62% of GDP  like we have here, it does not take a rocket scientist to figure that one out.

The last thing we need is more subsidies for the housing market.  People need to realize that unaffordability is the same as a housing bubble.  Call it as it is.  The housing bubble needs to pop.  Then there would  be pain.  Then recovery. Then growth that is balanced and stable. Until that happens, the cost of living will be unaffordable in Saskatoon.