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UBC Theses and Dissertations

Changes in taste for housing Gubbe, Robert Maxwell 1972

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CHANGES IN TASTE FOR HOUSING by ROBERT MAXWELL GUBBE B.A. U n i v e r s i t y of B r i t i s h C o l u m b i a , 1970 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS i n the School o f Community and Reg i ona l P l a n n i n g We a c c e p t t h i s t h e s i s as con fo rm ing to the r e q u i r e d s t a n d a r d THE UNIVERSITY OF BRITISH COLUMBIA J u l y , 1972 In p r e s e n t i n g t h i s t h e s i s i n p a r t i a l f u l f i l m e n t of the r e q u i r e m e n t s f o r an advanced degree a t the U n i v e r s i t y o f B r i t i s h C o l u m b i a , I a g r e e . t h a t the L i b r a r y s h a l l make i t f r e e l y a v a i 1 a b l e f o r r e f e r e n c e and s t u d y . I f u r t h e r agree t h a t . p e r m i s s i o n f o r e x t e n s i v e copy i ng of t h i s t h e s i s f o r s c h o l a r l y purposes may be g r a n t e d by the Head o f my Department or by h i s r e p r e s e n t a t i v e s . I t i s unde r s t ood t h a t c opy i n g or p u b l i c a t i o n o f t h i s t h e s i s f o r f i n a n c i a l g a i n s h a l l not be a l1 owed w i t h o u t my w r i t t e n p e r m i s s i o n . Rober t Maxwel l Gubbe SehooF^o f - °f (^vv>y»vM/>u^y <ft/vc^ The U n i v e r s i t y o f B r i t i s h Co lumbia Vancouver 8, Canada Date (LA l°\ j mi-i i ABSTRACT Th i s paper a t tempt s to de te rm ine whether changes have o c c u r r e d i n C a n a d i a n s ' p r e f e r e n c e f o r . h o u s i n g . To t h i s e n d , i t has been proposed t o . t e s t the t h e s i s t h a t C a n a d i a n s ' t a s t e f o r h o u s i n g , as r e p r e s e n t e d by the p o r t i o n of income devoted to i t , i s i n d e c l i n e . Most of the l i t e r a t u r e on the s u b j e c t d e a l s w i t h the hous i ng e x p e n d i t u r e - i n c o m e r e l a t i o n s h i p as i t a p p l i e s to the U n i t e d S t a t e s ; much of t h i s i n t u r n d e s c r i b e s the r e l a t i o n s h i p i n terms o f e l a s t i c i t i e s . A l t hough da t a w i t h r e s p e c t to the Canad ian s i t u a t i o n i s l a r g e l y r e s t r i c t e d to one segment of the new hous i ng .marke t , i t has been deemed p rope r to beg i n to d e s c r i b e . t h e Canad ian hou s i n g - i n come r e l a t i o n s h i p . Data c o n c e r n i n g buyers of i n d i v i d u a l l y f i n a n c e d d w e l l i n g s f o r owner occupancy under the N a t i o n a l Hous ing A c t were used to make i n t e r t e m p o r a l compar i sons d u r i n g the p o s t -war p e r i o d o f . s e v e r a l f i n a n c i a l v a r i a b l e s . The compar i sons of v a r i a b l e s were m o d i f i e d by means of a compar i son of the incomes of f a m i l i e s bo r r ow i ng under the NHA and o t h e r non-farm Canad ian f a m i l i e s i n s im i 1ar c i r c u m s t a n c e s i n terms of s i z e of f a m i l y , age o f head o f f a m i l y , t e n u r e , and s i z e of town of r e s i d e n c e . The r e s u l t s of the a n a l y s i s i n d i c a t e t h a t f o r NHA b u y e r s , the r a t i o of house p r i c e to income has d e c l i n e d i n i i i v a l u e . A s i m i l a r t r e n d is. e v i d e n t from S t a t i s t i c s Canada da t a f o r a l l Canad ian f a m i l i e s . For NHA buyers the d e c l i n e i n the r a t i o of house p r i c e to income has been the r e s u l t of a c on t i nuou s d e c l i n e i n the pe r cen t age of income p a i d down on the d w e l l i n g and a r e c e n t d e c l i n e i n the r a t i o of mortgage amount to income. The d e c l i n e i n the r a t i o o f mortgage amount to income i s seen as an ad ju s tment to h i g h e r i n t e r e s t r a t e s , but the s t eady d e c l i n e i n the i n i t i a l commitment i s seen as e v i d e n c e o f a d e c l i n e i n p r e f e r e n c e f o r h o u s i n g . i v TABLE OF CONTENTS Page ABSTRACT i i LIST OF TABLES v i L IST OF FIGURES i x ACKNOWLEDGMENT , x i Chap te r I . INTRODUCTION 1 Need f o r Research 3 Prob lem S ta tement . 5 Hypo the s i s 6 Organ i z a t i on 6 D e f i n i t i o n of Terms 6 I I . METHODOLOGY 8 Genera l C o n s i d e r a t i o n s and Assumpt ions . . . . 8 L i t e r a t u r e 11 P o s s i b l e Programme . . . 12 Programme Chosen 13 I I I . REVIEW OF LITERATURE 16 L i t e r a t u r e i n Suppor t of Hypo the s i s 17 L i t e r a t u r e Oppos ing the H y p o t h e s i s 21 t V Chap te r Page IV. RESEARCH RESULTS 24 Income Compar i son 25 F i n a n c i a l V a r i a b l e s - NHA Buyers 56 Genera l I n d i c a t i o n s . . . 76 A rea Compar i son . 84 V. SUMMARY OF RESULTS 93 V I . PLANNING IMPLICATIONS . 96 Change i n Ta s te 96 I n t e r e s t - P r i c e S e n s i t i v i t y 98 The D e c l i n e i n the P r i ce/ I n come R a t i o . . . . 99 BIBLIOGRAPHY . 101 v i LIST OF TABLES Tab l e Page I. P r o f i l e of NHA Bor rower 26 I I . Income Compar i son - Incomes o f : (a) a l l non- fa rm f a m i l i e s and i n d i v i d u a l s . . . 27 (b) a l l non- fa rm f a m i l i e s 27 (c ) a l l f a m i l i e s i n l a r g e urban c e n t r e s . . . . 27 (d) f a m i l i e s b o r r o w i n g under the NHA 27 I I I . Income Compar i son - Median Canad ian Fam i l y Incomes Compared.wi th Median Incomes of F a m i l i e s Bo r row ing under the NHA 29 IV. Income Compar i son - Mean Canad ian Fam i l y Incomes Compared w i t h Mean Incomes of F a m i l i e s Bo r row ing under NHA 32 V. Age Compar i son - Median Incomes of F a m i l i e s w i t h Head.the Same Age as Head o f F a m i l i e s Bo r row ing under the NHA w i t h NHA Fam i l y Incomes . . . . . . . . 34 1^ V I . Age Compar i son - Mean Incomes of F a m i l i e s w i t h Head the Same Age as Head of F a m i l i e s Bo r row ing under the NHA w i t h NHA Fam i l y Incomes 36 V I I . S i z e Compar i son - Median Incomes of F a m i l i e s of S i z e Equal to the S i z e of F a m i l i e s Bo r row-i n g under the NHA Compared to Median NHA Fam i l y Incomes . . 39 V I I I . S i z e Compar i son - Mean Incomes of F a m i l i e s of S i z e Equal to the S i z e of F a m i l i e s Bo r row-i n g under the NHA Compared to Mean NHA F a m i l y Incomes 41 IX. Canad ian Non-Farm Fam i l y Income, by S i z e of F am i l y . 42 X. Tenure Compar i son - Incomes of F a m i l i e s Owning T h e i r Homes Compared to Incomes of F a m i l i e s Bo r row ing under the NHA 45 v i i Tab le Page X I . Income Compar i son - Median Income of F a m i l i e s i n La rge Urban Cen t r e s Compared w i t h Median Income of F a m i l i e s Bo r r ow ing under NHA 49 X I I . Income Compar i son - Mean Income o f F a m i l i e s L i v i n g i n La rge Urban Cen t re s Compared w i t h Mean Income of F a m i l i e s Bo r row ing under the NHA 5 0 X I I I . Income Compar i son - Incomes o f : (a) a l l non - fa rm f a m i l i e s 53 (b) a l l f a m i l i e s i n l a r g e urban c e n t r e s . . . . 53 (c ) f a m i l i e s bo r r ow ing under the NHA i n p e r c e n t i l e s as r e l a t e d to the income d i s t r i b u t i o n of a l l non - fa rm f a m i l i e s ; s t r a i g h t - l i n e a p p r o x i m a t i o n 53 XIV. Income Compar i son - Incomes o f : (a) a l l non- fa rm f a m i l i e s and i n d i v i d u a l s . . . 54 (b) a l l non - fa rm f a m i l i e s 54 (c ) a l l f a m i l i e s i n l a r g e urban c e n t r e s . . . . 54 (d) f a m i l i e s bo r r ow i ng under the NHA i n p e r c e n t i l e s as r e l a t e d to the income d i s t r i b u t i o n of a l l non- fa rm f a m i l i e s and i n d i v i d u a l s ; s t r a i g h t - l i n e a p p r o x i m a t i o n 54 XV. NHA Loans f o r Home Ownersh ip - P r i c e o f I n d i v i d u a l l y F i nanced U n i t s , Average Mortgage Amounts, Average Down-Payment, and Average I n t e r e s t Rate 59 XV I . Mean Income of Head and F a m i l y of Bo r rower s under the NHA f o r Owner -Occup ied H o u s i n g ; R a t i o s of D w e l l i n g P r i c e and Down Payment to Income 63 XV I I . Hous ing Cos t and Income I n d i c e s (1961 = 100) 65 X V I I I . Mortgage Amount as M u l t i p l e of Incomes of NHA Bor rower and Fam i l y (NHA means) ; R a t i o of Gross Debt S e r v i c e to Income 72 XIX. S h e l t e r Cost s ( H o u s i n g , F u e l , L i g h t , and Wate r ) . a s Pe r cen tage of Income 77 v i i i Tab le Page XX. S h e l t e r Cost s ( H o u s i n g , F u e l , L i g h t and Water) and Pe r s ona l Taxes as Pe r cen tage of Income - Average of AIT Groups . . . . . . . . 7 8 XX I . Hous ing S t a r t s - V a r i o u s Types as Pe r cen t age of T o t a l S t a r t s 81 XX I I . P o p u l a t i o n of Canada, Net Fam i l y F o r m a t i o n , F am i l y S i z e , Pe r cen tage of Two-Person F a m i l i e s . . . . . 83 X X I I I . A rea Compar i son - T o t a l Cos t ( L and , Con-s t r u c t i o n and Other C o s t s , but E x c l u d i n g Mortgage I n su rance Fee) of D w e l l i n g s F i nanced under NHA on F r e e h o l d Land i n V a r i o u s M e t r o p o l i t a n Areas . . . 86 XXIV. A rea Compar i son - Mean NHA B o r r o w e r s ' Incomes, I n d i v i d u a l l y F i nanced D w e l l i n g s f o r Home Ownersh ip ) i n V a r i o u s M e t r o p o l i t a n Areas . . . 87 XXV. R a t i o of T o t a l Cos t to Income of P u r c h a s e r , I n d i v i d u a l l y F i nanced NHA D w e l l i n g s 88 XXVI. Area Compar i son - C o s t . o f Land Component of I n d i v i d u a l l y F i nanced NHA D w e l l i n g s 90 XXV I I . Land Cost as F r a c t i o n (%) of T o t a l Hous ing Cos t of I n d i v i d u a l l y F i n anced NHA D w e l l i n g s . 91 i x LIST OF FIGURES F i g u r e Page 1. Income Compar i son - Median Incomes of F a m i l i e s Bo r r ow ing under the NHA and Canad ian.Non-Farm F a m i l i e s 28 2. Income Compar i son - Mean Incomes of F a m i l i e s Bo r row ing under the NHA and Canad ian Non-Farm F a m i l i e s 31 3. Income Compar ison - Median Incomes o f F a m i l i e s Bo r r ow ing under the NHA and Non-Farm Canad ian F a m i l i e s w i t h Head the Same Age as NHA Average Each Year 33 4. Income Compar i son - Mean Incomes of F a m i l i e s Bo r row ing under the NHA and Non-Farm Canad ian F a m i l i e s w i t h Head the Same Age as NHA Average Each Year 35 5. Income Compar i son - Median Incomes o f F a m i l i e s Bo r row ing under the NHA and Non-Farm Canad ian F a m i l i e s the Same S i z e as the NHA Average Each Year 38 6. Income Compar i son — Mean Incomes of F a m i l i e s Bo r row ing under the NHA and Non-Farm Canad ian F a m i l i e s the Same S i z e as NHA Average Each Year. 40 7. Income Compar i son - Median Incomes o f F a m i l i e s Bo r row ing under the NHA and Non-Farm Canad ian F a m i l i e s who Own T h e i r Dwel l i n g s 43 8. Income Compar i son - Mean Incomes of F a m i l i e s Who Own T h e i r D w e l l i n g s 44 9. Income Compar i son - Median Incomes of F a m i l i e s Bo r row ing under the NHA and Canadian F a m i l i e s L i v i n g i n La rge (30,000+) Urban Cen te r s 47 X F i g u r e Page 10. Income Compar i son - Mean Incomes of F a m i l i e s Bo r row ing under the NHA and Non-Farm Canad ian F a m i l i e s L i v i n g i n La rge (30,000+) Urban Cen te r s 48 11. Income Compar i son - Median Incomes o f Fam-i l i e s Bo r row ing under the NHA and Canad ian F a m i l i e s L i v i n g i n La rge (30,000+) Urban Cen t r e s as Income P e r c e n t i l e s of a l l Canad ian F a m i l i e s 51 12. NHA House P r i c e s , Mortgages and Down-Payments , 1946 - 1 970 , 57 13. I n t e r e s t Rates on NHA Loan s , 1953 - 1970 . . . 60 14. Income o f Average NHA P u r c h a s e r , 1953 -1970; Pe r s ona l D i s p o s a b l e Income Per Cap i t a " , 1 961 - 1970 61 15. Incomes, Hous ing C o s t s , Consumer P r i c e s : I n d i c e s , 1 959 - 1 970 64 16. NHA P r i c e and Per C a p i t a D i s p o s a b l e Income: R a t i o of I n d i c e s , 1961 - 1970 66 17. Rates of Growth of House P r i c e s , Incomes and Down Payments 67 18. House P r i c e as M u l t i p l e of B u y e r ' s Income, 1 953 - 1970 . . . 68 19. Mortgages and Down Payments as M u l t i p l e s of B u y e r ' s i ncome, 1953 - 1970 . 71 20. House P r i c e as M u l t i p l e o f Income R e l a t e d to I n ve r se I n t e r e s t Rate Index , 1953 -1970 . 73 21 . R a t i o of Gross Debt S e r v i c e to Income, 1 953 - 1 970 75 22. Hous ing S t a r t s , T o t a l and by Type of Dwel 1 i ng 79 23. Hous ing S t a r t s by Type of D w e l l i n g as Pe r cen tage of T o t a l 8 0 ACKNOWLEDGEMENT G r a t e f u l l y acknowledged i s the he l p of L o i s E l l i s , Anne K a s s a u t z k i , and Robe r ta S t a y t e i n the p r e p a r a t i o n of t h i s pape r . A l s o acknowledged i s the k i ndnes s and s u p p o r t o f Dr. Rober t Col 1 i e r , A s s i s t a n t D i r e c t o r o f the School of Community and Reg i ona l P l a n n i n g a t the U n i v e r s i t y of B r i t i s h C o l u m b i a . 1 CHAPTER I INTRODUCTION For many yea r s Canad ians have been t o l d of the hou s i ng problem w i t h i n t h e i r m i d s t . Hous ing s h o r t a g e , h i gh c o s t s of l a b o u r and b u i l d i n g m a t e r i a l s , the h i gh c o s t of s e r v i c e d l a n d , the e v i l s o f 1 a n d . s p e c u 1 a t i o n and so on have combined to make the whole q u e s t i o n of hous ing and whether peop le can p r o v i d e a decent s t a n d a r d of i t f o r themse l ve s a p e r e n n i a l one. I t has been d i s c o v e r e d t h a t some Canad ians l i v e i n sub -s t a n d a r d , o ve r c rowded , u n s a n i t a r y , r amshack l e hou s i n g . ^ Poor hou s i ng i s a s s o c i a t e d w i t h ve ry r e a l s o c i a l problems and i n d i v i d u a l h a r d s h i p which are not to be m i n i m i z e d . Most 2 C a n a d i a n s , however, are not p o o r l y housed by w o r l d s t a n d a r d s , and most l i v e i n hous ing t h a t meets the s t anda rd s of the communi t ies i n wh ich they r e s i d e . I t has a l s o been d i s c o v e r e d t h a t most Canad ians a s p i r e 3 t o . t h e owner sh ip of t h e i r own s i n g l e - d e t a c h e d house. I t has become c o n v e n t i o n a l wisdom t h a t too few f a m i l i e s w i l l a t t a i n Repor t of the Task Force on Hous ing and Urban D e v e l o p -ment, Queen ' s P r i n t e r , O t t awa , 196~9~. • » p . 6 . pp. 15-16. 2 t h i s g o a l . I t i s a l s o a p a r t o f t h i s wisdom t h a t a "home of t h e i r own" may be beyond the reach of an e v e r - i n c r e a s i n g p o r t i o n of Canad ian f a m i l i e s . On a pe r s ona l l e v e l , the " hou s i n g p r o b l e m " may reach us v i a a r e q u e s t f rom the l a n d l o r d f o r more money, or by way o f a s ea r ch f o r accommodation t h a t both s u i t s our t a s t e and f a l l s w i t h i n a p r i c e our budget w i l l a l l o w . Of c o u r s e , the m a t t e r o f - r e c o n c i l i n g t a s t e and budget i s n e i t h e r new nor uncommon, but the magnitude of the conce rn t h a t fewer and fewer C a n a d i a n s , r e l a t i v e l y s p e a k i n g , w i l l be a b l e to a f f o r d hous ing of t h e i r c h o i c e l ead s one to i n q u i r e whether t h e r e i s a b a s i s i n f a c t f o r t h i s c o n c e r n . There i s no d e s i r e to m i n i m i z e the c o m p l e x i t y of t h i s q u e s t i o n . There are however , t h r e e p o s s i b l e reasons f o r the f e e l i n g t h a t the p r o v i s i o n of hou s i ng i s becoming an e v e r -i n c r e a s i n g burden on the f a m i l y ' s budget . The f i r s t has a p s y c h o l o g i c a l b a s i s and i s t h a t e x p e c t a t i o n s have o u t - s t r i p p e d r e a l i t y to an unusua l deg ree . T h i s rea son might be termed " i n f l a t i o n s hock " and a r i s e s when the f a m i l y r ega rd s i n c r e a s e d d o l l a r income as i n c r e a s e d r e a l income and i s s u r p r i s e d to f i n d the c o s t s o f goods and s e r v i c e s r i s i n g more o r l e s s apace . The second e x p l a n a t i o n i s t h a t hous i ng c o s t s have r i s e n much more q u i c k l y than income. Th i s e x p l a n a t i o n , i f t r u e , would be easy to prove s t a t i s t i c a l l y . 3 The t h i r d e x p l a n a t i o n i s t h a t the f a m i l y or consuming u n i t has r e - a r r a n g e d i t s a l l o c a t i o n of income. I t may be t h a t , over the cou r se o f t i m e , t a s t e s change. The f a m i l y may come t d - r e g a r d o t h e r goods a n d . s e r v i c e s as more i m p o r t a n t than h o u s i n g . There i s no reason to assume t h a t hou s i n g s h o u l d f a i t h f u l l y m a i n t a i n an i d e n t i c a l p o s i t i o n i n the consumer ' s p r e f e r e n c e f o r a l l goods and s e r v i c e s . As a s o c i e t y we are becoming more l e i s u r e - o r i e n t e d , and i t i s i n t u i t i v e l y s e n s i b l e t h a t i n any r e s u l t a n t r e - a l 1 i g n m e n t of consumer p r e f e r e n c e s hou s i ng s h o u l d move downward. The appa ren t p o p u l a r i t y of r a t h e r e x p e n s i v e l e i s u r e - t i m e p u r s u i t s such as s k i i n g , b o a t i n g , and h o l i d a y i n g w i t h camper t r u c k s , a l l o f which take p l a c e away from home, s uppo r t s t h i s i n t u i t i o n . Of the t h r e e p o s s i b l e e x p l a n a t i o n s advanced , i t i s the t h i r d , a q u e s t i o n of change i n t a s t e , t h a t i s the s u b j e c t of t h i s pape r . Need f o r Research When p o l i c y d i r e c t i o n s are to be cho sen , or when re-* s ou r ce s are to be committed to c e r t a i n programmes, i t i s d e s i r a b l e to have someth ing more s u b s t a n t i a l than s u s p i c i o n o r i n t u i t i o n on which to base d e c i s i o n s . The q u e s t i o n of change i n t a s t e w i t h r e s p e c t to hous i ng i s o f f a r - r e a c h i n g i m p o r t a n c e . and must be s t u d i e d i n o r d e r to p r o v i d e a b a s i s f o r p l a n n i n g c h o i c e s which must be made and which are dependent 4 at l e a s t i n some measure on the p l a c e hous ing ho ld s i n the p r e f e r e n c e s of Canad i an s . I n c r ea sed m o b i l i t y , i n c r e a s e d income, and g r e a t e r l e i s u r e t ime ( s h o r t e r wo r k i n g day , but e s p e c i a l l y the s h o r t e r wo r k i n g week) may.tend to make more of l e i s u r e t ime to be spent away from the home. I t seems r e a s o n a b l e to b e l i e v e then t h a t one of the major s a v i n g s t h a t might be made i n the hous i ng package as the r e s u l t of a downward s h i f t i n the p r e f e r e n c e f o r hous ing would be i n the " l e i s u r e s p a c e " component, the l a r g e s t and 1 e a s t - i n t e n s i v e l y used p a r t of wh ich i s o r d i n a r i l y t h e . l a n d component of h o u s i n g . A major r e s u l t of a s h i f t downward i n the consumer ' s t a s t e f o r hou s i ng may t h e r e f o r e be an i n c r e a s e i n the d e n s i t y a t which hou s i ng i s b u i l t . To whom i s a s tudy of consumers ' p r e f e r e n c e f o r hou s i n g i m p o r t a n t ? As f a r as i t might p r o v i d e a c l u e to the d e n s i t y a t wh ich a d d i t i o n s t o . h o u s i n g s t o c k are made, i t has the most immediate impo r t ance to those conce rned w i t h the use and deve lopment o f l a n d . The hous i ng d e v e l o p e r , f o r i n s t a n c e , w i l l w i sh to have a b a s i s f o r d e c i d i n g f o r what market he w i l l b u i l d . D e c i s i o n s as to the p r i c e the consumer i s w i l l i n g to pay ( t a s t e ) f o r hous ing w i l l d e t e rm ine the d e v e l o p e r ' s m a r k e t i n g s t r a t e g y , the k i n d o f de s i g n e x p e r t i s e he w i l l a c q u i r e or d e v e l o p , and the k i n d o f z on i n g he w i l l p res s f o r i n the a reas i n which he w i shes to b u i l d . Que s t i on s a r i s i n g from p o s s i b l e changes i n t a s t e of the community have more i m p l i c a t i o n s f o r those i n the p u b l i c 5 sphere charged w i t h p l a n n i n g the deve lopment of l o c a l or r e g i o n a l areas than can be ment ioned i n d i v i d u a l l y . Can an adequate wa te r s upp l y be a c h i e v e d w i t h i n d i v i d u a l w e l l s b u i l t by the h o u s e h o l d e r , or w i l l e l a b o r a t e schemes of s t o r a g e and pumping .w i th e x t e n s i v e p i p i n g be needed and t h e r e f o r e p lanned f o r ? How much p a r k l a n d w i l l be r e q u i r e d ? What about sewers? In what form w i l l t r a n s p o r t a t i o n needs be met? Problem S ta tement I t i s assumed, f o r the purpose of t h i s i n v e s t i g a t i o n , t h a t changes i n the t a s t e o f peop le f o r hou s i ng may a f f e c t the type and impo r t ance of problems t h a t p l a n n e r s w i l l be c a l l e d upon to s o l v e . These w i l l c e n t r e around r e t a i n i n g a l i v a b l e urban env i r onment i f i t s h o u l d be t r u e t h a t hous i ng i s f a l l i n g i n consumer p r e f e r e n c e , t h a t i s , i f peop le a re w i l l i n g to spend o n l y a s m a l l e r p r o p o r t i o n of income on hous ing as t ime pa s s e s . The prob lem f o r t h i s paper i s to de te rm ine whether the p r o p o r t i o n of t h e i r incomes Canad ians are d e v o t i n g to the p r o v i s i o n of hou s i ng i s i n change. The q u e s t i o n t h i s paper a t tempt s to answer i s : Are t h e r e t r end s i n the r e l a t i o n s h i p s among hous i ng f i n a n c i a l v a r i a b l e s wh ich i n d i c a t e a change i n t a s t e f o r hous ing ? 6 Hypothes i s In o r d e r to p r o v i d e the r e s e a r c h prob lem w i t h an i n -v e s t i g a t i v e s t r u c t u r e , i t i s h y p o t h e s i z e d : t h a t the t a s t e of Canad ians f o r h o u s i n g , as r e p r e s e n t e d by the p r o p o r t i o n o f income devoted to i t d u r i n g the p o s t - w a r p e r i o d , i s i n d e c l i n e . Organi z a t i on The rema inder of t h i s paper i s composed o f (a) a s t a t e -ment of the methodo logy emp loyed , (b) a r e v i ew of l i t e r a t u r e (c) p r e s e n t a t i o n of r e s e a r c h r e s u l t s , (d) a summary o f f i n d i n g s , and (e) an e x a m i n a t i o n of p l a n n i n g i m p l i c a t i o n s . D e f i n i t i on o f Terms The f o l l o w i n g terms are used e x t e n s i v e l y i n the un l e s s s t a t e d o t h e r w i s e they are to be taken as hav i ng meanings a s c r i b e d be low. Income: g ros s income; or i n the case of NHA p u r c h a s e r , the income s t a t e d on the mortgage a p p l i c a t i o n form and c omp i l ed by the CMHC. Mortgage Amount: The amount of the f i r s t mortgage l oan g r an ted by CMHC or approved l e n d e r . P r i c e , purchase p r i c e , c o s t : used i n t e r c h a n g e a b l y to mean the d w e l l -i n g p r i c e r e p o r t e d by CMHC. t e x t ; the 0 7 Hous i ng when used i n p a r t i c u l a r r e g a r d to the Research R e s u l t s i n t h i s p a p e r , " h o u s i n g " means i n d i v i d u a l l y f i n a n c e d d w e l l i n g u n i t s f o r owner -occupancy . S e p a r a t e l y f i n a n c e d , i n d i v i d -u a l l y f i n a n c e d : d w e l l i n g u n i t b u i l t by means of a l o a n not s ecu red by any o t h e r p r o p e r t y or d w e l l i n g u n i t . May i n c l u d e some m u l t i p l e f o r m s , but mo s t l y s i n g l e d e t a c h e d . Term adopted from CMHC's Canadi an Hobs i ng S t a t i s t i cs , where i t i s g e n e r a l l y i n t e r c h a n g e a b l e w i t h " o w n e r - o c c u p i e d . " Bungalow: i s a o n e - s t o r e y s i n g l e - d e t a c h e d d w e l l i n g . G e n e r a l l y a l e s s c o s t l y s t r u c t u r e to e r e c t than o t h e r s i n g l e - d e t a c h e d f o rms , e . g . t w o - s t o r e y , one and o n e - h a l f s t o r e y , or s p l i t - 1 e v e l . T a s t e , p r e f e r e n c e : used i n t e r c h a n g e a b l y to mean the p r o p o r t i o n of con sumer ' s income d e v o t e d . I f the p r o -p o r t i o n of a con sumer ' s income devoted to a good changes , then the consumer t a s t e o r p r e f e r e n c e f o r t h a t good i s s a i d to have changed or s h i f t e d . 8 CHAPTER II METHODOLOGY Genera l Cons i d e r a t i ons and Ass umpti ons In f o r m u l a t i n g a methodology to s e r ve as a b a s i s f o r r e s e a r c h , i t has been chosen to a d h e r e , w i t h o n l y d e s c r i p t i v e d e p a r t u r e s , to the a s sumpt ion t h a t movements i n the t a s t e f o r a good can be s a i d to o c cu r i f changes o c cu r i n the p r o -p o r t i o n of income devoted to i t . Th i s a s sumpt ion i s p r o b a b l y a good one, c e t e r i s p a r i b u s , but i n the r e a l w o r l d i t c a r r i e s w i t h i t a number of weaknes se s . One o f . t h e s e might be t h a t t h e r e must be an absence of unusua l c i r c u m s t a n c e s or sudden changes i n c i r c u m s t a n c e s . Ano the r might be t h a t t h e r e must be s t a b i l i t y i n the s t r u c t u r e of r e l a t i v e p r i c e s f o r d i f f e r e n t goods. A t h i r d might be t h a t any package of goods and s e r v i c e s under a g i v e n l a b e l must remain c o n s t a n t ; f o r example , the t e r m , " h o u s i n g " s h o u l d compr i se s u b s t a n t i a l l y the same mix of space and equipment t h r oughou t the p e r i o d of s t u d y . F i n a l l y , some might a t t a c k the a s sumpt ion i t s e l f , m a i n t a i n i n g t h a t t a s t e f o r a good and the p r o p o r t i o n of income p a i d f o r i t have no nece s s a r y r e l a t i o n s h i p and add ing as the f i r s t i n s t a n c e the a i r we b r e a t h e , wh ich i s both nece s s a r y f o r l i f e and a v a i l a b l e f r e e of c h a r g e . Th i s argument i s 9 based l a r g e l y on a c o n f u s i o n between p u b l i c and p r i v a t e g o o d s , a s u b j e c t which w i l l not be e n t e r e d i n t o h e r e J The most s e r i o u s of the o b j e c t i o n s to the l i m i t i n g a s s u m p t i o n . chosen i s t h a t , i n e f f e c t , compar ing the t a s t e f o r " h o u s i n g " as a commodity over a t i m e - s p a n of twenty y e a r s i s l i k e compar ing a p p l e s at one end o f the t ime p e r i o d w i t h o ranges a t the o t h e r , and t h a t w i t h o u t a c c o u n t i n g f o r the d i f f e r e n c e s i n the h o u s i n g package t h a t have t a k e n p l a c e o v e r the p e r i o d i t i s d i f f i c u l t to make m e a n i n g f u l s t a t e m e n t s about changes i n t a s t e . I t i s hoped to m i n i m i z e t h i s o b j e c t i o n by s t a t i n g t h a t new a d d i t i o n s to the h o u s i n g s t o c k , i n terms of space and equ ipment p r o b a b l y conform very c l o s e l y to a community c o n c e p t i o n o f what they s h o u l d be l i k e i n t h e s e r e s p e c t s . A n o t h e r way of s t a t i n g t h i s i s t h a t new d w e l l i n g u n i t s are b u i l t to conform to a f a i r l y s t r i c t d e f i n i t i o n of a c c e p t a b i l i t y . T h i s d e f i n i t i o n changes w i t h the passage of t i m e , but i t i s i m p o r t a n t t h a t , y e a r by y e a r , new a d d i t i o n s to the s t o c k d f h o u s i n g are b u i l t to a community s t a n d a r d o f a c c e p t a b i l i t y ; i n o t h e r w o r d s , though the s t a n d a r d s may c h a n g e , what does not change i s t h a t d w e l l i n g s a re b u i l t to a s t a n d a r d . For the purpose of t h i s s t u d y , i t would seem t h a t no s u i t a b l e l i m i t i n g and s i m p l i f y i n g a s s u m p t i o n e x i s t s o t h e r than t h a t c h o s e n . In any c a s e , the p o i n t of t h i s s t u d y i s t h a t ' H ead , J . G . , "The Theory of P u b l i c Goods , " Pub ! i c  F i nance , 1 968. 10 f a m i l i e s may be a l l o c a t i n g t h e i r r e s o u r c e s d i f f e r e n t l y now than f o r m e r l y , t h a t hous ing i s " s u f f e r i n g " as a r e s u l t , and t h a t t h i s has i m p o r t a n t p l a n n i n g i m p l i c a t i o n s . The p e r i o d chosen f o r s tudy was the po s t -wa r e r a . Th i s span of t ime was chosen f o r two r e a s o n s . One of these was t h a t da ta c o n c e r n i n g hous i ng i s much more comple te f o r the po s t -wa r p e r i o d than f o r any o t h e r t i m e - s p a n . The second reason i s t h a t i t was f e l t t h a t the p o s t - w a r p e r i o d was the o n l y p e r i o d r e l e v a n t to p l a n n i n g d e c i s i o n s t h a t must be made today and wh ich are a f f e c t e d by p o s s i b l e changes. i n t a s t e f o r h o u s i n g . In a d d i t i o n , the p o s t - w a r p e r i o d has been f r e e from economic c a t a s t r o p h e and from l a r g e - s c a l e war , a f a c t not t r u e of any o t h e r two-decade p e r i o d i n t h i s c e n t u r y . There are p r o b a b l y two ways i n wh ich the s tudy of p o s s i b l e changes i n t a s t e w i t h r e s p e c t to hous ing might be u n d e r t a k e n . The f i r s t o f t h e s e , perhaps because o f g r e a t e r a v a i l a b i l i t y of d a t a , i s the one u s u a l l y t a k e n , and i s a macro app roach . I t d e a l s w i t h averages of a l l incomes f o r a l l f a m i l i e s f o r i n s t a n c e , and w i t h c o s t s per hous ing u n i t o b t a i n e d f rom some method such as d i v i d i n g the pe r cen tage of g ross n a t i o n a l p r o d u c t devoted to p r oduc i n g hous ing by the number of hou s i ng u n i t s produced i n the same y e a r . Some-t imes a f i n e r d e t e r m i n a t i o n i s u s e d , s t i l l w i t h i n a macro a p p r o a c h . With i n f o r m a t i o n thus o b t a i n e d much can be s a i d about the t a s t e of the p o p u l a t i o n as a whole and the s h i f t i n p r i o r i t i e s on a n a t i o n a l s c a l e . n I t i s not meant to deny the v a l i d i t y o f the macro approach or any of i t s v a r i a t i o n s . Th i s s t u d y , however, i s more concerned w i t h new a d d i t i o n s to the s t o c k of hou s i ng as a f f e c t e d by the t a s t e of those f o r whom i t i s b u i l t . T h e r e -f o r e the approach chosen f o r t h i s r e s e a r c h i s more m i c r o i n n a t u r e , an a t t e m p t to d e t e c t p o s s i b l e changes i n t a s t e o f the segment of the p o p u l a t i o n whose b e h a v i o u r w i l l have the most e f f e c t on the form of new h o u s i n g . As i s o u t l i n e d be l ow, a v a i l a b l e da ta have l i m i t e d the a rea of i n v e s t i g a t i o n to the market f o r home owner sh ip under the N a t i o n a l Hous ing A c t . Home owner sh ip i n v o l v e s both the purchase p r i c e , the down payment and the c a r r y i n g c o s t of the r e m a i n i n g , mortgaged amount. A l l of these f i n a n c i a l v a r i a b l e s are i m p o r t a n t i n the d e t e r m i n a t i o n o f changes i n t a s t e , i f any, and a l l a re examined i n t h i s paper . L i t e r a t u r e A r e v i ew of the l i t e r a t u r e on the s u b j e c t of hou s i ng e x p e n d i t u r e and income has been unde r taken i n o r d e r to broaden u n d e r s t a n d i n g of the s u b j e c t a r e a . I t was hoped t h a t the r e v i ew would l e ad a l s o to data on the p a r t i c u l a r r e s e a r c h a rea cho sen , t h a t of e x p e n d i t u r e / i n c o m e r e l a t i o n s h i p s i n the Canad ian r e s i d e n t i a l ma r ke t , or f a i l i n g t h a t to g i v e p r a c t i c a l c l u e s to the deve lopment or use of o t h e r da ta i n an a p p l i c a t i o n to t h i s p r ob l em. 12 With r e s p e c t to these o b j e c t i v e s the r e v i ew o f l i t e r a -t u r e has not been t o t a l l y s u c c e s s f u l . I t has proven h e l p f u l i n i n c r e a s i n g u n d e r s t a n d i n g of the s u b j e c t a rea f rom many p o i n t s of v i e w , but i t has f a i l e d to uncover p u b l i s h e d da ta r e l e v a n t to the s tudy of hou s i ng e x p e n d i t u r e / i n c o m e v a r i a b l e s 2 i n Canada o t h e r than t h a t p u b l i s h e d by S t a t i s t i c s Canada 3 and the C e n t r a l Mortgage and Hous ing C o r p o r a t i o n . N e i t h e r has the r ev i ew c o n t r i b u t e d much toward the use o f t h i s da ta f o r the d e t e r m i n a t i o n of p o s s i b l e changes i n the t a s t e s of hous ing consumers . P o s s i b l e Programme Data i s a v a i l a b l e on a g ross b a s i s on the mortgage l e n d -ing a c t i v i t i e s o f f i n a n c i a l i n s t i t u t i o n s i n Canada. Th i s a l l o w s s e l e c t i o n of the most a c t i v e l e n d e r s wh ich c o u l d then be p o l l e d f o r i n f o r m a t i o n w i t h r e s p e c t to the incomes of mortgage a p p l i c a n t s , the p r i c e of the hous ing p u r c h a s e d , and so on. S e v e r a l of these l e n d e r s were p o l l e d , w i t h the r e s u l t t h a t i t i s appa ren t t h a t ve ry few, p r o b a b l y none, c o m p i l e on an annual b a s i s , or even c u m u l a t i v e l y , i n f o r m a t i o n e a s i l y P a r t i c u l a r l y the s e r i e s on Urban Fam i l y E x p e n d i t u r e and Fam i l y Income Di s t r i bu t i ons . 3 Canad ian Hous i ng S t a t i s t i cs and i t s p r e d e c e s s o r , Hous ing i n Canada, CMHC, O t t awa , q u a r t e r l y or a n n u a l l y s i n c e 1946. 13 a v a i l a b l e from mortgage a p p l i c a t i o n forms r e l e v a n t to t h i s r e s e a r c h p r o b l e m . . Most , however, seemed w i 1 1 i n g to make mortgage a p p l i c a t i o n s i n t h e i r f i l e s a v a i l a b l e to a r e s e a r c h e r w i l l i n g to r e s p e c t t h e i r c o n f i d e n t i a l n a t u r e , so t h a t the r e s e a r c h e r c o u l d c omp i l e the i n f o r m a t i o n and c o u l d produce a body of s t a t i s t i c s f o r the e n t i r e c o n v e n t i o n a l mortgage market comparab le to the s t a t i s t i c s a l r e a d y a v a i l a b l e from 4 the CMHC c o n c e r n i n g NHA-approved l o a n s . Th i s however i s a t a s k of h e r o i c p r o p o r t i o n s , w e l l beyond the c o n s t r a i n t s of t ime and r e s o u r c e s of t h i s s t u d y . Programme Chosen The mos t . comp le te s ou r ce of da ta g i v i n g the i n f o r m a t i o n r e q u i r e d was den i ed by p r a c t i c a l c o n s i d e r a t i o n s . The nex t be s t s ou rce was the da ta r e p o r t e d i n Canad i an .Hou s i n g S t a t i s -5 t i c s c o n c e r n i n g the a c t i v i t i e s of the CMHC. I t was f e l t t h a t t h e r e was i n f o r m a t i o n c o n t a i n e d i n t h i s s o u r c e t h a t c o u l d be compared i n d i f f e r e n t ways, and t h a t the i n f o r m a t i o n c o u l d be combined and u n r e p o r t e d r e l a t i o n s h i p s c o u l d be d e r i v e d and e x p l o r e d t h a t would be r e l e v a n t to the r e s e a r c h p rob lem. I t i s i m p o r t a n t to r e c o g n i z e t h a t t h i s s e c o n d - b e s t s ou r ce of d a t a i s g r e a t l y i n f e r i o r to t h a t wh ich c o u l d be 4 I b i d . 5 I b i d . 14 o b t a i n e d w i t h the p rocedu re o u t l i n e d above. For i n s t a n c e , i t can be argued t h a t , f r o m an economic p o i n t of v i e w , government s u b s i d y programmes of whateve r form and s u b t l e t y i n t r o d u c e d i s t o r t i o n s i n t o the m a r k e t p l a c e , making c o n c l u s i o n s about consumers ' p r e f e r e n c e d i f f i c u l t . To m i n i m i z e t h i s d i f f i c u l t y . i t was chosen to e l i m i n a t e from c o n s i d e r a t i o n the da ta r e p o r t i n g on v a r i o u s s p e c i a l programmes or those programmes o b v i o u s l y l i m i t e d i n scope or i n range of p r i c e . The body of da ta judged most s u i t a b l e was t h a t r e p o r t i n g on mortgages g r an ted by approved l e n d e r s or the CMHC on i n d i v i d u a l l y - f i n a n c e d d w e l l i n g s f o r owner -occupancy . Th i s a l s o was the most l e n g t h y of the programmes, r unn i n g t h r o u g h -out the t i m e - s p a n under c o n s i d e r a t i o n . The o t h e r major d i f f i c u l t y w i t h t h i s d a t a i s t h a t i t i s not r e p r e s e n t a t i v e of a l l pu r cha se r s o f new h o u s i n g . With r e s p e c t to pu r cha se r s of new h o u s i n g , da ta c o n c e r n i n g buyers under the NHA hla^e a low income b i a s . On the o t h e r hand, buyers under the NHA have h i g h e r incomes than e i t h e r the average or median Canad ian income. The income b i a s may be the most s i g n i f i c a n t l i m i t a t i o n on the u s e f u l n e s s of the CMHC da ta on NHA buyers i n the d e t e r m i n a t i o n of p o s s i b l e s h i f t s i n the t a s t e o f hous ing consumers i n g e n e r a l . What i s needed i s a s u i t a b l e base I b i d . , 1970, p. 79; or see F i g u r e 1, p. 28. 15 w i t h which to compare movements i n the incomes o f NHA buyers and to judge concommi t an t l y the i n t e r - t e m p o r a l compar i son of f i n a n c i a l v a r i a b l e s based.on NHA e x p e r i e n c e . The income r e c o r d o f . f a m i l i e s i n n o n - f i n a n c i a l c i r c u m -s t a n c e s s i m i l a r t o . t h o s e o f NHA f a m i l i e s p r o v i d e s such a ba se . S t a t i s t i c s Canada has p u b l i s h e d da ta f o r v a r i o u s y ea r s d u r i n g the t ime p e r i o d of i n t e r e s t wh ich are used here to .compare the incomes of NHA f a m i l i e s w i t h the incomes of o t h e r f a m i l i e s on the b a s i s of age of head , s i z e o f f a m i l y , t e n u r e , and s i z e o f town o f r e s i d e n c e . 1 I t would b e , e x p e c t e d t h a t , c e t e r i s p a r i b u s , the o p e r a t i o n of the Schwabe law. of r e n t ( t h a t e x p e n d i t u r e on hous i ng becomes r e l a t i v e l y s m a l l e r as income r i s e s ) would r e s u l t i n an upward t r e n d i n the NHA hou s i n g - i n come v a r i a b l e s d u r i n g those t imes i n wh ich NHA f a m i l y income was f a l l i n g r e l a t i v e to the incomes of a l l f a m i l i e s . Du r i ng those t imes when NHA income was r i s i n g r e l a t i v e to the incomes of a l l f a m i l i e s , the r e v e r s e would be t r u e . A s i m p l e d i v i s i o n of the incomes of a l l f a m i l i e s by the NHA f a m i l y income w i l l r e v e a l the magn i tude of the two e f f e c t s . The r e s u l t s of the i n t e r - t e m p o r a l compar i son of NHA v a r i a b l e s must be i n t e r p r e t e d i n the l i g h t of the income c o m p a r i s o n . I f the v a r i a b l e s do not t r a c e a p a t t e r n a c c o r d -i n g to the mechanism o u t l i n e d above , o t h e r mechanisms must be a t work , one of wh ich may be a change i n consumer p r e f e r e n c e f o r h o u s i n g . 16 CHAPTER I I I REVIEW OF LITERATURE Most of the l i t e r a t u r e t h a t has b e a r i n g on the s u b j e c t be ing r e s e a r c h e d i n t h i s paper i s concerned w i t h the Schwabe law of r e n t , s o - c a l l e d a f t e r a n i n e t e e n t h c e n t u r y e c o n o m i s t , who f i r s t f o r m a l l y s t a t e d i t . Th i s law was the r e s u l t of r e s e a r c h i n t o e x p e n d i t u r e on hous i ng over a c r o s s - s e c t i o n of income g roup s . Schwabe found t h a t hous i ng behaves w i t h r e s p e c t to income as an o r d i n a r y good behaves , t h a t i s , the g r e a t e r the income the s m a l l e r p r o p o r t i o n of i t s pen t on h o u s i n g , though the a b s o l u t e amount i s g r e a t e r w i t h l a r g e r i ncomes. Most r e s e a r c h e r s s i n c e Schwabe ' s t ime c i t e e v i d e n c e which s uppo r t s h i s law of r e n t . Some f a l l i n t o the c o n c e p t u a l e r r o r of a p p l y i n g the Schwabe l a w , which was r e s e a r c h e d f o r an i n s t a n t of t i m e , to e x p e c t a t i o n s about r e s u l t s o b t a i n e d over t i m e . Some r e s e a r c h e r s have i n r e c e n t t imes found what they b e l i e v e to be a b a s i s f o r r e f u t i n g the Schwabe l aw . What needs to be found to s uppo r t the h y p o t h e s i s chosen f o r t h i s paper i s e v i d e n c e s u p p o r t i n g a s t a t e m e n t l i k e t h a t of the Schwabe law as i t might app l y over t i m e . 17 L i t e r a t u r e i n Suppor t o f the Hypothes i s Among the w r i t e r s a d d r e s s i n g themse l ve s to problems of hou s i ng e x p e n d i t u r e w i t h r e s p e c t to i ncome, r e l a t i v e l y few, i t seems, are i n t e r e s t e d i n d e a l i n g w i t h " a v e r a g e " f a m i l i e s or even average incomes ve r su s average hou s i ng e x p e n d i t u r e . Most p r e f e r to d i s c u s s the hous i ng problems f a c e d by low income f a m i l i e s of many d e s c r i p t i o n s - - t h e f a t h e r l e s s f a m i l i e s , the e l d e r l y , and so on.^ Few r e p o r t da ta a p p l i c a b l e to q u e s t i o n s of t a s t e f o r h o u s i n g , perhaps because o f i t s " i n t r a c t a b i l i t y . " 2 F o r . t h e Canad ian s i t u a t i o n t h e r e i s perhaps one s t a n d a r d r e f e r e n c e work not s p e c i f i c a l l y concerned w i t h the p a r t i c u l a r p l i g h t of some segment of s o c i e t y and t h a t segment ' s d i f f i c u l t y i n o b t a i n i n g " d e c e n t " h o u s i n g . Th i s 20 y e a r o l d work , by Dr. O . J . F i r e s t o n e , was commiss ioned by the CMHC. Dr. F i r e -s t one uses da ta c omp i l ed by the CMHC f o r the y e a r 1949 to c onc l ude t h a t "As a r u l e , the burden o f a c q u i r i n g a house r e s t s more h e a v i l y on persons w i t h low incomes and appears 3 to l i g h t e n as the income i n c r e a s e s . " Th i s c o n c l u s i o n d i r e c t l y Task Force on H o u s i n g , op. c i t.& Whee le r , M. e d . , The R i g h t to Hou s i n g , H a r v e s t House, M o n t r e a l , 1969, are examp le s . 2 Muth, R i c h a r d F . , , " T h e Demand f o r Non-Farm H o u s i n g , " i n H a r b e r g e r , A r n o l d C. e d . , The Demand f o r Du rab l e Goods, U n i v . of Ch icago P r e s s , C h i c a g o , 1960, p. 29. 3 F i r e s t o n e , O . J . , R e s i d e n t i a l Real E s t a t e i n Canada, U n i v . of To ron to P r e s s , . T o r o n t o , 1951, p. 223. 18 s uppo r t s the Schwabe law and appears to i n d i c a t e t h a t Canadians of h i gh income are r e l a t i v e l y l e s s concerned f i n a n c i a l l y w i t h hous i ng than are Canadians of low income. I t i s n ece s s a r y to t u r n to r e s e a r c h i n t o the U.S. hous ing ma r ke t ; i t i s assumed t h a t the b e h a v i o u r of the Amer i can consumer of hou s i ng i s s i m i l a r to h i s Canad ian cou n t e r p a r t . Glenn H. B e y e r , w r i t i n g i n 1958, quotes the U.S. Census of 1950 to much the same e f f e c t as F i r e s t o n e ' s work. Beyer found t h a t i n 1950 Amer icans of h i gh income spen t more money, but a s m a l l e r p r o p o r t i o n of i ncome, on the p r o v i s i o n of 4 h o u s i n g . Sherman J . M a i s e l and L o u i s W i n n i c k , i n an a r t i c l e concerned more w i t h improvement of da ta c o n c e r n i n g hou s i ng than w i t h the da ta i t s e l f f ound t h a t "The i n f l u e n c e of income ( w i t h o u t d i f f e r e n t i a t i n g between permanent and t r a n s i t o r y components) appears p e r v a s i v e . Whatever the p r i n c i p l e o f c l a s s i f i c a t i o n , hou s i ng e x p e n d i t u r e s are seen to r i s e w i t h 5 income but a t a l e s s e r r a t e . " They a l s o found t h a t t h i s s t a t emen t h e l d t r u e r e g a r d l e s s of whether the hou s i ng was B e y e r , Glenn H . ,Hous i ng: A F a c t u a l A n a l y s i s , M a c M i l l a n , New Yo rk , 1958, Chap te r 6. 5 M a i s e l , S . J . and W i n n i c k , L., " F a m i l y hou s i ng e x p e n d i -t u r e s : E l u s i v e laws and i n t r u s i v e v a r i a n c e s , " i n Wheaton, W.L .C. , M i l gram, G. and.Meyers on, M.E. e d . , Urban Housi ng , M a c M i l l a n , New Yo rk , 1966, p. 145. 19 r e n t e d or owned, o r i f owned, whether or not the d w e l l i n g 6 was mor tgaged. Thus these w r i t e r s ' e v i d e n c e a l s o s uppo r t s the Schwabe l aw . In the m i d - 1 9 5 0 1 s , L o u i s W inn i ck p u b l i s h e d the r e s u l t s of r e s e a r c h i n t o p o s s i b l e s h i f t s i n consumer ' s p r e f e r e n c e f o r hous ing i n a w o r k 7 d e s c r i b e d by economi s t Ma r ga re t Re id as " u n d o u b t e d l y the most c a r e f u l l y deve l oped e s t i m a t e of Q change i n r e s i d e n t i a l s t o c k . " Winn ick devotes Chapte r VI I of t h i s book to a d i s c u s s i o n of the f a c t t h a t d u r i n g the p e r i o d 1890-1950 i n the U.S., new d w e l l i n g u n i t s added to the hou s i ng s t o c k tended to use l e s s and l e s s r e a l i n p u t and so to be wor th l e s s i n terms o f c o n s t a n t d o l l a r s . He i s ve ry thorough i n a c c o u n t i n g f o r t h i s t r e n d i n document ing i n t r a - m e t r o p o l i t a n movement of hou s i ng s t o c k a d d i t i o n s , r e g i o n a l t r e n d s , s i z e of d w e l l i n g (which d e c r e a s e d , though not as q u i c k l y as f a m i l y s i z e ) . , type of s t r u c t u r e , bui 1 di ng . t e chno ! ogy, ..and. so on . In Chap te r V I I I W inn i ck p r e s e n t s da ta f o r 1941 which i n d i c a t e s t h a t the Schwabe law of r e n t h e l d f o r t h a t y e a r . W inn i ck notes* ' t h a t d u r i n g the p e r i o d of t ime f o r wh ich he conducted h i s r e s e a r c h , 1890-1950, per c a p i t a r e a l income 6 I b i d . , p. 142. 7 G r e b l e r , Leo ; B l a n k , D a v i d M. , W i n n i c k , L o u i s . C a p i t a l  Fo rmat i on i n Res i d e n t i a l Real E s t a t e : Trends and P r o s p e c t s . , P r i n c e t o n U n i v . P r e s s , P r i n c e t o n , 1956. o R e i d , Ma r ga re t G . , Hous ing and Income, U n i v . of Ch i cago P r e s s , C h i c a g o , 1962, p. 225. 20 doub led i n the U.S. A c c o r d i n g to h i s c r o s s - s e c t i o n a l a n a l y s i s o f p r o p e r t y v a l u a t i o n i n r e l a t i o n to income f o r 1941, the average r e a l v a l ue o f a new d w e l l i n g u n i t s h o u l d have i n c r e a s e d d u r i n g the 1890-1950 p e r i o d by 40 per c e n t . I n s t e a d , new d w e l l i n g s f e l l i n v a l u e . W inn i ck has committed a c o n c e p t u a l e r r o r i n h i s r e a s o n -i n g . There i s no reason to assume t h a t because the r a t i o of hou s i ng e x p e n d i t u r e f a l l s as we move up through the income and c l a s s spect rum i n any one y e a r , t h i s r a t i o w i l l a l s o f a l l as the income o f any spend ing u n i t ( o r the p o p u l a t i o n as a whole) r i s e s over t i m e . W i n n i c k , as ment ioned above , i s a b l e to accoun t f o r the f a l l i n v a l u e of new d w e l l i n g u n i t s . One of the most s i g n i f i -can t reasons f o r the f a l l i n v a l u e per u n i t may have been g the f a l l i n the s i z e of f a m i l i e s . Ano the r i s t h a t a l ower group w i t h i n the income spec t rum was be i n g s e r ved by the hous i ng i n d u s t r y , r e s u l t i n g i n a l ower p r i c e f o r new u n i t s . ^ W inn i ck was a b l e to remove the se f a c t o r s by measur ing the v a l u e . o f a l l r e s i d e n t i a l s t r u c t u r e s f o r the p e r i o d under s t u d y . He found t h a t the f i g u r e s show no s i g n i f i c a n t r i s e d u r i n g the p e r i o d . Wh i le the v a l u e of r e s i d e n t i a l c a p i t a l per c a p i t a , i n c o n s t a n t d o l l a r s , was h i g h e r i n 1950 than i n G r e b l e r , B l a n k , and W i n n i c k , o_p_. c i t . , p. 128. I b i d . , p. 130. 21 1890 ($703 ve r su s $ 658 ) , the 1950 f i g u r e was a l s o l owe r than t h a t f o r any y e a r a f t e r 1900 ($793 i n 1900) . The f i g u r e reached a peak ($870) i n 1930, a f t e r a b u i l d i n g boom i n the 1 9 2 0 ' s , and has been i n d e c l i n e d u r i n g the f o l l o w i n g two decades . In o t h e r words , t h e r e r e a l l y has been no re sponse i n per c a p i t a r e s i d e n t i a l c a p i t a l to the g r e a t i n c r ea se s ' i n r e a l income d u r i n g t h i s c e n t u r y . One i s c ompe l l ed to agree w i t h Winn i ck when he says " T h i s i s i m p r e s s i v e e v i d e n c e t h a t hous i ng has moved downward i n the consumer ' s s c a l e . o f p r e f e r e n c e s . " ^ L i t e r a t u r e Opposi ng the H y p o t h e s i s Not a l l w r i t e r s on hou s i n g - i n come r e l a t i o n s h i p s agree t h a t hous i ng i s f a l l i n g i n consumer p r e f e r e n c e . One o f the f i r s t o b j e c t i o n s to W i n n i c k ' s argument was a l a r g e l y h y p o t h -e t i c a l one from Jack G u t t e n t a g , who m a i n t a i n e d t h a t W inn i ck was wrong u n l e s s " i t i s assumed t h a t the d e m a n d - s t i m u l a t i n g e f f e c t of the i n c r e a s e i n income exceeded the d e m a n d - d e t e r r i n g 1 2 e f f e c t of the r i s e i n p r i c e . " F u r t h e r , he noted t h a t W i n n i c k ' s e v i d e n c e shows t h a t " t h e r a t i o of c a r r y i n g c o s t s 1 3 to income has remained r e l a t i v e l y unchanged . " G u t t e n t a g 1 1 1 b i d . , p. 131. 12 G u t t e n t a g , J . , . " W i n n i c k ' s Case f o r a Changing A t t i t u d e Toward.Hous i n g , " Q u a r t e r l y J o u r n a l of Economi cs , Vol . 70, 1 956 , p. 31 5 . 1 3 1 b i d . , p. 314. 1 4 M u t h , R.M., "The Demand f o r Non-Farm H o u s i n g " i n H a r b e r g e r , A r n o l d C , e d . The Demand f o r Du rab le Goods, U n i v e r s i t y of Ch icago P r e s s , C h i c a g o , 1960, pp. 29 -98 . 22 sugges t s t h a t i f the c a r r y i n g c o s t r a t i o d i d not f a l l , and i f hous ing . e x p e n d i t u r e i s supposed to f a l l as a p r o p o r t i o n o f income as . income r i s e s , then hous ing has r i s e n i n the s c a l e o f consumer p r e f e r e n c e s , not f a l l e n . More s u b s t a n t i v e o b j e c t i o n s t o arguments t h a t hous i ng 1 4 has f a l l e n i n p r e f e r e n c e are s t a t e d by R i c h a r d Muth and 1 5 Ma rga re t R e i d . Both o f these w r i t e r s , however, base t h e i r arguments on a r e - d e f i n i t i o n of income. Muth and Re id base t h e i r r e d e f i n i t i o n of income on a t heo r y propounded by M i l t o n Fr iedman i n the 1 9 5 0 ' s . Th i s t heo r y sugges ted t h a t income was composed of two components , the t r a n s i t o r y and the permanent. The permanent component i s " w e a l t h - p r o d u c i n g , " Fr iedman s a i d , and the t r a n s i t o r y component i s " a c c i d e n t a l . " ^ 7 Th i s was c l a r i f i e d to mean t h a t consumerss base t h e i r consumpt ion d e c i s i o n s on t h e i r e x p e c -t a t i o n s of . pe rmanent i ncome, and t h a t the t r a n s i t o r y component 1 o shows up p r i m a r i l y i n the consumer u n i t ' s measured s a v i n g s . F u r t h e r m o r e , Fr iedman found t h a t the r a t i o of permanent 1 9 consumpt ion to permanent income was a c o n s t a n t . Fr iedman does not deny t h a t the r a t i o between measured consumpt ion 20 and measured income f a l l s as measured income r i s e s but 15 Rei d . , op. c i t . 1 6 F r i edman , M i l t o n , A Theory o f the Consumpti ve F u n c t i on , P r i n c e t o n U n i v . P r e s s , P r i n c e t o n , 1957. 1 7 1 b i d . , pp. 21 -22 . 1 8 1 b i d . , p. 221. 1 9 1 b i d. , pp. 222-230 . 2 0 I b i d . , pp. 222-223. r e c o n c i l e s t h i s by e s t i m a t i n g a t h r e e - y e a r h o r i z o n b e f o r e 21 c u r r e n t income l e v e l s become r ega rded as " p e r m a n e n t . " From F r i e d m a n 1 s r e s u l t i n d i c a t i n g a c o n s t a n t r e l a t i o n between permanent consumpt ion and permanent i n come, both Muth and Re id used consumpt ion as a proxy f o r income. They found t h a t the share o f . i n c o m e a l l o c a t e d to hous i ng e i t h e r 22 23 changed very l i t t l e (Muth) or i n c r e a s e d ( R e i d ) . 21 22 23 I b i d . , p. 221. Muth, p_p_. c i t . , pp. 72-74 R e i d , o_p_. ci_t• » Chap te r I 24 CHAPTER IV RESEARCH RESULTS Th i s e x a m i n a t i o n of hou s i ng i n the con sumer ' s s c a l e o f p r e f e r e n c e has b e e n . l a r g e l y l i m i t e d by the g e n e r a l l a c k o f Canad ian da ta and r e s e a r c h to an a n a l y s i s o f da ta p u b l i s h e d by the C e n t r a l Mortgage and Hous ing C o r p o r a t i o n . 1 In o r d e r to e l i m i n a t e , so f a r as p o s s i b l e , the economic d i s t o r t i o n s s u r r o u n d i n g t h i s c o r p o r a t i o n ' s s p e c i a l programmes and a l s o - t o . g a i n as much c o n t i n u i t y of da ta as p o s s i b l e , the CMHC da ta was f u r t h e r reduced to t h a t r e g a r d i n g the o r d i n a r y mortgage i n s u r a n c e programme, t h a t i s o r d i n a r y l oans f o r home owner sh ip g r a n t e d by approved l e n d e r s or the CMHC. Wh i le the segment of the home purchase market thus s e r ved i s l a r g e , i t s b e h a v i o u r may o r may not be a good proxy f o r the t a s t e s of the Canad ian p u b l i c or the e n t i r e home purchase ma rke t . In o r d e r to judge the i n f o r m a t i o n ga i ned about NHA buyers as i t might app l y to a l l Canad ians an income compar i son was made between f a m i l i e s buy i ng under the NHA and " o r d i n a r y " Canad ian fami 1 i e s . s h a r i n g s i m i l a r c i r c u m s t a n c e s . Th i s i s the f i r s t p a r t of t h i s s e c t i o n . The second p a r t examines f i n a n c i a l v a r i a b l e s ove r t ime as they app l y to f a m i l i e s buy ing t h e i r own home under the NHA. The t h i r d p a r t examines a g e n e r a l i n d i c a t i o n of c o n -sumer p r e f e r e n c e f o r hous ing f o r Canad ian f a m i l i e s as a w h o l e . 1 C a n a d i an Housi ng S t a t i s t i c s , op. c i t . 25 The f o u r t h p a r t l o ok s at v a r i o u s r e g i o n s to de te rm ine whether they d i f f e r from any n a t i o n a l t r e n d t h a t may e x i s t . Income Compari son A p r o f i l e such as t h a t p r e s e n t e d i n Tab l e I can r e v e a l a g r e a t dea l about the average NHA b o r r o w e r . A q u i c k g l a n ce t e l l s t h a t the average age of a bo r rower under the NHA has changed r emarkab l y l i t t l e s i n c e 1956. F am i l y s i z e has been r e l a t i v e l y more v o l a t i l e . The incomes of b o r r o w i n g f a m i l i e s has s t e a d i l y r i s e n , as Ira-tee the p r i c e of d w e l l i n g p u r c h a s e d . Such a p r o f i l e t e l l s us n o t h i n g a t a l l about how these incomes compare w i t h the incomes of o t h e r Canad ian f a m i l i e s . I n c l u d e d . i n t h i s compar i son are i n t e r t e m p o r a l compar i sons of incomes w i t h r e s p e c t to age, t e n u r e , f a m i l y s i z e , and i n rough t e rms , l o c a t i o n , i . e . , whether l i v i n g i n l a r g e towns or sma l1 . Tab le II i n d i c a t e s t h a t i n eve ry y e a r s i n c e 1955, NHA f a m i l i e s have had a h i g h e r income than the f a m i l i e s c l a s s i f i e d under the o t h e r h e a d i n g s . The l owe s t income c l a s s i f i c a t i o n , t h a t o f f a m i l i e s and u n a t t a c h e d i n d i v i d u a l s , w i l l be e l i m i n a t e d from f u r t h e r compar i sons on the a s sumpt ion t h a t u n a t t a c h e d i n d i v i d u a l s are u n l i k e l y to compose any but an i n s i g n i f i c a n t p a r t o f the home-purchase ma r ke t . F i g u r e 1 and Tab le I I I p r e s e n t the compar i son of income medians of NHA f a m i l i e s and Canad ian non- fa rm f a m i l i e s . 26 Table J : P r o f i l e of NHA borrower Pr ice of Borrower's age Family Size Family Income Dwelling Year Mean Mean Mean Median Mean ($) ($) 1949 8058 1950 8939 1951 10260 1952 10183 1953 '. 11687 1954 12335 1955 5442 5112 12598 1956 33.8 3.5 13366 1957 34.4 3.6 6310 5945 14512 1958 34.1 3.6 6188 5807 14237 1959 34.2 3.7 6283 5923 14516 1960 33.9 3.8 6204 5859 14380 1961 34.2 3.8 6336 5964 14474 1962 34.5 3.9 6563 6169 14815 1963 34.5 3.9 6747 6322 15229 1964 34.7 3.9 6964 6549 15826 1965 34.6 3.6 7233 6780 16531 1966 34.6 3.5 7918 7465 17945 1967 34.2 3.6 8769 8255 19442 1968 33.5 4.2 9983 9485 20270 1969 33.1 3.7 10810 10241 20780 1970 33.2 3.7 11833 11221 21895 Source: Central Mortgage & Housing Corporation 1. Pr ice of i nd i v idua l l y financed dwellings except 1969, 1970 - single-detached only. 27 Table II : Income Comparison - Incomes of: (a) a l l non-farm fami l ies and indiv iduals (b) a l l non-farm fami l ies (c) a l l fami l ies in large^ urban centres (d) fami l ies borrowing under the NHA Year (a) (b) (c) (d) Mean Median Mean Median Mean Median Mean Medi. ($) ($) ($) ($) 1951 3185 2703 3535 3110 1952 1953 1954 3654 3184 4143 3663 4738 4142 1955 4370 3829 4933 4320 5442 5112 1956 1957 4269 3624 4644 4093 5313 4622 6310 5945 1958 4921 4308 5656 4889 6188 5807 1959 4521 3936 4968 4423 5582 4966 6283 5923 1960 1961 4851 4262 5318 4866 5956 5378 6336 5964 1962 6563 6169 1963 5195 4569 5939 5296 6706 5921 6747 6322 1964 6964 6549 1965 6049 5327 6669 6044 7386 6661 7233 6780 1966 7918 7465 1967 2 7756 7008 7756 7008 8546 7693 8769 8255 1968 8056 7287 8922 8001 9983 9485 1969 2> 3 8876 8000 8935 8084 9845 8934 10810 10241 1970 9563 8561 10537 9567 11833 11221 Source: Central Mortgage & Housing Corporation, S t a t i s t i c s Canada 1. S t a t i s t i c s Canada d e f i n i t i o n : a l l urban centres in excess of 30,000 population are " l a rge " . 2. 1967, 1969: fami l ies only for column (a) 3. 1969: farm & non-farm for column (a) 1 i ! t ----- i 1 i 1 : '• r . ; ; i j : 1 ! 1 i ; I 1 i ! ! 1 ! [ i • ! i j i | f ! I 1 j i ! ! i 1 .! 1 ! ! ! 1 j I 1 i i 1 i I i i ! ; ! ! 1 1 J ! .! i i 1 1 ' i • i •1 ! : i i i i 1 ! i i i : 1  ! • ' / ! i i j I i i ! : ; ! i 1/ i ^ 1 1 ! A_ \\ \ i • ' 1 ' < : / 3 1 i < l\ 1 ! "T n i ~ r r • i - 1 ; • i I i | ] i 1 \ 1 /! t i i ( i < • i I • i . 1 1 1 ! ; l l f i ' •i 1 ! • 1 i : 1 ! ! ! i _• J.... ... • _/.. h i i ; ! j ; i • i 1 ! i | | 1' 1 . I . i •\ r • Is 0 .. -r> . i !. -IM i i i I • I 1 1 ' ! < . i ! i '1 : I. : | ; 1 : ?-1 i ! . i 1 i j r 1 T T T T 1 i L_i t , -M-i • i ss s £ 9 Ail \ 6 3 65- 7 7 7 i i 1 i '> ! i •i ! i • ! I i . r •J ! . ! : • : i \ /zooo i. i ! i i : ; T ~^ • I i f\ \ H\ .) 1 i- 1 ! ; t ; '. 1' // A/ \ /v i ! 1 ! n 1 i | n r . . i ! i i 1 CL N6N-Ff\R^ I i i / [ y _ i 1 1 ' 1 /./I A/ i i l i. | • i t i i T ! ! j 1 !- c Ui a I- t fSf-FAR M j ! i j i i q • j i '. 1 — : 1 i —u—(..— ; ; I 7 i i i ! '1 i / : i ! •; o 00 0 i T I 1. ! ! ; _ ' _i.. J 1 | i 1 i i i / - i ! ; j ! i i : i i ~!—i t i i i i — 1 i i i I I i i i ! i ' i I — | c Oi 0- i i i 1 1 ! i .—,— j i i i ! i 1 H i ! 1, — , j I .. i .. I : [ - i \0l )0 i i i i ! i '• 1 ; • ! ! i > XL ! 1 1 1 , z A/ IA 1 i ! j r _.. i_ . / ' 1 I i ! ' i 1 ! -[ 1 i •i 1 f 1 — i — : i T t r 1 1 1 ! i | ! ! i ; | | -. i I 1 1 i' 1 H 1 I i _J *? 1 St A 1.1 !__ S3 SS 1 57 1 59 6/ 63 45 1 67 71 i ; 1 : - — i i 1 i 1 1 ) L . r i L L {_ i ! ! | i i ' ' j 1 ^ i E_T.hllf • r r Tnrnmf » r • , 171 nrtiDaiLison. 'ar Median... NbnTFa I.n.( ; r • ' :omesLof Fam. es Be >rr ow inc Under i ! 1 t .he! N iA land Canad" rm| Famip ies.| : ; i i 1 , t i i Cor 1 ; t Mor-tgage-! i i &- | i -Innci nn J 1 L . l 1 J . • i t + i r.c_ Ca'na \ i . i Ha • i ! : u : r 1 |_ 1 _j_ i r " 1 ! 1 i _ _ L . . . i i ! i i i •1 1 ."• i • 1 ! i i ; 29 Table i l l ; Income Comparison - Median Canadian Family Incomes compared with Median Incomes of Families borrowing under the NHA. Median Income of Median Income of NHA- NHA  Year NHA Families Non-Farm fami l ies Non-Farm Non-Farm ($) ($) 1951 3110 1952 1953 1954 3663 1955 5112 3829 1283 1.33 1956 1957 5945 4093 1852 1.45 1958 5807 4308 1499 1.35 1959 5923 4423 1500 1.34 1960 5859 1961 5964 4866 1098 1.22 1962 6169 1963 6322 5296 1026 1.19 1964 6549 1965 6780 6044 636 1.12 1966 7465 1967 8255 7009 1246 1.18 1968 9485 7287 2198 1.30 1969 10241 8084 2157 1.27 1970 11221 8561 2660 1.31 Source: Incomes are reported by Central Housing Corporation; derived Mortgage & 30 F i g u r e 2 and Tab l e IV compare the mean incomes of the same two g r oup s . (Where p o s s i b l e , both mean and median w i l l be compared, f o r w h i l e . t h e mean i s u s u a l l y more e a s i l y o b t a i n a b l e and t h e r e f o r e more common, the med ian , i n m a t t e r s o f income anyway, i s more m e a n i n g f u l . ) The d i f f e r e n c e between the two income s e r i e s i s a b s o l u t e l y more i n 1970 than i n 1955; but more i m p o r t a n t l y , the d i f f e r e n c e i s r e l a t i v e l y l e s s i n 1970 than i n 1955. Non-farm f a m i l i e s reached t h e i r be s t p o s i t i o n r e l a t i v e to NHA f a m i l i e s i n 1965. The d i f f e r e n c e between the r a t i o s of NHA income to non- fa rm income when means and medians are compared ho ld s no s u r p r i s e s : the r a t i o of means i s s m a l l e r , r e f l e c t -i ng the s m a l l e r income sp read among NHA f a m i l i e s than among non- fa rm f a m i l i e s i n the n a t i o n as a who l e . F i g u r e 3 w i t h Tab l e V and F i g u r e 4 w i t h Tab l e VI p r e s e n t compar i sons of medians and means r e s p e c t i v e l y o f NHA f a m i l y incomes and the incomes o f f a m i l i e s whose head was the same age as the average f o r the heads of NHA f a m i l i e s . For example , the average age of the heads of NHA f a m i l i e s was 34.2 i n 1967. Us ing S t a t i s t i c s Canada d i s t r i b u t i o n s , a s t r a i g h t - l i n e a p p r o x i m a t i o n was used to e s t i m a t e the i ncomes , both median and mean, of a l l Canad ian fami 1 i e s whose head was 34.2 a t the t ime the su r vey f o r 1967 was t a k e n . Aga i n the non-NHA group was i n i t s b e s t p o s i t i o n w i t h r e s p e c t t o NHA f a m i l i e s i n 1965. There was l i t t l e a b s o l u t e d i f f e r e n c e i n t h e i r p o s i t i o n s i n 1957 and 1969, though i t - -;—— .— . _ _ — — — — — i - 4—1 ; • 1 - L ~ . . . J _ L . L i . ' 1 1  t | i ; — — — r "3 1 — ---— — ! 5- — — ----- — - — — — — . — — 0 /' — — —- — — — — — -— — — --/ 3 l' — — — /, t -— - — D ---H ft —-— — l —• - -— — — — — i> F, ra HI 1 B N I • <# % 5/ 5 3 i 5 5 57 JB 7/ .— — 1 — •— — - — — - — - — i — — • ...... !. i 0 > TH — — — — A IC f) A — - 11 yo 0 Ni m Al — • — k S 1 - 10 Oi 10 >o — — c VJ A jo/ F ---..... — — e> — | i -9 Oi 1 - Q fsr. o — — j j -— — — — -- — — — — • • I -7\oc o — 4 -l — -- — — L >o i — — s oc 6 — -— I - is-" — i 1 o ! _t -1 i ! — •— - _ . -- _ [ _ . i 1 — — ~ - — — _ — -1 •>o -i—— I-— Oi — > 1 •i I | -— 5L j>. U 5 7_ ..S!9J..6!L_ L_a.7i f - — — ! ' I i !_.. .. '-16 Si; -— Hoi — I _ _ s_ iti r t -• i _F IGURE [ _ _ 2 L... In cot ne Comp< \ and i " _Mo.r_' ;.ri Ca _ SOI i - M t 3an _^inr.i lITIf <;... nf. fa mi mi wi in un — —-- th'e NH/j nadic n Nori-Fiarrn ftam'.iV es!. Jan. I ida; S ource Centra' taa ge L ' Housi na_Co.r_Dor .1. I a til on: st ICS deriv ed — ; • 1 • --- i • - t - I ! i , -! 1 I r i I i T r ~ . . . j . ^ . . . . . . 32 Table IV : Income Comparison - Mean Canadian family incomes compared with Mean incomes of fami l ies borrowing under NHA. Mean Income of Mean Income of NHA- NHA Year NHA Families Non-farm Families Non-Farm Non-Farm ($) ($) 1951 3535 1952 1953 1954 4143 1955 5442 4370 1072 1.25 1956 1957 6310 4644 1666 1.36 1958 6188 4921 1267 1.26 1959 6283 4968 1315 1.26 1960 6204 1961 6336 5318 1018 1.19 1962 6563 1963 6747 5939 808 1.13 1964 6964 1965 7233 6669 564 1.09 1966 7918 1967 8769 7756 1013 1.13 1968 9983 8086 1897 1.23 1969 10810 8935 1875 1.21 1970 11833 9563 2270 1.24 Source: Incomes as reported by Central Mortgage & Housing Corporation; derived i 1 ! 1 / 1 ! 1 ; 1 i i ! i ! i . ) (• i ! 1' i 1 ; ! 1 1 1 i i i | 1 ; i 1 I.H- 1 i : 1 V ! ..... .1 i r 32 i i ! j I 'V 1 i i i f i \ > i ! : ! i i ! 1 1 1 i ; IX- i i 1 1 j i . i ! ! * j | ' i ! i i ! -i 1 /o i i *• i | i \ ! r ! ! i i ! ! f l i / 2- I 1 I i ! | \ 1 ! 1 I . ! iD | 1 i 1 i i 1 1 ; f • I i 1 1 N / i ! 1 I i 1 1 i l l ! '< II 1 i l l \ i i 1 I I I / ' i 1 1 ; : ! i J _ j ! • ! 1  1 .1 i | 1 i / i 4J / H -A-6 rE 1 1 i • j 1 : i ! | i • 1 • i ! • i : I i i i i • r 1 1 1 • i 1 i l j 1 ! i j ! t 1 ! ! 1 i : 1 7- 1 1.3 M i l l •1 ! i : i 1 ! ! . ! i i 1 1 1 I I i. j i i 1 i i i 1 i , i . I • i i . ; i 1 1 i ! I 1 i • : ! j i : 1 i i i i 1 : . i i r ! : ' i ! i i • 1 I Pi Al N 1 _ _ L J _ _ i i : • I //-oe>0 i j i j ! / A | ft A ; AG -£ : i i i i / i i ! ! ! ! • ! i t& •• ! i i i ! : t j . i : i I Iv a W A - t ; : / I * a ooo i • , i i i '• : \ i ! ' ! h : ? '• ; > : - i i i ! i ! ' : l f l . ! i '.. c >ooo > — ! ! | i 1 i i. 1 1 1 • 1 i / r ;.' . i 0 • i ' i ! • j. 1 1 I / 1 » 1 1 i . ; I ! • 1 j • ; i . . i n , ! : . I : ! ' | i ; j : J. i , • j 1 1 i !. i i ! : 1 i i i | i — 1 \ • M ! i i j / ! i : 1 ! i ; i i ' • 5 1 ooo T ! : ! t \/ t > r l ! i ; j ' • i ; : L L U_l_ i '\ 1 ' ! : 1 ! 1 ! ! ! t 1 )0 1 i i ! i i 1 i i i : 1 ! i 1 i 1 ' ..! i i t 1 ' : 1 • i ; ' i i t \0Q0 j i T l T ~ ' .1 1 ; ! • N i i • : i ._i ! ! 1 i i i i i ; i ' ' 1 1 ! i . t i ,000 • • • i 1 ' i i f. i l l ' ' i ; 1 1 ; J* i ' / CL i — ^ t tj ooo 1 I t ' 1 t ' ' ' 1 i i . i 1 ! ' -i i . ; > i j i i 1 L J J _ I ' ; t t ] ! i ' ' i i i 1 i •. : 1 i I ! ! !' i i r r n • ; ! • ff) Sf 53 55 U.5|7_i_ .^i_ft/_ 1 X ^ e a r ) 6.3 _ G5 GURE.• 3:i Incomje Comparison. - 1 t _. __ NHA average each year.] Median jinicomesj of fam:i 1 ies^borrowing under ! "the same ;age~as~ Source:——eentra-l--Mqrt-gage-;&-34 Table y • : Age Comparison - Median Incomes of fami l ies with head the same age as head of fami l ies borrowing under the NHA with NHA family incomes. Median Income of Year NHA age Families with NHA-age head Median NHA Family Income NHA-NHA age NHA NHA a* ($) ($) 1951 (34.5) 3168 1954 (34.5)" 3764 1957 34.4 4184 5945 1761 1.42 1959 34.5 4630 5923 1293 1961 34.2 5039 5964 925 1.18 1965 34.6 6382 6780 398 1.06 1967 34.2 7367 8255 888 1.12 1969 33.1 8485 10241 1756 1.21 Source: Central Mortgage & Housing Corporation S t a t i s t i c s Canada - derived ( s t ra i gh t - l i ne approximation) 1951, 1954: 34.5 age used for cont inuity --- - j — 1 -/ ./ $-+-3 ... .... - - { - - ; • • - — — — — _}_... i L. — — — - ? ~ - f --- --— L_L_ — — — — i — — — - - — — — - — —-' 3"£ / - — — — — — — ; — — i -~4-i - - — -— / 2 - - — i -— / — — Hi D / / / / — r\ m /V H f IG c A A. D /V r — 1 ,9- 1 1 t ..S i S3-i 55 i 57 -A air di 71 — - ) — / I — — — - • — ,— , ! i — /Z OC — — - — — i - - 1 - -i i — - - Pi o — •A — II OC o f " — v r — — ---- 10 OC \o — ' -r • r. _ °i oc o . — — — — ._ — — — — — | 7 $ Oc oc o o — — — — - — — — | — — — — — — 7 -- — — w _ — — — — oc o — T • 1 ° — s OC • ' o — : i . t — — — — (AA/ o — — i 1 i t 3 Oc o — — Ot o — — — i i — c 1 1 — /_ oc o ; — 1 _5jf_. sk\ -5J9LJ Jk. ar 1 ) i 7 i I an~ EI GU. VL 4.:. !.n.c orri' = Com Dar-lson. rrnjjCa'naj . 1 1 T 1 • i 1 foe •nil •5 nt 1 1 HA. -th .a.v e -en W iae and nbn-lfa Han... far 111 i.es_wrt b_i iea'.d_the....same_ alge 1 1 1 | 1! _a.s'_N I — r i r r n each vear. 1 • | 1 ' 1 1 1 — So ur :e: Central Mo j rtgac e & Hou sir Co -pc ra t ic )n,j Stat is jt ics jCa lada; derived. — i — ' [ - -1 1 r i i 1 I I I T i i n r . i 1 I 1 . i ! i " i r 36 Table VI : Age Comparison - Mean Incomes of fami l ies with head the same age as head of fami l ies borrowing under the NHA with NHA family incomes. Mean Income of Families with Mean NHA NHA- NHA Year NHA age NHA-age head Family Income NHA age NHA age ($) ($) 1951 (34.5) 3387 1954 (34.5) 3972 1957 34.4 4480 6310 1830 1.41 1959 34.5 5035 6283 1248 1961 34.2 5357 6336 979 1.18 1965 34.6 6988 7233 245 1.03 1967 34.2 7912 8769 857 1.11 1969 33.1 9111 10810 1699 1.19 Source: Central Mortgage & Housing Corporation, S t a t i s t i c s Canada - derived ( s t r a i gh t - l i ne approximation). 37 was r e l a t i v e l y s m a l l e r i n the l a t t e r y e a r . Aga i n as w e l l , the r a t i o of the means was s m a l l e r than t h a t of the med ian s , though l e s s s o . F i g u r e 5 w i t h " Tab le VI I and F i g u r e 6 w i t h Tab l e V I I I p r e s e n t the compar i sons f o r f a m i l i e s of the same s i z e as NHA f a m i l i e s . w i t h NHA f a m i l i e s . The r a t i o o f NHA to NHA-s i z e i s , as are the r a t i o s f o r o t h e r c a t e g o r i e s , a t a minimum i n 1965. Wh i le the r a t i o of the median s i t u a t i o n s i s ve ry n e a r l y equa l i n 1957 and 1969, the r a t i o of means i s s i g n i f i -c a n t l y h i g h e r i n 1969 than i n 1957. Th i s would seem to i n d i c a t e a ve ry narrow sp read among the incomes of NHA- s i ze f a m i l i e s i n the l a t e r y e a r . The incomes of NHA- s i ze f a m i l i e s was e s t i m a t e d u s i n g s t r a i g h t - l i n e a p p r o x i m a t i o n s on the da ta r e p o r t e d i n Tab l e IX. I t i s i n t e r e s t i n g to. note the dec rea se i n the r e l a t i v e d i f f e r e n c e between the incomes of l a r g e and s m a l l f a m i l i e s d u r i n g the span of t ime r e p o r t e d . Perhaps t h i s i s the r e s u l t of a t r e n d toward both members of two -pe r son f a m i l i e s wo r k i n g p lu s a t r e n d toward c h i l d r e n r ema i n i n g i n s c h o o l f o r more y e a r s . F i g u r e s 7 and 8 and Tab le X r e p o r t the compar i son between NHA f a m i l i e s and f a m i l i e s t h a t own t h e i r homes. Once aga in the minimum r a t i o appears i n 1965. Though S t a t i s t i c s Canada has not y e t p u b l i s h e d da ta f o r 1969, t h e r e i s no reason not to e xpec t the r a t i o o f NHA to owners to c o n t i n u e to r i s e . 1 1 • - i -J • j • ' \ ' : ' M j • .' j ; i ! is 1 M MM M • I ' i ; i • : • 1 1 ! 1 ! i M 138 i ; i 1 1 ft 1 i ' I i i M M i I 1 7 * T 1 i i j D ! M | i 1 1 h i • ! # i \ I M M i 1 ; • i i j i i / I i i M M 1 1 ! 1 i i I t , A ! 1 i i I : I ! I i \ / M M i i !• ! : . 1 1 / ,/ t 1 ; M M > 1 M • : ! M •! . i i / / h A -r- S I Z . £ 1 i. ; i ! i I f ! 1 ; ' i 1 i i i M" M ! i ! • ; 1 1 ! T 1 1 i i • 1 1 1 I 1 i i !• 1 ! • i i 1 ! • 1 1 1 1 si i _53_ 7__ SB ii 1 I r i • ' ! Clear ) 1 ] 1 ! i ! i 1 i f I • 1 1 I 1 i M M - i i i ! 1 ! 1 1 ! 1 i i | ! ! I M t i I • i i M i . ! I. M i I | .i t ! it &_ i j i 1 II oc 10 ; A 1 1 li Al <HA < 51 Z£ I i i i i i i l ;• 1 - 1 i A \ j M M 1 1 1 _ c J SfJi A / i \y | I i 1 1 ; i 1 i ' I M M ; : i • i ( i 1 M i 9-A/l/V 1 i ; 1 ! : i ' r i 1 R ! -1 I f-il i A Ly i i ! ! • * / $ i 1 1 | : i TT i 1 ! I 1 j M i j i ' i • i i i 1 • 1 1 < i 1 i • | ^ x f 1 1 i i i i —*J»rti )0 1 i~" • i j i 1 V\ ! i I ! \ l ! ! I i ! i 1 i . 1 i '< • i i i j-i 1 M •! A / I i | ! j ! 1 1 1 i : r f / 1 i / i A /"\ /~1 T i t / i 1 i j • 1 1 1 1 i I • i ! 1 I j ! | i f' i * 1 : 4v Si 55 sk 5 9 7/ | ! | i 1 i I 1 r 1 I "j 1 1 i 1 j FIGU RE" "5.: Income ( ,ompapson - Median'incomes of f "amil ies b Drrowinc 3 und sr'th'e ' 1 : INMM ana no rr". n-rarm oanac ia 1 tarm 11 i es t Te-. >sarre size 1 ! as average . i 1 1 :e~ — i each jyec 1 & - H o u 1 si J | j ng-Go;rp< yrs ti an "i 1 . 1 : —St-a-t-T sties M l ! i -Ga'nada-: ! : 1 ! ! H o n \/orl j Sour CentraI • 1 l ,i-riur L y a y e _ i _ L - U--UJC i. 1 V'CUv 39 Table VII : Size Comparison - Median Incomes of fami l ies of s ize equal to the s ize of fami l ies borrowing under the NHA compared to Median NHA family incomes Year Size Median NHA Income Median Income of NHA-size Families NHA-NHA s ize NHA NHA s ($) •($) 1955 5112 1956 3.5 1957 3.6 5945 4275 1670 1.39 1958 3.6 5807 1959 3.7 5923 4676 1247 1.27 1960 3.8 5859 1961 3.8 5964 5.57 807 1.16 1962 3.9 6169 1963 3.9 6322 1964 3.9 6549 1965 3.6 6780 6225 535 1.09 1966 3.5 7465 1967 3.6 8255 7209 1046 1.14 1968 4.2 9485 1969 3.7 10241 7451 2790 1.38 1970 3.7 11221 Source: Central Mortgage & Housing Corporation; derived - -• j r t T" — i - ' 4 -... i. . . . . — --L . . . . -.— — _.. r-4 .. -; 1 ; 1 - M f — ) i / t — I i 1 / — .__ — -•— -- — -- / — • — — i i f 2-—-— ••• i / i — 1 -/ / > m ft * — i" — _ i _ !— 51 LE °: — ! ? — 5/ sk 55 _,J T .59 u / . _ 4.7 7 . _ — — _ . — — -- — — __. — — — — — uo ./v. >0 — . . . . / \ . S — K B ..... ...... — — i 1 - — I — — — 1 ' 1 \m A ST zr* --- — — 10 0( )0 — — / L — — — — — . — [ 1 - — 0( vo — — - - I — — — _< '/V )0 — — _ I — — — / i / * — i - — — ( Si — * / — '1/ — - — — — J ~ o —- —. — i — — - t Oi 10 — — — — — i _._ — — - X A/ IAN — — — — —j <* — T +J | - -.... f 1 — — : c — — - n Sir ._. ---i — — -— —- i SI S _S5_ [ _ L . O t e Jo 7— J» / - - — it) IRE • Df 1 un fei :~t'lie i "N'f ->^i A" anc i n on i income Ganadia -.1 . . . 1 , Lompari n-jfamii son - m he Ho — *an i "same ncomes fami 11es sorrowing 1 . . , - f a rm1 i e: s ize as i o i l L nrt average eacn year. 1 1.' " irce i T" • ntrai _ _ ! . _ . :ga JS ng V orat or 9 L. 1 snciad I jer IV sd. — _ J _ L _ _ _ i I I | I t Table VIII : Size Comparison - Mean Incomes of fami l ies of s ize equal to the s ize of fami l ies borrowing under the NHA compared to mean NHA family incomes. Year Size Mean NHA Income Mean Income of NHA - s ize Families NHA-NHA Size NHA NHA : ($) 1952 5442 1956 3.5 1957 3.6 6310 4889 1421 1.29 1958 3.6 6188 1959 3.7 6283 5178 1105 1.21 1960 3.8 6204 1961 3.8 6336 5677 659 1.11 1962 3.9 6563 1963 3.9 6747 1964 3.9 6946 1965 3.6 7233 6870 363 . 1.05 1966 3.5 7918 1967 3.6 8769 7922 847 1.11 1968 4.2 9983 1969 3.7 10810 7695 3115 1.40 1970 3.7 11833 Source: Central Mortgage & Housing Corporation, S t a t i s t i c s Canada; derived 42 Table IX : Canadian Non-Farm Family Income, by s ize of family. Year Size of Family A l l Families w — r n — 2 3 4 5+ 1951 mean 2698 3648 3790 4169 median 2439 3112 3401 3550 1954 mean 3491 3989 4535 4620 median 3033 3671 3993 3920 1957 mean 3784 4565 5102 5153 median 3304 4078 4406 4486 1959 mean 4116 5026 5243 5509 median 3545 4550 4730 4786 1961 mean 4464 5319 5766 5728 median 3890 4994 5198 5170 1963 mean 4865 5787 6250 6632 median 4266 5041 5730 5804 1965 mean 5367 6389 7191 7588 median 4741 5984 6309 6684 1967 mean 6248 7455 8234 8438 median 5379 6855 7446 7473 19691 'mean 8876 7201 8906 9546 median 8000 6016 8066 8775 3535 3110 4143 3663 4644 4093 4968 4423 5317 4366 5939 5296 6669 6044 7602 6839 10041 8829 Source: S t a t i s t i c s Canada 1. 1969: farm and non-farm • . X i ; i ; ! 1 : /. j i - ; • ; i 1 i l i ! • 1 i ; l i : i 1 ' [ i ! i i ! *- 1 ; }43 j i • i • i 1 1 ! 1 i I i : 1 ; { 1 /-3- i ! ! N ! I i i i ! i t 1 i i XJ 1 | i 1 l 1 i ! 1 ! I ! i 1 i i i \ f ! ! 1 I i i 1 ; ! 1 N i i P i i ! 1 I /Ji It. / Pi A i i •• - o u MCA ! 1 '! 1 1 • I 1 ! i ! / FA'MLLS i ' i ! I i , 1 .,1 !_/. IS i ' | 1 i 1 1 ; 1 !' !, 1 i 1 ! j • 1 i 1 1 i i j . . i I ! I i ! i i ii S3 55 ( 9 4'/ 1 ds i t 7 \ > ! i ! 1 i 1 V ) i I ! ! 1- i i • i i I i 1 1 \ ' 1 ( 1 i ; • 1 i 1 ! ! i 1 i ••iii i i i i i 1 l i i ; I ; 1 i i i 1 Pi 1 SU u \ I | • > 1 1 i / / ' / v i a 1 ' __J • Pi i — • ' i At ES i i i / i .1 . i .!_.. I 1 ! i — i — i •; 1 i •. • \ ! . ( IHPi FA Mi a 1 i 1 •; i j i i_q ooo I | — r _ . .I i i ; i i 1 i i QQQ l i i 1 ! ! • i i > , I I 1 1 . ! i / f)7ooo i i l i / > 6 i i 1 t • i i ! 1 i 1 ' 6 9£ \f\ ! ; ! i i i i • ! ; r 1 - | •\ • 1 ' ! : i c 900-! j \ 1 ^ 1 1 1 1 1 i i i 1 \ \ K i 1 _ i _ L ! ! \u <ooe> ! j R V t : i ; I • / i i 1 i ] I I — — 1 i 1 i i -z i 666 ! i | | 1 1 1 j — ! : i i i - -I 006 1 i i < i ,* 1 1 i i - - ] . . -j ! i* t • 1 i /Ann • i : ! 1 i 1 CL ; ! •. M i i I i l . 1 , f : i • : i | 1 l i ! _ \ ! ' 1 :3LL5/L. ! i _55_l5'5LL5 I I I ! 1 7 1 59 ! ^  cb.\ -TI — • i j !-: , 1 i ( >c nf! f; J\ •GURE 7: - Income- Compare son-.... \ nonrfarm: Canadian. — M o r i i a n f n r mi • d1 -St "Li.* hn s. Z iw-i ng 11 m 1 r HPI^ t.hp an i r— f.amllp.e.s_w.hoLo.w.n_LtheJ.i' wel l ing 1 1 | i j • \ >urc'e: \ \ \ \ \ —^-GentrajT-Moijtgage-8 ... , -a at j i s t i c 1 ! ;ar ad a ;"lde r i ved. i n JUS 1 [1 y I 1 ! ! 1 i . . _ t _ _ r ! ! i i M ' i • : 1 ' I : i ' — 1 1 i 1 r . . i J ... !• s : i i i 1 —T" J i 1 i . 1 i : 1 1 i : • 'Ml i . • i * ; 1 ! i I 1 ! ' i i i i 1 i ; 1 \ i J A. A I i . i iii/. t ; i i i i i i • i I i i 1 1 1 i \ r 1 1 ! i i ' / 1 ! I- i 1 . 1 1 i - i • 1 i I M i | ! ! i MS, i i I ; i t j -i ! 1 •I !• i • • 1 ! i i • • / ' i ; i j. I . - , i • I i ! 1 ! ' i ! I i i i , • •A 1 1 . • i ! 1 k t i MM M ; i I I _.>k! !_. ' 1 1 ; i i i 1 i I I ! . / / - l ' 1 1 V 1 > V ! !. D i 1 i i r 1 i ) 1 • D . 1 Nh A • y i i i i ' M M ; i i . 1 1 | I I M A i i ' ,1 j f f f l M f t y i j ] / \ r i • i M l M M 1 .. : t ! j j i ! 1 ! i J.i > M i r n . 1 1 i •! i ! 1 • • 1 i i ! i i i i < • , i ! M M i M' I i M i l ill, i 1 i i i 1 1 S3 L S5_ l _s 7 ; £i ! 6>? ; 6.5 i o>n 1 ca A TI i i i ! i. i / y e a r V i M M i i i I i i i 1 i i MM! i .  1 ! ! i i i i i i 1 1 . i 1 1 M 1 ; 1 l ! 1 I-l ! 1 i •  • i 1 ! ; | MM! 1 • 1 i : i 1 •1 i > . i : ' • • , -i i ; M i • ; i i . IAOC \ o i i • i ! : i ; •' •1 | ! : 1 M : i i L . . • ; a N H i Pi i ! ; ' M i ' ' ! . . i 1 A! 1 i i : 1 1 II est \0 f - 1 ! j ... ! . . . . . ! . . . _ . ! ' i i ' ! / 1 i i i r " 1 • ! | 'l\vt- ; ' i S OUJA P :sl 't i , ...: 1 • ! / I" i ! 1 i " T I 1 (0600 1 I i • ! ' 1 i / i i 1 I i i N //A 4- OK -JA>£T^ IF/ MIL i ! y / ••! 1 - i i 1 | 1 0 • ; i 1 ' " i / i i : : I 1 1 1 TL \ i i • i... |. , •MM / P 1 - | | ! 1 1 )0 l ; j ! ! • / ! • \ i 1 1 ! I Z>Ul j i ; i i i i ' i i 1 i B! i i I i )0 ... . . j . — i \ ; i ' : • : _ 1 <Z l i ! L i i ' , 1 : i / )\ . i 1 i i i i i . ^ i . | 1 \ ) J \0 1 , —<i i 1 1 ! 1 • i | M M J / M M i ! I ' i _ J _ . . _ j 1 i j | i" ! j . : 1 SO00 i i [ "M ,i | i i 1 i | ; ; ' i • 1 ' | ! ! i I ! • . . ; _ _ _ . / _ i '— ! I i i i • ! • ! \ \ ' | • j 1 MM 1 ; • >0 i I ! M | I 1 i r r i •! ! , ' i t 1 ' M ! ! ; M l M 1 " ,0 | ! 1 i i Mill i 1 1 • jm. i i i | i 1 I Jooo i I i ! j i i i i • i ! 1 1 1 + I i 1 1 ! • ; | 1 : 1 t I /ooo M M ' • . i ! : i 1 • . I ; . 1 ' 1 .__.}...! J. ! ! i 1 1 \ • i 1 .' > - n ; T T T : | •i ; • \ i i 1 1 Mi ; ^ r - ^ M ! M ! i . ! -F-I-GU-R t I ! I . I M r I 1 M i I : ' ' M . * ' 1 • i 1 i ! 1 -S-r-r-rnfcome^Gompariso^-MeanHnc^ -f arm-Gana'di •a-n-j-'f-am-i-• , , , , I ' | I ! I . | I -Source :~i—--Gent;ra-l-Mor;tgage-& IT. •no"n~ Housli ng -qorporatHonr lS - t^ ! I 45 Table _X : Tenure Comparison - Incomes of fami l ies owning the i r homes compared to Incomes of fami l ies borrowing under the NHA. Year NHA Family Owner Family NHA- NHA Income ($) Income($) Owner Owner 1957 mean 6310 4912 1398 1.27 median 5945 4319 1626 1.38 1959 mean 6283 5208 1075 1.21 median 5923 4142 1281 1.30 1961 mean 6336 5593 743 1.13 median 5964 5076 888 1.18 1963 mean 6747 median 6322 1965 mean 7233 7080 153 1.02 median 6780 6397 383 1.06 1967 mean 8769 7908 861 1.11 median 8255 7109 1146 1.16 Source: Central Mortgage & Housing Corporation, derived 46 Though t h e r e i s no u n e q u i v o c a l b a s i s f o r do ing s o , the most mean ing fu l income compar i son can be s a i d to be the compar i son between the incomes of NHA f a m i l i e s and the incomes of f a m i l i e s l i v i n g i n " l a r g e urban c e n t r e s " ( S t a t i s t i c s Canada d e f i n i t i o n : 1arge urban c e n t r e s are those o f 30,000 and more i n p o p u l a t i o n . ) Th i s i s because the m a j o r i t y o f new d w e l l i n g s o f a l l types a re b u i l t i n such 2 areas . The incomes o f f a m i l i e s l i v i n g i n l a r g e urban c e n t r e s show a much c l o s e r c o r r e l a t i o n w i t h the incomes of NHA f a m i l i e s , and the n u m e r i c a l d i f f e r e n c e i s s m a l l e r , than i s the case w i t h o t h e r c a t e g o r i e s . Once aga in however , the non-NHA shows i t s be s t r e l a t i v e p o s i t i o n i n 1965, and i n the case o f the means, t h i s p o s i t i o n i s above t h a t of the NHA f a m i l i e s . The r e l a t i v e p o s i t i o n i s the same, i n the case of the r a t i o of the med ian s , i n 1970 as i t was i n 1955. The r a t i o of the means shows a d e t e r i o r a t i o n i n 1970 as compared to 1955. These r e l a t i o n s h i p s are g i v e n i n F i g u r e s 9 and 10 and Tab l e s XI and X I I . In F i g u r e 11 the incomes of f a m i l i e s bo r r ow i ng under the NHA and the incomes of f a m i l i e s l i v i n g i n l a r g e urban c e n t r e s are r e l a t e d to the d i s t r i b u t i o n of a l l Canad ian non- fa rm f a m i l y i ncomes . The median income o f f a m i l i e s i n 2 C e n t r a l Mortgage &.Hous ing C o r p o r a t i o n uses a d i f f e r -en t b a s i s f o r r e p o r t i n g NHA d a t a . However, t h i s c o n c l u s i o n can be i n f e r r e d from da ta r e p o r t e d i n Canad ian Hous ing  S t a t i s t ! c s , 1 970 , Tab le s 7, 10, 12 and 13. — — . . . . -3 — • -_ _ i i _ i -i -• - -A — _/J*.-— — 4 3 i — / • — — — — — — — -i / 3 — — / • — — - — -. . . / h i — — — - — P t — / • i — li _ _ N 1 ! — • / - . < •3 H.P. r*._. ftfi-E Ce — — — -F — — . / _ _5 71 l 6 7 6 r -1' - — '— - — — — — -4~ - -: — oc — "1 — - . -— — -— — A ii oc iG 3 • £ — CENT* i E«S I / A — 10 OG 0 ( / H A I. I A 0 1 1 (IP /• .1 — D — — 9 OC — — — — _ _ . — • — — — —JL 1-y — $ 00 •o- — — — i — _ _ — i - i — - — _ _ . - — )n OC — — i — i — — J — - — ' ' — ! A n / Y t i T — 1 | — CL — - > _ _ 1 i — U- . I — i • 1 i y — - - — — 0 — — — — — ! : — — 0 : ' ' < < — A > • © - 0- — C — — — — — 1 1 I T ^ i i 1 1 i _ 7 I i % 5 3 lea i i i 51. n_. ie _5 7_ 5 9 i i _F iei .RE .. 1J __I n T? ICC ime •fa rn-i * . ISC die m_ n far -be 30; i ( )mf Cc ar. na in< s 1 :omes|of-J:am-ivjing in- jl a * .1-1 -ge es. ( TX. 00 DW: 0 H -U u r ldc-)ar r_ c thi en' s-NHA. ;ers. ar i i S - -Due ce jntra loritgage & Housing Corporation, •I • r •• | | I S t a t i s t i c s Can ad< , i . i ,• derived. - n - p i | I _ _ _ — T — 1 . _ ! _ _ 1" I 49 Table X I Income Comparison - Median Income of fami l ies in large urban centreslocompared with median income of fami l ies borrowing under NHA. Year Median Income of NHA Families ($) Median Income of Families in large Centres NHA -Large Centres NHA? Large Centres ($) 1954 4142 1955 5112 4320 792 1.18 1956 1957 5945 4622 1323 1.29 1958 5807 4889 918 1.19 1959 5923 4966 '957 1.19 1960 5859 1961 5964 5378 586 1.11 1962 6169 1963 6322 5921 401 1.07 1964 6549 1965 6780 6661 119 1.02 1966 7465 1967 8255 7693 562 1.07 1968 9485 8001 1484 1.19 1969 10241 8934 1307 1.15 1970 11221 9567 1654 1.18 Source: Central; Mortgage & Housing Corporation, S t a t i s t i c s Canada; derived 1. S t a t i s t i c s Canada d e f i n i t i o n : a l l urban centres in excess of 30,000 population a re " la rge " . 50 Table X-H Income Comparison - Mean Income of fami l ies l i v i n g in large urban centres^ compared with Mean income of fami l ies borrowing under the NHA. Year 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 Mean Income of NHA Families ($) 5442 6310 6188 6283 6204 6336 6563 6747 6964 7233 7918 8769 9983 10810 11833 Mean Income of Families in large centres ($) 4738 4933 5313 5656 5582 5956 6706 7386 8546 8922 9845 10537 NHA-Large centres 509 997 532 701 380 41 -153 223 1061 965 1296 NHA Large centres 1.10 1.19 1.09 1.13 1.06 1.01 0.98 1.02 1.12 1.10 1.12 Source: Central Mortgage & Housing Corporation, S t a t i s t i c s Canada; derived 1. S t a t i s t i c s Canada d e f i n i t i o n : a l l urban centres in excess of 30,000 population are " l a rge " . . . . . . . . - L - - . . f 1 i 1 1 • i I "I i i ; ; 1 1 - -M I i ... ----1 IT ' 5 --/« o 7 < 0 ' — o ! . --4/ T --' A . 1_J 3" C | j I • o 1 ' 1 • -< t | • - | Pi AJ a V : o £. c R L 4 0 C. N ot /- ; L / l M i 0 1 1 \ - 1 SI i 53 Js 57 i ^ f 1 i 7/ C y e o ) i I . . . L _ . . . F .IG JRF " 1 u _ I nc DtTlf » c om an jar Is Dn _ Me< die n inc :OIT es _0j ig " f ami l i es. e be r r DW na U ide r i i llhel NHA r -T - | d Ganadi an famijl ies 1 i|vi in] larg (30r"0p0| + ) urban "1 een i tres as i r come pe r cen t i l es of a 1 Ca nac iiaTi ! •arr i l i e s ( n • —S ou 1 | Mo "tc | i-H I.I Eoi •po ra ;ic n7 -S1 " |. :-i-c s- -de r i ve< i ,en 2 t ou g JCU rau 1 1 1 i 1 52 l a r g e c e n t r e s has been a lmos t c o n s t a n t a t must under the l e v e l o f the s i x t i e t h p e r c e n t i l e . The median NHA income shows more movement, but reaches i t s l owe s t l e v e l i n 1965. The r e l e v a n t da ta appears i n Tab le X I I I . A l l t h r e e of t he se income s e r i e s appear as r e l a t e d t o : t h e d i s t r i b u t i o n of the l ower income.group o f . a l l f a m i l i e s and una t t a ched i n d i v i d u a l s i n Tab le XIV. In each c a s e , the p e r c e n t i l e r e l a t i o n s h i p was e s t i m a t e d by u s i n g s t r a i g h t - 1 i n e a p p r o x i m a t i o n s on S t a t i s t i c s Canada d i s t r i b u t i o n s . The s t a t i s t i c a l l y - m i n d e d w i l l note t h a t i n none of the compar i sons between NHA f a m i l y income and the o t h e r income c a t e g o r i e s would r e g r e s s i o n s , i f p e r f o r m e d , have shown any s i g n i f i c a n t c o r r e l a t i o n . A common p a t t e r n emerges however , and t h a t i s i m p o r t a n t . A l l o f the r a t i o s between NHA income and the o t h e r c a t e g o r i e s beg i n a t r e l a t i v e l y h i gh l e v e l s e a r l y i n the compar i son p e r i o d , and i n a l l but one of the c a t e g o r i e s , end the compar i son a t a l ower l e v e l . In eve ry c a s e , the r a t i o ' s l o w e s t v a l u e o c c u r r e d i n 1965. From t h i s one can c onc l ude t h a t , i n terms o f i ncome, the NHA f a m i l y s t e a d i l y improved as a proxy f o r a l1 Canad ian f a m i l i e s u n t i l 1965. T h e r e a f t e r i t d e t e r i o r a t e d , but over the whole p e r i o d t h e r e has been an improvement. One i s tempted to wonder what p o l i c y i t was t h a t the CMHC was f o l l o w i n g which t e n d e d , a p p a r e n t l y , to i n c r e a s e the a v a i l a b i l i t y of home owner sh ip under the NHA, and to wonder a l s o why t h i s p o l i c y was changed a f t e r 1965. A c t u a l l y 53 Table XIII : Income Comparison - Incomes of: (a) a l l non-farm fami l ies (b) a l l fami l ies in large urban centres^ (c) fami l ies borrowing under the NHA in percenti les as related to the income d i s t r i bu t i on of a l l non-farm fami l i e s ; s t r a i gh t - l i ne approximation. (a) (b) (c) Year Mean Median Mean Median Mean Median (percenti le) (percenti le) (percenti le) 1951 60.0 50.0 1952 1953 1954 59.7 50.0 69.9 59.7 1955 1956 1957 59.1 50.0 68.9 58.7 79.7 76.6 1958 1959 59.5 50.0 68.1 59.4 76.5 72.8 1960 1961 57.4 50.0 66.9 58.3 71.4 67.1 1962 1963 59.3 50.0 68.5 59.1 68.7 64.3 1964 1965 57.9 50.0 71.1 57.8 67.5 59.3 1966 1967 58.0 50.0 71.4 57.4 73.0 64.7 1968 19692 1970 2 58.3 50.7 65.7 58.3 71.9 68.4 Source: Distr ibut ions from S t a t i s t i c s Canada; derived 1. S t a t i s t i c s Canada d e f i n i t i o n : a l l urban centres in excess of 30,000 population are " l a rge " . 2. Percenti les for 1969 based on farm and non-farm family income d i s t r i bu t i on s . Year 54 Table XIV : Income Comparison - Incomes of: (a) a l l non-farm fami l ies and indiv iduals (b) a l l non-farm fami l ies (c) a l l fami l ies in large urban centres^ (d) fami l ies borrowing under the NHA in percenti les as related to the income d i s t r i bu t i on of a l l non-farm fami l ies and ind iv idua l s ; s t r a i gh t - l i ne approximation (a) (b) (c) (d) Mean Median Mean Median Mean Median Mean Median (percenti le) (percenti le) (percenti le) (percenti le) 1951 61.1 50.0 67.7 59.7 1952 1953 1954 59.4 50.0 68.2 59.6 76.3 58.2 1955 1956 1957 60.7 50.0 65.9 58.2 74.2 58.7 83.1 80.6 1958 1959 55.0 50.0 65.6 57.3 72.9 59.4 80.4 76.8 1960 1961 58.1 50.0 64.8 58.8 72.8 58.3 76.3 72.9 1962 1963 58.4 50.0 68.8 60.1 76.5 59.1 76.8 72.6 1964 1965 58.3 50.0 65.0 58.3 76.0 57.8 70.8 66.2 19672 58.0 50.0 58.0 50.0 69.4 57.4 73.0 64.7 1966 67 1968 1969 2 ' 3 57.8 50.0 58.3 50.7 65.7 58.3 71.9 68.4 1970 Source: D i s t r ibut ion from S t a t i s t i c s Canada; derived 1. S t a t i s t i c s Canada d e f i n i t i o n : a l l urban centres in excess of 30,000 population are " la rge" 2. 1967, 1969: fami l ies only for column (a) 3. 1969: farm and non-farm for column (a) 55 the r i s e i n the r a t i o s of NHA to o t h e r incomes was the r e s u l t of a s i m p l e r e a d j u s t m e n t upwards i n the amount bo r r ow-a b l e under the NHA and the e l i m i n a t i o n o f the bedroom count as a c r i t e r i o n f o r d e t e r m i n i n g the amount b o r r o w a b l e . The e f f e c t of t h i s r e a d j u s t m e n t was to make NHA-.insured l oans a t t r a c t i v e to a h i g h e r income group w h i l e i t s purpose was to keep the bo r r owab l e amount i n l i n e w i t h the p r i c e s o f new houses . The r e a d j u s t m e n t d i d not r e s u l t i n an i n c r e a s e i n 3 house b u i l d i n g a c t i v i t y . Because the Schwabe law of r e n t has been shown to h o l d by the r e s e a r c h e r s c i t e d i n the r e v i ew of l i t e r a t u r e , at l e a s t as i t a p p l i e s to measured income, the compar i son o f NHA and o t h e r incomes w. i l l warn of b i a s i n the r e s u l t s of the a n a l y s i s of NHA bo r rower b e h a v i o u r . In the y e a r s p r i o r to 1965, when NHA f a m i l y income was f a l l i n g r e l a t i v e to o t h e r i ncomes , we may e xpec t to note an upward t r e n d i n hou s i ng e x p e n d i t u r e w i t h r e s p e c t to i ncome, o t h e r t h i n g s be i ng e q u a l ; any t r e n d i n hou s i ng e x p e n d i t u r e - i n c o m e r e l a t i o n s h i p s w i l l be a f f e c t e d a c c o r d i n g l y . In the yea r s f o l l o w i n g 1965, r a t i o s of hous ing e x p e n d i t u r e to income shou ld f a l l , c e t e r i s p a r i b u s , w i t h t r end s a f f e c t e d a c c o r d i n g l y . Based on the r e s u l t s of the income compar i son we can b e l i e v e the downward b i a s over the yea r s f o l l o w i n g 1965 to be s m a l l e r i n magn i tude than the Canad ian Hous ing . S t a t i s t i c s , op. c i t . , Tab! es 37 -40 . See a l s o F i g u r e 22, p. 40 . 56 upward b i a s over the y e a r s p r i o r to 1965. F i n a n c i a l V a r i a b l e s - - NHA Buyers Th i s s e c t i o n of the r e s e a r c h r e s u l t s p r e s e n t s c o s t v a r i a b l e s over t i m e , the income p a t t e r n over t i m e , and the r e l a t i o n s h i p between them as they app l y to bo r rower s f o r owner -occupancy under the NHA. F i g u r e 12 i l l u s t r a t e s the marked r i s e i n the p r i c e p a i d f o r hou s i ng under the NHA s i n c e 1946. Between t h a t y e a r and 1970, the growth i n the p r i c e o f the average d w e l l i n g has been by a f a c t o r g r e a t e r than t h r e e . Three s e p a r a t e p e r i o d s i n the growth of house p r i c e s are seen i n F i g u r e 12. From 1946 to 1957, the r i s e was a t an average annual r a t e of 8%. A p e r i o d of s l o w e r g r o w t h , 1.6% a n n u a l l y , o c c u r r e d between 1957 and 1965, f o l l o w e d by ano the r of more r a p i d g r o w t h , 5.8% from 1965 to 1970. F i g u r e 12 a l s o shows the changes over t ime i n the average of amounts borrowed and amounts pa i d down on owner-o c c u p i e d d w e l l i n g s under the NHA. As i s shown, average mortgage amounts i n c r e a s e d by a lmos t f o u r t imes from 1946 to 1970. Data on down.payments i s a v a i l a b l e from 1953 to the p r e s e n t . The r e s u l t of mortgage amounts i n c r e a s i n g a t a f a s t e r r a t e than house p r i c e s has been t h a t the down payment, o r i n i t i a l commitment, has remained f a i r l y c o n s t a n t f rom 1953 to the p r e s e n t . R e l a t i v e to both house p r i c e s and 1 | i i i • i 1 — 1 l 1 — — ] — •7 5 7 . . . 5 <* — — / -0 S£ <L1 6.5 / —-. j / o _/ 5- / o < I. >* At m Ul i. m - / 0 C — • 1 H S_ i 4 %-| I 1 t / ?- | | 1 — - — t i At* / _ i 55 SS i 51 51 i. 6k- 7 / o r-L- 1 F l re 1 2: NH A ho us e pr rp i c W6 es » mo 97 r t ga ge s an d do wn pa ym en t s » - 1" 0.. f u-v e-e Ge n-t ra •1-Mo rt-g-a g-e -& -H ou s-i ng -G or po ra t-i-on O U 1 •1 • | ( 1 - ; . 58 mortgage amounts,or of c ou r s e , t he down payment has s h r unk . Some of the e f f e c t of the r e l a t i v e s h r i n k i n g of down payments can be accounted f o r by the e a s i e r mortgage terms t h a t have come to pass d u r i n g the t ime p e r i o d examined ( h i g h e r l o a n / v a l u e r a t i o s ) . Other reasons may be a growth i n f i n a n c i a l acumen on the p a r t of b o r r o w e r s , an i n a b i l i t y to save f o r a l a r g e down . payment, or an u n w i l l i n g n e s s to do so because of a s h i f t i n t a s t e away from h o u s i n g . None of these reasons s hou l d be seen i n i s o l a t i o n as a l l can be o p e r a t i n g s i m u l t a n -e o u s l y . And of cour se the da ta f o r F i g u r e 12, which appears i n Tab l e XV, says n o t h i n g a t a l l about the p o s s i b l e r o l e o f j u n i o r mortgages i n s h r i n k i n g the r e l a t i v e s i z e o f down payments. Tab le XV a l s o p r e s e n t s the p a t t e r n of i n t e r e s t r a t e s on NHA l oan s s i n c e 1953. The NHA i n t e r e s t r a t e , governed d i r e c t l y f o r many y e a r s , was s u b s e q u e n t l y t i e d to the y i e l d , dn government bonds, and f i n a l l y a l l o w e d to f l o a t f r e e i n J u l y o f 1969. I t n e a r l y doub led s i n c e 1953. I t i s worth n o t i n g t h a t i t i s the i n t e r e s t r a t e i n c o m b i n a t i o n w i t h the mortgage amount t h a t s i s the l a r g e s t p o r t i o n of the c a r r y i n g c o s t of home o w n e r s h i p . The i n t e r e s t r a t e s a re d i s p l a y e d g r a p h i c a l l y i n F i g u r e 13. F i g u r e 14 shows the r i s e i n NHA i ncomes . The NHA f a m i l y income i s r e p o r t e d f o r the yea r s 1955-1970, and the income of the bo r rower a l one f o r the y e a r s 1953-1968. These are seen to r i s e at a moderate r a t e u n t i l 1965; a f t e r t h i s 59 Table XV ; NHA loans for home ownership - pr ice of i nd i v i dua l l y financed un i t s , average mortgage amounts, average down payment, and average interest rate. Year Mean House Pr ice Mean Mortgage^' Mean Down Payment^' Interest 1 ($) ' ($) ($) (%) 1946 6205 4593 1947 6873 5031 1948 7624 5476 1949 8058 5801 1950 8939 7249 1951 10260 7019 1952 10183 8199 1953 11687 8347 3340 1954 12335 9344 3084 1955 12598 9999 2773 5.25 1956 13366 10434 3217 5.50 1957 14512 10856 3826 6.00 1958 14237 . 11804 3057 6.00 1959 .14516 11750 3094 6.75 1960 14380 11722 3033 6.75 1961 14474 12747 2475 6150 1962 14815 12845 2421 6.50 1963 15229 13237 2634 6.25 1964 15826 13804 2700 6.25 1965 16531 14459 2999 6.25 1966 17945 15589 3544 7.25 1967 19442 16692 4312 7.91 1968 20270 16304 4382 8.69 1969 20780 17911 4395 9.97 1970 21895 17902 4206 9.79 Source: Central Mortgage & Housing Corporation 1. Data for 1969, 1970 for single-detached only. . 1.. 1 • 1 • .1 l_. ...... ..... i . i ... --— i I ! 1 -4 l — i i • i --— — — — -. — ..... — I - — — ....... ...... — 0- — — • — - — ..... t — ..... -- — — r — 6 — — — - — — — - .... -- ... ..... - — — — 4 — — — — — — — — — --— ..... I — 9 ...... — -— — ..... :._ ...... — .... — — — -....... — •—- — — ...... — -— .... — — — J r -~- .... — — — - — — — — - — — ----- ..... — — -/> ! ) • — L U l r — — - — - — — — — ..... .... .... _ _ — — — ^ ------ 7 I — — — — — - — • — ---__. —,— — \ — -•/-— — o__ — — — — ..... — — -— t. fi-w_ — — ...... — - — .— ... — — .... — — — — — c - -— -- — - — — — — ...... ...... ...... — .__ — — — — — — — ..... — — — — — .... — — — — — — - — • — — — — — - — — — — - — • — .... -— - -— -— - - — — — — • — — • .... — — — -— — - ...... --- , h • — — -— - — — 5 t — 5 5 5 ...s t -C Ye 6 I 5 _ 5_ — -~--.— -— — .... --— — — - — — .._ — — — — — — — — --- — — — — — — — • — — 1-3 \'.~ " - r nt en er t r es a-l t- ra te s — on .-N HA - i - o'a" ns 19 53 —_ -1-9-7-i are 0. — —; rcL:- . — ...... -C -M or t-g a-g e_ 5-Ho us i.n g-Co r-p o.r. a.t i.o. 0- .._ ---.-. ...... - -— -- — — —.- — — — 1 " 1" r ' — ; i i i 1 : i .. i i . ! i 1 i • i i c 0 --/ ve no iA an In ne 1 | / / a- / / — — — / *- / / 4 Si-3 i — — — i o — t. IT i file - A /Hi L i •to u)t Co. :or nc l > 1 - 1^ 1#\ • | — — 7) *i L 0 i £ - 1 i V —-— — 1 P er A O no D « < i O OS « l or *e • C< lO i to — i | 1 I r . i SI 1 S3 55 _5 7_ 5 < 1 6.3 i 4.7 1 tl i rs ) ! i i i i I i • F i qu re 1 4: In cc tne 0 f av er ag e NH A pu rc ha S € r , 1 95 3- 19 70 9 i i pers or -1 a l c i s pojsa bl e i r C O me P er c ap i t a , i 1 9 b 1 97 0. i i. Sn U-V c e H P n-t via -1-t i Mn n.aln.p - a a; nc c -¥ er O L • 1 V -si ed nc -C or po ra -t-i 1 \* \-S t!a t ' i s cs Cariad 5 62 t ime they are seen to r i s e more q u i c k l y . Th i s p a t t e r n ho ld s no s u r p r i s e , be i ng what.was e x p e c t e d . f r o m the r e s u l t s of the s e c t i o n on income compa r i s on . The r e l e v a n t numbers appear i n Tab le XV I . I t i s c e n t r a l to the t h e s i s of t h i s paper to de te rm ine which of the i n c r e a s e s , t h a t of income or t h a t of e x p e n d i t u r e on h o u s i n g , i s the g r e a t e r . F i g u r e 15 p r o v i d e s an answer i n d i s p l a y i n g the i n d i c e s g i v e n i n Tab le XV I I . Wh i l e t he se i n d i c e s cannot show changes i n a b s o l u t e amounts, they ve ry c l e a r l y show t h a t incomes have r i s e n a t a f a s t e r r a t e d u r i n g the decade 1961-1970 than e i t h e r consumer p r i c e s or hou s i ng cos t s . F i g u r e 16 r e l a t e s the i n d i c e s of per c a p i t a d i s p o s a b l e income and NHA house p r i c e s . That the r a t i o f a l l s i n v a l u e i n d i c a t e s t h a t a f t e r - t a x per c a p i t a income has r i s e n more q u i c k l y than the c o s t of h o u s i n g . F i g u r e 17 p r e s e n t s the same r e s u l t . The l i n e s t r a c i n g the i n c r e a s e s i n income on the s e m i - l o g f o rma t of F i g u r e 17 r i s e more s t e e p l y ove r the p e r i o d 1953-1970 than e i t h e r the l i n e t r a c i n g house p r i c e s or the l i n e t r a c i n g down pay -ments . A f t e r the gene ra l i n d i c a t i o n s 'as p r e s e n t e d i n F i g u r e s 15 -17 , a more p a r t i c u l a r r e s u l t i s shown i n F i g u r e 18, based on da ta c o n t a i n e d i n Tab le XV I . R e c a l l from the income compar i sons t h a t NHA incomes f e l l w i t h r e s p e c t to o t h e r incomes d u r i n g the p e r i o d p r i o r to 1965 and rose r e l a t i v e to o t h e r 63 Table : Mean income of head and family of borrowers under the NHA for owner-occupied housing; Ratios 1 of Dwelling Price and Down Payment to Income Year Mean Borrower 1s Income Mean Family Income Price Borrower 1s Price Family D.P. Borrower D.P. Family ($) ($) 1953 4803 2.44 0.697 1954 4962 2.48 .623 1955 5023 5442 2.51 2.32 .552 0.509 1956 5312 2.52 .606 1957 5798 6310 2.50' 2.30 .659 .607 1958 5628 6188 2.53 2.30 .543 .494 1959 5716 6283 2.52 2.42 .532 .517 1960 5620 6204 2.56 2.32 .540 .490 1961 5810 6336 2.49 2.29 .426 .391 1962 6015 6563 2.46 2.26 .403 .369 1963 6179 6747 2.47 2.27 .426 .390 1964 6375 6964 2.48 2.27 .424 .388 1965 6655 7233 2.48 2.29 .451 .415 1966 7287 7918 2.46 2.27 .486 .448 1967 8008 8769 2.43 2.22 .539 .492 1968 8803 9983 2.33 2.06 .498 .439 1969 10810 1.92 .407 1970 11833 1.85 .356 Source: Central Mortgage & Housing Corporation; derived 1. Data for rat ios for i nd i v idua l l y financed dwellings for home ownership, 1953 - 1968; single-detached only, 1969, 1970. 65 Table XV I I : Housing Cost and Income Indices (1961 = 100) N'on-Farm Personal Disposable Total Cost of NHA Year Family Income Income Per Capita Home Ownership 1 s ingle detached di 1959 93.4 95.4 1960 98.8 1961 100.0 100.0 100.0 100.0 1962 106.6 102.8 102.3 1963 117.7 111.5 105.9 105.3 1964 115.7 110.4 110.7 1965 125.4 125.5 115.0 116.9 1966 135.3 120.1 129.6 1967 141.3 147.3 126.9 131.7 1968 151.5 157.2 136.1 133.7 1969 160.6 168.4 148.3 146.8 1970 186.1 176.2 161.3 145.4 Consumer Price Index  97.9 99.1 100.0 101.2 103.0 104.8 107.4 111.4 115.4 120.0 125.5 129.7 Source: Central Mortgage & Housing Corporation; derived 1. T o t a l home owner sh ip i n d e x : compos i te p r i c e i ndex i n c l u d i n g c o s t of p r o p e r t y t a x e s , mortgage i n t e r e s t , r e p a i r s , new houses , and p r o p e r t y i n s u r a n c e . --- I d ... . . . . ....... . . . . - ; \ _...L. — - -" ..... --- -- .6. 6... - • -— ... ~ -— • •--• — -/ —.— ... /' «* - . — / Ir = IOC > •-/ i / i .... ---— -— / A o s / U - - -- — — — - — -4= .... ...... -----V • •-• V o .... . . . . . --9 -. -i' — --- - - - - • - ..... • < ...... ... 0. .... ----..... . . . . - -— . _ : • - -6 f _4. 3_. 6 (X SL irs .6 I) a 7 _Q 7 — - - - - -.... / — ..... " -1 6: NH A~ t-i p-r o~ 1-c of • an IF i d • pe es r » ca 1-9 pi 61 ta -1 d 97 1 s po sa b 1 e i n C O me : Ra i rid 1 c 0. ti s:0 ur ce • .Ce de n.t r i r.a ve d. M.o r_t ga g.p ft .H O.U s-i n.g _C or po r.a t i on ; _— •-— 30 AS 53 St S5 S(> 51 S 8 5 9 6 0 U U 4 , 3 6 ¥ - W J 6 6 6 7 68 6 9 TO (Yeors) F i g u r e 17: Rates of growth of house p r i c e s , incomes and down payments. Sou rce : C e n t r a l Mortgage and Hous ing C o r p o r a t i o n , S t a t i s t i c s Canada. — r 1 ' ' ' i i i H j . _i !' • i . _ J--- 0 D )0 — — . . _ . L :— T0 __ — 8« rr, er ' s J •or i e o — — ST )0 £ o — o c -— \ <-»-o OS'. v. i • —- — \ ~v J r a. - -i *> F< I neon re on J O T S 7 t i I r T 1 Ir\corvi C t- -A 1 57 1 i 7 ! 59 i 6A J • b le. *) Fi gu re 1 8: Ho r9 US 53 e -1" pr 97 i c e as m t l Pi e O f b uy er 's . i nc om e, 0. So G-e de n-t-r-i-r-a ve •1-Mo rt g-a g-e -H OU si ng or po ra t i on U 1 • • 69 incomes s u b s e q u e n t l y . R e c a l l as w e l l t h a t , because of t h i s , the Schwabe law of r e n t would i n t r o d u c e an upward b i a s i n r a t i o s r e l a t i n g hous i ng e x p e n d i t u r e to income p r i o r to 1965 and a downward b i a s a f t e r . R e c a l l f u r t h e r t h a t the r e l a t i v e movement of NHA income and t h a t of the o t h e r c a t e g o r -i e s examined was i n g e n e r a l s m a l l e r a f t e r 1965 than b e f o r e a l l o w i n g the c o n c l u s i o n t h a t the downward b i a s i n q u e s t i o n would be somewhat s m a l l e r than the upward one. The Schwabe l a w - i n d u c e d b i a s can c l e a r l y not account f o r what we see. i n F i g u r e 18.• To be s u r e , both the r a t i o s of house p r i c e to b o r r o w e r ' s income and of house p r i c e to f a m i l y income show sma l l peaks around 1965. In the case o f b o r r o w e r ' s r a t i o , however , a c l e a r downward t r e n d i s shown to have e x i s t e d a t l e a s t s i n c e 1960. In the case of the f a m i l y r a t i o , which i s more a p p r o p r i a t e f o r reasons o f e q u i v a l e n c e , the downward t r e n d i s obv ious s i n c e 1959; i f the 1959 peak i s t aken to be anomalous , . the t r e n d i s e v i d e n t from 1955 when t h i s da ta s e r i e s was f i r s t r e p o r t e d . In sum, a n o r m a l i z e d i l l u s t r a t i o n would show a c l e a r downward t r e n d b e f o r e 1965; the n o r m a l i z e d t r e n d would be l e s s s t e e p a f t e r 1965 than t h a t shown i n F i g u r e 18. Th i s downward t r e n d can be accounted f o r i n one or both of two.ways. One o f these i s t h a t . t h e h y p o t h e s i s chosen f o r i n v e s t i g a t i o n i s i n f a c t t r u e - - h o u s i n g has s l i p p e d down-ward i n the consumers. ' s c a l e o f p r e f e r e n c e s . The o t h e r i s 70 t h a t h i g h e r i n t e r e s t r a t e s and g r e a t e r mortgage amounts have combined to c r e a t e h i gh c a r r y i n g c o s t s toward the l a t t e r p a r t of the t ime p e r i o d under i n v e s t i g a t i o n . A r a t i o n a l way to reduce the c a r r y i n g c o s t s of a mortgage i s to reduce the amount be ing bo r rowed. I f c a r r y -i ng c o s t s are a l i m i t i n g f a c t o r , a r i s e i n the a p p l i c a b l e i n t e r e s t r a t e s hou ld e l i c i t a f u r t h e r r e d u c t i o n i n the amount bo r rowed. I f i t i s d e s i r e d to o b t a i n the same q u a n t i t y o f good, the on l y method o f r e d u c i n g the amount borrowed i s to i n c r e a s e the amount p a i d down. The movements of the r a t i o s of mortgage amount and down payment show t h i s k i n d of c o m p l e m e n t a r i t y , as shown i n F i g u r e 19, u n t i l 1967. The s i g n i f i c a n t drop i n the p r i c e / i n c o m e r a t i o a f t e r 1967 as seen i n F i g u r e 18 was a c c o m p l i s h e d a t the expense of hav i ng the mortgage/ income and down payment/income r a t i o s move i n c o n c e r t - - t h e f i r s t t ime f o r such a t r e n d . Wh i l e the r e d u c t i o n i n the mortgage/income r a t i o can be seen as a r a t i o n a l accommodation to r i s i n g c a r r y i n g co s t s r e s u l t i n g f rom a r i s i n g i n t e r e s t r a t e , the s imu l t aneou s r e d u c t i o n i n the r a t i o of down payment to income must be seen as a s i g n of a downward s h i f t i n the t a s t e f o r h o u s i n g . The numbers to accompany F i g u r e 19 may be found i n Tab le s XVI and X V I I I . There i s no d o u b t . t h a t a r i s e i n i n t e r e s t r a t e s , th rough t h e i r e f f e c t o n . c a r r y i n g c o s t , a f f e c t the c o s t of h o u s i n g . F i g u r e 20 shows how house buyers have a d j u s t e d the purchase p r i c e they pay f o r hou s i ng to accommodate the movement of the j 1. : • -— 1 : t • ; i — 4 — • i i i ! 1 I 7 1 • -- f t ; o r +5 «3 e_ _d ty\t »rr -Is _ I o c on "1 1 11 ^. 0 -v \ / \ X / <U -I 0 /• 5 ^ l e tt-A M.I l t _ « o •i.lj on | y C H I U — , — w C De i m c n o r r*o< i 'J In Lor i e i • j — Oo Pot y n ier»t 1/ Feif 1 Tn zor AC 1 a 0 / T 1 I — 1 1 5 I sk . £ . 7 Si * - L A L . 1 L_ _ 7 / c oris) F i qu re 1 Mo r t qa ge S an d do wn P ay me n t s as rr u l t i P i es of buy er ' s i i n c o m e 1 1 ! 953 - 197C Sn •U-V .r.e • Ge d.e J I _ n.J-no—jJ—1- -IVM-C—1 ng C M po -ra -t-i on — ve'd. 9 i 72 Table XVI If!: Mortgage Amount as mult ip le of Incomes of NHA borrower and family (NHA means); Ratio of Gross Debt Service to Income.'* Year Mortgage Amount ? Mortqaqe Amount Gross Debt Service Borrower's Income Family Income Income 1953 1.74 (%) 18.1 1954 1.88 18.7 1955 1.99 1.83 18.6 1956 1.97 18.3 1957 1.87 1.72 18.5 1958 2,10 1.91 . 19.9 1959 2.06 1.96 20.1 1960 2.09 1.89 21.2 1961 2.19 2.01 21.7 1962 2.14 1.96 21.4 1963 2.16 1.98 21.4 1964 2.16 1.98 21.5 1965 2.17 2.00 . 21.4 1966 2.14 1.97 21.4 1967 1.96 1.81 2U6 1968 1.85 1.63 20.4 1969 1.66 20.7 1970 1.51 20.9 h 2 Source: Central Mortage & Housing Corporation; derived 1. As reported by Central Mortgage & Housing Corporation. Ratio), i s determined using borrower's income only , 1953 - 1968; borrower's income plus 50% of spouse's income ( i . e . family income basis) used to determine r a t i o , 1969, 1970 Gross debt service = payments on p r i n c i pa l . i n t e re s t , and property taxes. 2. Indiv idual ly financed dwelling units for home ownership 1953 - 1968; s ingle detached only, 1969, 1970. 74 i n t e r e s t r a t e . The i n t e r e s t r a t e i s i n v e r t e d to b e t t e r i l l u s t r a t e the n e g a t i v e c o r r e l a t i o n t h a t e x i s t s between house p r i c e and i n t e r e s t r a t e . The f a c t o r of (1/10) a p p e a r i n g i n the i n t e r e s t r a t e i ndex i s s i m p l y a c o n s t a n t used to a d j u s t the i ndex to an a p p r o p r i a t e l e v e l a l ong the v e r t i c a l a x i s . F i g u r e 21 w i t h Tab l e XV I I I p r e s e n t the r e s u l t of the ad ju s tment s of purchase p r i c e and down payment as w e l l as the i n t e r e s t r a t e on the c a r r y i n g c o s t to the average NHA b u y e r . I l l u s t r a t e d i n F i g u r e 21 i s the r a t i o o f g ross debt s e r v i c e ( p r i n c i p a l , i n t e r e s t , and p r o p e r t y t a x e s ) to income. Th i s r a t i o remained f a i r l y s t eady t h r oughou t the decade of the S i x t i e s — the d i p a t the l a t t e r , e n d i s the r e s u l t of the CMHC's i n c l u s i o n of some.of the s p o u s e ' s income as p a r t of the income r e l e v a n t to home pu r cha se . Over the cou r se of the e n t i r e t ime r e p o r t e d , the gross debt s e r v i c e t o income r a t i o has r i s e n , from 18%-19% i n the m i d d l e F i f t i e s to above 21 1/2% i n the S i x t i e s . I t might appear t h a t i n terms of c a r r y i n g c o s t the t a s t e o f consumers f o r hou s i ng had grown. In the t o t a l p i c t u r e the r e v e r s e has been shown to be t r u e however, t h a t the t a s t e of NHA buyers f o r hou s i ng has f a l l e n . More i m p o r t a n t l y f o r the r e s e a r c h o b j e c t i v e , i t has been shown t h a t , f o r NHA buyers a t l e a s t , the purchase p r i c e of hou s i ng has shown a d e c l i n i n g r e l a t i o n s h i p t o the income of the b u y e r . I t has a l s o been shown t h a t , i n a d d i t i o n to the chang ing t a s t e . o f the consumer, the i n t e r e s t r a t e on 76 mortgage l oan s i s a l s o i m p o r t a n t i n the e s t i m a t i o n o f the p r i c e / i n c o m e r e l a t i o n s h i p . Genera l I nd i c a t i ons Th i s s e c t i o n takes a b r i e f l ook a t the g e n e r a l i n d i c a -t i o n s p r o v i d e d by the S t a t i s t i c s Canada s e r i e s on Urban  F a m i l y Expendi t u r e and by an e x a m i n a t i o n of hou s i ng s t a r t s ove r the t ime p e r i o d cove red by t h i s pape r . T a b l e XIX p r e s e n t s s h e l t e r c o s t s as a pe r cen t age of income as a v a i l a b l e from S t a t i s t i c s Canada f o r the p e r i o d 1955-1967. I t can be seen t h a t the Schwabe law of r e n t ho ld s f o r each of the yea r s r e p o r t e d . I ndeed , i t would be s u r p r i s i n g i f i t d i d n o t , i n v iew of the r e s e a r c h t h a t i n d i c a t e s t h a t i t s h o u l d ho l d (as d i s c u s s e d i n the r ev i ew of l i t e r a t u r e ) . Remarkab l y , S t a t i s t i c s Canada does not v iew payments on mortgage p r i n c i p a l as a c o s t of hou s i ng but i n c l u d e s payments on i n t e r e s t . Tab l e XX shows t h a t t h e r e has been a s t eady d e c l i n e i n the average e x p e n d i t u r e on hous ing r e p o r t e d by a l l groups d u r i n g the p e r i o d . Th i s i s t aken as s u p p o r t of the c o n t e n t i o n of the h y p o t h e s i s t h a t C a n a d i a n s ' t a s t e f o r hou s i ng has d e c l i n e d . F i g u r e 22 shows hous i ng s t a r t s i n Canada - - t he numbers of v a r i o u s types of d w e l l i n g s and the t o t a l . F i g u r e 23 and Tab l e XXI p r e s e n t a breakdown o f the v a r i o u s types of hou s i ng as pe r cen tage s of t o t a l s t a r t s . Table XIX : Shelter Costs (housing ' , f u e l , l i g h t , and water) as percentage of income. Year Under $2500- $3000- $3500- $4000- $4500- $5000- $5500- $6000- $6500- $7000- $7500- $8000- $10,000-$2500 2999 3499 3999 4499 4999 5499 5999 6499 6999 7499 7999 9999 + 1955 22.1 19.8 19.8 18.0 17.4 16.7 17.0 16.0 14.0 1951 2 20.2 19.8 18.5 16.7 16.9 17.1 16.7 15.7 15.9 1959 24.9 21.6 19.3 18.5 18.8 18.2 16.8 16.3 15.8 15.2 14.0 11.8 19622 21.9 21.2 20.0 19.2 19.8 18.4 17.9 17.2 15.9 16.6 19643 (30.1) (22.5) (21.4) (20.1) (20.4) (19.0) (18.8) (16.9) (17.0) (16.2) (15.3) 03.2) 28.2 23.9 22.6 19.6 20.2 19.3 18.8 16.6 16.9 15.9 15.2 13.2 1967 3 (31.4) (23.7) (22.7) (22.7) (19.5) (20.0) (19.1) (19.0) (18.2) (17.9) (17.0) (15.8) (12.9) 27.8 22.8 22.9 23.7 18.7 20.3 19.1 19.3 18.5 18.1 .'17.3 . 15.8 12.9 Source: S t a t i s t i c s Canada, Urban Family Expenditure series 1. Excludes payments on mortgage pr inc ipa l but includes interest payments and rent. 2. Restricted income range. 3. Figures in parentheses for fami l ies and unattached ind iv idua l s . O the r f i g u r e s f o r f a m i l i e s o n l y . 78 Table XX • Shelter Costs (housing 1 , f u e l , l i g h t and water) and Personal Taxes as percentage of income - average of a l l groups. Year 2 2 Shelter Costs Personal Taxes 1955 17.1% of $4424 5.6% of $4424 3 1957 17.1% of $4830 6.2% of $4830 1959 16.4% of $5570 6.8% of $5570 3 1962 18.6% Of $5507 6.4% of $5507 1964 (16.8% of $6395) (9.4% of $6395) 16.3% of $7031 9.2% of $7031 1967 (15.9% of $8000) (12.7% of $8000) 15.5% of $8831 12.9% of $8831 1969 (15.2% of $8161) Cl 3.5% of $8161) Source: S t a t i s t i c s Canada, Urban Family Expenditure series 1. Excludes payments on mortgage pr inc ipa l but includes interest payments and rent. 2. Figures in parentheses for fami l ies and unattached ind iv idua l s . 3. Restricted income range r-M-SINGLE |S CM J - "BET*Crt ED ^\pu PtEX D_E_TA.CHCDr I L L U . • ! • . ! . •8-G-_L_. -4--Source": Housjing s ta r t - s j by t.ype pe r cen tage to t a l C e"h t r a jl' Mo r t g a"g"e" cler i ved . of dwel Hous ing l i n g Corpora as TableXX I : Housing Starts - Various types as percentage of tota l s ta r t s . Single Semi-detached w Apartment and Year Detached and Duplex Row Other (*) (*) (%) (%) 1949 78.8 8.3 - 12.8 1950 74.2 9.4 0.7 15.7 1951 77.3 8.2 0.1 14.4 1952 72.8 6.4 0.4 20.3 1953 69.1 7.2 0.5 23.3 1954 69.3 5.7 0.9 24.2 1955 71.6 7.7 0.4 19.4 1956 71.2 7.4 0.8 19.6 1957 67.8 7.6 0.8 22.5 1958 63.5 6.5 0.5 28.5 1959 65.2 7.4 0.4 26.0 1960 61.7 8.9 0.1 27.2 1961 60.8 9.3 0.5 28.4 1962 56.8 8.4 0.9 31.2 1963 51.8 5.3 0.6 40.1 1964 46.5 5.3 0.9 45.4 1965 45.3 4.8 0.7 46.8 1966 52.6 5.4 0.7 38.3 1967 44.2 6.1 0.5 45.2 1968 38.3 5.1 0.1 52.5 1969 37.3 4.9 0.1 52.7 1970 37.1 6.2 0.2 49.2 Source: Central Mortgage & Housing Corporation; derived 82 The p r e c e d i n g s e c t i o n s have shown t h a t NHA buyer s make a s m a l l e r s a c r i f i c e now than f o r m e r l y to purchase hous -i n g , and t h i s has been d e f i n e d by the h y p o t h e s i s as i n d i c a t -i n g a downward s h i f t i n the t a s t e o f a t l e a s t t h i s group o f consumers f o r h o u s i n g . The income compar i son has i n d i c a t e d t h a t f o r Canadians as a whole the p r o v i s i o n of hous ing i s u n l i k e l y to be a g r e a t e r burden now than i n the p a s t . Neve r -t h e l e s s , t he r e has been a marked s h i f t away from the most c o s t l y type of h o u s i n g , s i n g l e d e t a c h e d , to l e s s c o s t l y type of h o u s i n g , s i n g l e d e t a c h e d , to l e s s c o s t l y m u l t i p l e f o rms . Tab l e XXII p r e s e n t s da ta t h a t s h o u l d he l p e x p l a i n the reason f o r the s h i f t to forms of m u l t i p l e h o u s i n g , but does n o t . Net f a m i l y f o r m a t i o n shows no s y s t e m a t i c change i n i t s r e l a t i o n to n a t i o n a l p o p u l a t i o n , and the average f a m i l y s i z e i s g r e a t e r now than a t many t imes i n the p a s t . Even the pe r cen tage of two -pe r son f a m i l i e s i s l owe r now than at. many t imes i n the p a s t . Thus the s h i f t to m u l t i p l e hous ing from s i n g l e forms i s a l s o t aken as e v i d e n c e t h a t the Canad ian con sumer ' s p r e f e r e n c e f o r hous ing has f a l l e n . In s p i t e o f e v i d e n c e to the c o n t r a r y , t h e r e i s a vehement c o m p l a i n t t h a t decent hous ing i s becoming i n c r e a s i n g l y d i f f i c u l t f o r f a m i l i e s to p r o v i d e f o r t h e m s e l v e s . Th i s l ead s to a conce rn t h a t some i m p o r t a n t e lement r e l e v a n t to t h i s s tudy has been o m i t t e d . No s tudy of hou s i ng and income a l l o c a t i o n can be c o n s i d e r e d comple te w i t h o u t an e x a m i n a t i o n of the r o l e of 83 Table XXII: Population of Canada, Net Family Formation, Family S ize, Percentage of Two-Person Families Canada Net Family Average Percentage of Year Population Formation Family Size Two-Person Families (10'00's) (1000's) 1949 13447 74.1 3.7 30.7 1950 13712 70.7 1951 14009 93.4 3.7 31.2 1952 14459 89.8 3.7 30.8 1953 14845 90.6 3.8 31.5 1954 15287 86.0 3.7 31.5 1955 15698 74.4 3.8 30.2 1956 16081 90.8 3.8 30.3 1957 16610 116.6 3.8 29.8 1958 17080 83.3 3.8 29.2 1959 17483 76.8 3.9 28.7 1960 17870 71.3 3.9 28.8 1961 18238 65.6 3.9 28.9 1962 18583 65.4 3.9 28.0 1963 18931 68.4 4.0 26.7 1964 19290 77.1 4.0 26.9 1965 19644 89.2 4.0 27.3 1966 20015 110.6 3.9 28.9 1967 20405 120.6 3.9 29.0 1968 20744 115.1 3.9 29.2 1969 21061 112.2 3.9 29.3 1970 21377 112.8 1971 21681 Source: S t a t i s t i c s Canada, Central Mortgage & Housing Corporation 84 t a x e s . No f i r m c o n c l u s i o n s can be made w i t h r e s p e c t to changes i n t a s t e as i n d i c a t e d by chang ing p a t t e r n s of income a l l o c a t i o n w i t h o u t u n d e r s t a n d i n g the e f f e c t , e s p e c i a l l y d u r i n g p e r i o d s o f i n f l a t i o n , of the g r a d u a t e d , p r o g r e s s i v e income t a x . U n f o r t u n a t e l y , a thorough e x a m i n a t i o n of the e f f e c t of taxes i s beyond the scope of t h i s s t u d y ; on the o t h e r hand, the r o l e of taxes has been i g n o r e d by o t h e r s t u d i e s of hou s i n g - i n come r e l a t i o n s h i p s . How l a r g e the e f f e c t of t axe s may be i s i n d i c a t e d i n Tab le XX. Wh i le e x p e n d i t u r e s f o r s h e l t e r have f a l l e n d u r i n g the p e r i o d 1955-1969 i n the o r d e r of 2 per cen t of i ncome, taxes have r i s e n to w e l l over t w i c e the l e v e l i n 1969 t h a t they h e l d i n 1955. Taxes doub led as a pe r cen tage of p u r c h a s i n g power between 1962 and 1969, w h i l e e x p e n d i t u r e s on hous ing f e l l about one p e r c e n t . The prob lem appears to be complex however, because t h i s e v i d e n c e would appear to be c o n t r a d i c t e d by compar i sons between per c a p i t a d i s p o s a b l e income ( i . e . a f t e r - t a x ) and i n d i c e s of consumer p r i c e s , which i n d i c a t e a s i g n i f i c a n t i n c r e a s e i n a f t e r - t a x spend ing power. In any c a s e , as ment ioned above, t h i s m a t t e r i s l e f t to ano the r s t u d y . Area Compari son The r e s e a r c h r e s u l t s p r e s e n t e d i n t h i s paper conc l ude w i t h a b r i e f i n t e r - m e t r o p o l i t a n compar i son of the h o u s i n g -income r e l a t i o n s h i p . Th i s e x a m i n a t i o n i s not c e n t r a l to the 85 t h e s i s of t h i s pape r , but i s o f more i n t e r e s t w i t h r e s p e c t to the b roade r r e s e a r c h o b j e c t i v e from which t h i s paper grew. Tab le XX I I I p r e s e n t s the average p r i c e of NHA houses i n v a r i o u s m e t r o p o l i t a n a r e a s , as r e p o r t e d by the CMHC. In g e n e r a l , t h e r e are no s u r p r i s e s i n t h i s t a b l e , as house p r i c e s seem to bear the same r e l a t i o n to geography as we have come to know r e g a r d i n g i ncomes , l i v i n g s t a n d a r d and so on ; a g ene ra l i n c r e a s e from e a s t to w e s t , but w i t h O n t a r i o the h i g h e s t of a l l . P r i c e s i n c r e a s e d from 1960 to 1970. The e x c e p t i o n to the g e n e r a l t r e n d occu r s i n the P r o v i n c e of Quebec, e s p e c i a l l y i n M o n t r e a l . From 1960 to 1965, the p r i c e of houses i n Mon t r ea l r o s e , not as f a s t as i n some c i t i e s , but f a s t e r than the n a t i o n a l a ve r age . However, t he r e was a drop i n 1967 from which t h e r e has been no r e c o v e r y . Th i s drop i n p r i c e co r re sponds w i t h one of the f i r s t s e r i o u s s e p a r a t i s t e x c i t e m e n t s and a n a t i o n a l rumour t h a t r e s i d e n t i a l p r o p e r t y p r i c e s i n Mon t rea l had s u f f e r e d a d r a s t i c s e t b a c k . Cou ld i t be t h a t ang lophones no l o n g e r b u i l d houses i n M o n t r e a l ? I t would be i n t e r e s t i n g to s tudy the d e n s i t y p a t t e r n of new r e s i d e n t i a l b u i l d i n g i n Mon t rea l b e f o r e and a f t e r t h i s d e p a r t u r e from the n a t i o n a l t r e n d . The incomes of the buyers of the NHA houses appear i n Tab le XXIV and are r e l a t e d to the house p r i c e s i n Tab l e XXV. In both the n a t i o n a l and i n eve r y m e t r o p o l i t a n a r e a , the r a t i o s a t the end of the t ime p e r i o d r e p r e s e n t e d are l owe r Table XX11i : Area Comparison - Total Cost ( land, construction and other costs, but excluding mortgage insurance fee) of dwellings financed under NHA on freehold land in various metropolitan areas. Year 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) Halifax 13819 14403 15039 15179 15307 16302 16998 17784 18855 24469 24003 St. John's 13267 14937 15013 15454 16406 18317 19115 17963 20703 20568 22263 Montreal 13917 13222 14167 15052 16232 17034 18066 15901 16634 17015 17432 Quebec 12989 13241 13633 14292 14941 14933 15709 16502 16499 18347 17337 Hamilton 15374 15637 14968 15531 16551 17951 19947 21341 23087 29144 29322 London 14315 14706 14737 14897 15107 15122 16675 18208 19236 24307 23760 Ottawa 15652 15772 15926 16211 17269 17880 19829 19973 20324 30553 30793 Sudbury 12546 13720 14576 15353 15845 15914 19168 18357 l 19290 25031 25672 Toronto 16736 17368 17009 16561 17455 19677 23056 24878 26547 28644 29914 Windsor 13343 14652 14647 15822 16348 18450 21774 22620 22228 27342 29165 Calgary 14004 14477 14903 15099 15330 15999 17980 18980 20060 22753 22590 Edmonton 14783 14860 15139 15102 15632 16486 17954 18967 19649 22897 25161 Regina 12779 13491 13793 13999 14721 15162 16549 17299 17891 21141 16050 Saskatoon 12725 13191 13330 13410 14756 15093 16391 16988 17926 20721 16947 Winnipeg 15158 15332 15617 15720 16602 17164 18297 18622 19641 22489 23041 Vancouver 16019 16622 17010 16139 17007 18326 19554 20687 21833 24477 25591 V ic to r ia 14891 15593 16025 16362 16925 19339 20732 20848 21368 27760 25969 Canada 14273 14463 14684 15068 15807 16572 18059 18529 18930 21860 21599 Source: Central Mortgage & Housing Corporation 1. Bungalows 1960 - 1968, s ingle detached 1969, 1970 TableXXIV: Area Comparison - Mean NHA borrowers' incomes ( ind iv idua l l y financed dwellings fo r home ownership 2.) i n various metropolitan areas. Year 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) ($) Hal i fax 5347 5797 6170 6691 7104 7008 7792 8656 9006 11094 12953 St. John's 5874 5517 5725 5463 5784 6220 6904 7155 7119 10107 9998 Montreal 6861 6595 6247 6441 6864 7307 7945 8477 9340 10320 11039 Quebec 5271 5467 5838 6012 6192 6106 6791 7428 8831 10095 10765 Hami1 ton 5859 6147 6298 6314 6496 6712 7435 8213 8531 •  11336 12965 London 5828 5900 6041 6250 6473 6571 7109 7977 8668 10969 12742 Ottawa 6002 6151 6546 6659 6758 7076 8281 9248 9219 12203 14816 Sudbury 6106 6833 6607 7076 8451 9215 9807 12931 13860 Toronto 5913 5968 6088 6210 6322 6521 7323 8401 8826 12675 14614 Windsor 5901 6125 6641 6815 7438 7609 8197 8769 9489 11538 13286 Calgary 5610 5866 5965 6146 6166 6372 6892 7934 8989 11121 12417 Edmonton 5684 5684 5593 5857 5788 6047 6670 7568 8704 11037 12816 Regina 7582 8436 10082 10558 Saskatoon 7664 9003 10165 10642 Winnipeg 5501 5612 5712 6081 6265 6445 6949 7849 8473 10426 12142 Vancouver 5627 5838 6438 6393 6461 6859 7153 7922 8363 11044 12254 V i c to r i a 5630 6044 6305 6308 6442 6706 7531 8175 8714 10682 11949 Canada 5620 5933 6095 6179 6375 6655 7287 8008 8803 10810 11833 Source: Central Mortgage & Housing Corporation 1. Borrowers' Incomes 1960 - 1968, Family Incomes 1969, 1970 2. Bungalows 1960 - 1968, Single detached 1969, 1970 Table XXV: Ratio of Total Cost to Income of purchaser, i nd i v i dua l l y financed NHA dwell ings. i Year 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 Halifax 2 .58 2 .48 2 .44 2. 27 2. .16 2, .33 2 .18 2 .06 2 .06 2 .20 1 .85 St. John's 2 .26 2 .71 2 .61 2. 83 2. .84 2. .95 2 .78 2 .51 2 .91 2 .03 2 .23 Montreal 2 .03 2 .01 2 .27 2. 34 2, .37 2, .34 2 .28 1 .88 1 .78 1 .65 1 .58 Quebec 2 .46 2 .42 2 .34 2. 38 2, .41 2, .45 2 .31 2 .22 1 .87 . 1 .82 1 .61 Hamilton 2 .63 2 .55 2 .38 2. 46 2. .55 2, .68 2 .68 2 .60 2 .72 2 .57 2 .26 London 2 .46 2 .49 2 .44 2. 38 2, .34 2, .30 2 .35 2 .28 2 .22 2 .22 1 .86 Ottawa 2 .61 2 .56 2 .43 2. 43 2, .55 2, .53 2 .39 2 .16 2 .20 2 .50 2 .08 Sudbury 2 .39 2. 25 2. .40 2, .25 2 .26 2 .00 1 .97 1 .93 1 .85 Toronto 2 .83 2 .91 2 .79 2. 67 2, .76 3, .01 3 .15 2 .96 3 .01 2 .28 2 .05 Windsor 2 .43 2 .39 2 .21 2. 32 2, .20 2. .43 2 .66 2 .58 2 .34 2 .46 2 .19 Calgary 2 .50 2 .47 2 .50 2. 50 2, .49 2. .51 2 .61 2 .39 2 .23 2 .04 1 .82 Edmonton 2 .60 2 .61 2 .71 2. 58 2, .70 2, .73 2 .69 2 .51 2 .26 2 .07 1 .96 Regina 2 .28 2 .12 2 .10 1 .52 Saskatoon •> 2 .22 1 .99 2 .02 1 .59 Winnipeg 2 .76 2 .73 2 .74 2. 59 2, .65 2. .66 2 .63 2 .37 2 .32 2 .16 1 .90 Vancouver 2 .85 2 .85 2 .64 2. 53 2. .63 2. .67 2 .73 2 .62 2 .61 2 .25 2 .09 V i c to r i a 2 .65 2 .58 2 .63 2. 60 2. .66 2, .91 2 .85 2 .55 2 .45 2 .60 2 .17 Canada 2 .54 2 .44 2 .41 2. 44 2, .48 2. .49 2 .48 2 .32 2 .15 2 .02 1 .83 Source: Central Mortgage & Housing Corporation; derived 1. Bungalows 1960 1968, s ingle detached 1969, 1970 89 than at the b e g i n n i n g . Note t h a t a l t hough t h e r e i s a r i s e i n the r a t i o s i n the m i d d l e S i x t i e s , the n a t i o n a l t r e n d and about o n e - h a l f o f the m e t r o p o l i t a n areas show a l owe r f i g u r e i n 1965 than i n 1960. In v iew of the t r e n d i n house p r i c e s t h e r e , i t i s not s u r p r i s i n g to f i n d the house p r i c e / i n c o m e r a t i o at a low l e v e l in ' ;Quebec. But they were low to s t a r t wi t h - - p e r h a p s i t i n d i c a t e s a d i s t i n c t s o c i o l o g i c a l d i f f e r e n c e between the F rench-and E n g l i s h - C a n a d i a n t a s t e f o r h o u s i n g . Note the h i gh l e v e l s o f the r a t i o i n To ron to i n t h i s c o n n e c t i o n . A compar i son of r e s i d e n t i a l d e n s i t i e s i n French and E n g l i s h Canada might r e v e a l r e l a t i o n s h i p s between these d e n s i t i e s and the p r o p o r t i o n of income devoted to h o u s i n g . One of the major causes o f i n c r e a s e s i n hous i ng co s t s i s s a i d to be the c o s t o f the l and c o m p o n e n t - - e i ' t h e r the l and s p e c u l a t o r or the c o s t o f s e r v i c i n g the l and i s a t the r o o t of the h igh c o s t of l a n d , i t i s o f t e n f e l t . Tab le XXVI p r e s e n t s the c o s t of the l a n d component of h o u s i n g , and Tab l e XXVII shows the pe rcen tage of the t o t a l hou s i ng package c o s t devoted to l a n d . I t can be seen t h a t the c o s t of the l a n d component has r i s e n f a s t e r than the c o s t of the t o t a l package, i n some cases more than d o u b l i n g i n p r i c e between 1960 and 1970. In a b s o l u t e terms t hough , most of the p r i c e i n c r e a s e i n the hous ing package can be t r a c e d to the b u i l t componen t . Tab le X X V T : Area Comparison - Cost of land component of i nd i v idua l l y financed NHA dwell ings. Year 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 ($) ($) ($) (?) (S) ($) ($) ($) ($) ($) ($) Halifax 1581 1861 2036 2077 1974 2018 2046 1968 2096 4273 4755 St. John's 1548 2332 1628 2315 2659 2978 3291 3355 4310 4675 5641 Montreal 1912 1698 2035 2215 2434 2455 2558 1899 2115 1976 2220 Quebec 1376 1466 1795 1970 2004 1954 2149 2335 2223 2536 2272 Hamilton 3376 3852 3818 4054 4327 4839 5349 5999 6914 9350 10489 London 2225 2556 2653 2805 2983 3010 3293 3732 4483 5941 5771 Ottawa. 2934 2964 3045 3197 3515 3355 3259 3535 3505 6660 7316 Sudbury 1243 1473 1858 2129 2524 . 2585 3156 2359 3276 4398 5822 Toronto 5007 5134 5416 4952 5126 5777 7097 8306 8834 9667 10639 Windsor 2115 2046 2123 2223 2348 3013 4200 4567 4413 5785 6275 Calgary 2749 2864 2883 2882 2972 3071 3319 3585 4106 4925 5192 Edmonton 3014 3058 3118 3232 3347 3541 3578 3709 4266 5307 5885 Regina 1463 1772 1928 1850 1873 1973 1974 2130 2593 3557 2625 Saskatoon 1356 1575 1634 1600 1978 1998 2226 2348 2840 3965 2938 Winnipeg 2810 2686 2831 2921 3211 3241 3095 3111 3705 4525 4584 Vancouver 3184 3581 3572 3375 3413 3516 3781 3979 4523 6088 7094 V ic to r i a 1864 1986 2167 2304 2471 2764 3017 3255 3516 7087 6782 Canada 2360 2453 2535 2692 2813 2816 3006 3155 3357 4202 4258 Source: Central Mortgage & Housing Corporation 1. Independent of level of serv ic ing 2. Bungalows 1960 - 1968, s ingle detached 1969, 1970 Table XXVI I: Land Cost as Fraction {%) of to ta l housing cost of i nd i v idua l l y financed NHA dwell ings. Year 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 (%) (%) (% ) (% ) W (%) (*) (%) (%) (%) (%: ) Hal ifax 10. 4 12. 9 13 .3 13 .7 12 .9 12. 4 12. 0 11.1 11 .1 17. 3 19, .8 St. John's 11. 7 15. 6 10 .8 15 .0 15 .6 16. 3 17. 2 18.7 20 .8 22. 8 25, .7 Montreal 13. 7 12. 8 14 .4 14 .7 15 .0 14. 4 14. 2 12.0 12 .7 11. 6 12, .7 Quebec 10. 6 11. 1 13 .2 13 .8 13 .4 13. 1 13. 7 14.1 13 .5 13. 8 13, .1 Hami1 ton 22. 0 24. 6 25 .5 27 .2 26 .2 26. 9 26. 8 28.1 29 .9 32. 1 35, .8 London 15. 5 17. 4 18 .0 18 .8 19 .8 19. 9 19. 7 20.5 23 .3 24. 4 23, .3 Ottawa 18. 7 18. 8 19 .1 19 .7 20 .3 18. 7 16. 5 17.7 17 .3 21. 8 23, .7 Sudbury 9. 9 10. 7 12 .7 13 .8 15 .9 16. 2 16. 5 12.9 17 .0 17. 7 22, .7 Toronto 29. 9 29. 5 31 .9 29 .9 29 .4 29. 3 30. 8 33.4 33 .3 33. 7 35, .6 Windsor 14. 6 14. 0 14 .5 14 .0 14 .4 16. 3 19. 3 20.2 19 .8 21. 2 21, .5 Calgary 19. 6 19. 8 19 .3 19 .1 19 .4 19. 2 18. 5 18.9 20 .5 21. 6 23, .0 Edmonton 20. C 20. 6 20 .6 21 .4 21 .4 21. 5 19. 9 19.6 21 .7 23. 1 23, .4 Regina 11. 4 13. 1 12 .7 13 .2 12 .7 13. 0 11. 9 12.3 14 .5 16. 8 16, .4 Saskatoon- 10. 5 11. 9 12 .2 11 .9 13 .4 13. 2 13. 6 13.8 15 .8 19. 2 17, ,3 Winnipeg 18. 5 17. 5 18 .1 18 .6 19 .3 18. 9 16. 9 16.7 18 .9 20. 1 19, .9 Vancouver 19. 8 21. 5 21 .0 20 .9 20 .1 19. 2 19. 3 19.2 20 .7 24. 8 27, ,7 V i c to r i a 12. 5 12. 7 12 .9 14 .1 14 .6 14. 3 14. 5 15.6 16 .4 25. 5 26, .1 Canada 16. 5 17. 0 17 .3 17 .9 17 .8 17. 0 16. 7 17.0 17 .7 19. 2 19, ,7 Source: Central Mortgage & Housing Corporation; derived 1. Independent of level of serv ic ing 2. Bungalows 1960 - 1968, s ingle detached 1969, 1970 92 That the r i s e i n the p r i c e of the l a nd component can be blamed on i n c r e a s e d l e v e l of s e r v i c e s r e q u i r e d by m u n i c i p a l a u t h o r i t i e s i s not demons t ra ted by t h i s d a t a . N e i t h e r can one f i n d e v i dence to i n d i c t l a nd s p e c u l a t i o n from t h i s d a t a . The i n c r e a s e i n the p r i c e p a i d f o r l a n d may s i m p l y be a means of pay ing f o r a t t r a c t i v e l o c a t i o n a l b e n e f i t s . I t c o u l d be t h a t as e x p e n d i t u r e s on a house i n c r e a s e i n magn i t ude , the buyer i s w i l l i n g to spend a g r e a t e r p r o p o r t i o n of the t o t a l c o s t on l a n d . Th i s may be shown by n o t i n g the marked r i s e i n the l a n d / t o t a l c o s t r a t i o between 1968 and 1969, when the c a t e go r y examined i n t h i s d a t a changed from the r e l a t i v e l y l e s s e xpen s i v e bungalow to the more c o s t l y s i n g l e de tached c l a s s i f i c a t i o n . The n a t i o n a l t r e n d i s e s p e c i a l l y c l e a r i n t h i s r e g a r d . F u r t h e r m o r e , a base f o r compar i son i s p r o v i d e d by the p r i c e of the l and component and the l a n d / t o t a l c o s t r a t i o f o r the c i t i e s of Mon t rea l and Quebec, un l e s s i t i s assumed or known t h a t these areas are not comparab le to the o t h e r s i n the l e v e l o f s e r v i c i n g r e q u i r e d i n new r e s i d e n t i a l a reas or i n the l e v e l o f a c t i v i t y o f l a n d s p e c u l a t o r s . 93 CHAPTER V SUMMARY Th i s s tudy seems not to have p a r a l l e l s i n the l i t e r a t u r e c o n c e r n i n g hous i ng e x p e n d i t u r e and income. So f a r as can be d e t e r m i n e d , no o t h e r s tudy has unde r taken to i n v e s t i g a t e p o s s i b l e changes i n consumers ' p r e f e r e n c e f o r hou s i ng w i t h a v iew to the e f f e c t such changes might have on p l a n n i n g c o n -s i d e r a t i o n s . Most o t h e r s t u d i e s dea l w i t h agg rega te d a t a , w h i l e t h i s c o n c e n t r a t e s on da ta concerned w i t h a group o f hou s i ng consumers whose p r e f e r e n c e i s r e s p o n s i b l e f o r the form and d e n s i t y of t h e i r hou s i ng as i t i s added to the hous ing s t o c k . Those s t u d i e s wh ich do base a l l or much of t h e i r r e s e a r c h on agency d a t a , as t h i s one doe s , o f t e n seem not to r e c o g n i z e t h a t such da ta i s b i a s e d and may not t h e r e f o r e be a good proxy f o r data f o r a l l segments of the p o p u l a t i o n ; t h i s s tudy r e c o g n i z e s the b i a s i n i t s da ta and a t tempt s to c o r r e c t f o r i t . Many s t u d i e s make judgments about a c t u a l or e xpec ted i n t e r t e m p o r a l b e h a v i o u r based on o b s e r v a t i o n s f o r on l y one yea r or o t h e r l i m i t e d t i m e ; o t h e r s employ i s o l a t e d o b s e r v a -t i o n s taken when r a d i c a l l y d i f f e r e n t economic c o n d i t i o n s p r e v a i l e d . I t i s hoped t h a t t h i s s tudy has a vo i ded these p i t f a l 1 s . 94 F i n a l l y , u s e f u l s t u d i e s r e l e v a n t to the Canad ian hous ing e x p e n d i t u r e - i n c o m e s i t u a t i o n seem a lmos t not to e x i s t . Th i s i s p e c u l i a r i ndeed f o r a n a t i o n so a p p a r e n t l y conce rned w i t h the hous ing problems of i t s p e o p l e . I t i s t r u e t h a t l i t t l e da ta e x i s t s , a t l e a s t not i n a p u b l i s h e d f o r m , but i t might have been expec ted t h a t the appa ren t conce rn about hous ing would have m a n i f e s t e d i t s e l f i n the deve lopment of data s o u r c e s . By the f o r e g o i n g i t i s not meant to imp l y t h a t the s tudy w i t h i n these pages i s the d e f i n i t i v e work on the s u b j e c t of the Canad ian c o n s u m e r ' s , p r e f e r e n c e f o r h o u s i n g . R e s t r i c -t i o n s on t ime and da ta r e s o u r c e s have c o n s p i r e d to f o r c e a r e l i a n c e on what might be termed c i r c u m s t a n t i a l e v i d e n c e i n some r e s p e c t s . Th i s s tudy has a l s o on l y s c r a t c h e d the s u r f a c e of some r e l e v a n t ma t te r s t h a t r e q u i r e thorough r e -sea r ch b e f o r e u n e q u i v o c a l s t a t emen t s can be made w i t h r e s p e c t to changes i n consumer p r e f e r e n c e . Other r e s e a r c h e r s have p r e s e n t e d e v i d e n c e t h a t would s uppo r t the c o n t e n t i o n o f the h y p o t h e s i s as i t might app l y to the U.S. c o n t e x t . The two i m p o r t a n t s t u d i e s t h a t deny t h a t e x p e n d i t u r e s on hous ing are f a l l i n g i n r e l a t i o n to income base t h e i r o b j e c t i o n on a r e v i s e d d e f i n i t i o n of income. Ev i dence shows c o n c l u s i v e l y t h a t the r a t i o o f house p r i c e to income, as i t a p p l i e s to buyers bo r r ow ing under the NHA f o r home o w n e r s h i p , i s i n d e c l i n e . There appear to 95 be two reasons f o r t h i s : one i s t h a t i n t e r e s t r a t e s have r i s e n , t e n d i n g to i n c r e a s e the burden of c a r r y i n g c o s t s to the home buye r , and the o t h e r i s t h a t the p r e f e r e n c e of the NHA buyer f o r hou s i ng appears to be i n d e c l i n e . Ev idence t h a t hous ing i s d e c l i n i n g i n the p r e f e r e n c e of a l l consumers i s found i n the chang ing mix ( toward h i g h e r d e n s i t y hous ing forms) o f the new a d d i t i o n s to the hous ing s t o c k . Other s u p p o r t i v e e v i d e n c e comes from S t a t i s t i c s Canada su rvey s on income a l l o c a t i o n but these s u r vey s a l s o r a i s e the d i s q u i e t i n g q u e s t i o n of the e f f e c t of taxes and i n f l a t i o n . F i n a l l y , i t was shown t h a t NHA t r e n d toward s m a l l e r r a t i o s between p r i c e and income, t r u e f o r the n a t i o n as a who le , was a l s o t r u e f o r a l l of the v a r i o u s m e t r o p o l i t a n a r e a s . Th i s a s p e c t of the i n v e s t i g a t i o n uncovered s i g n i f i -cant d i f f e r e n c e s , unaccounted f o r as y e t , between the hous ing p r i c e / i n c o m e r a t i o as i t a p p l i e s i n Quebec and the rema inde r of Canada. 96 CHAPTER VI PLANNING IMPLICATIONS The summary of t h i s paper p r e s e n t s t h r e e p r ima r y r e -sea r ch r e s u l t s . These a r e : t h a t t h e r e has been a drop i n the r a t i o of house p r i c e to income, a t l e a s t as the r a t i o a p p l i e s to purchases under the NHA; t h a t one of the causes of the drop i n t h i s r a t i o appears to be t h a t the p r i c e p a i d i s s e n s i t i v e to i n t e r e s t r a t e l e v e l s ; t h a t the o t h e r cause i s t h a t t h e r e appears to have been a s h i f t downward i n consumer p r e f e r e n c e f o r h o u s i n g . A l l t h r e e o f these r e s e a r c h r e s u l t s have s i g n i f i c a n t i m p l i c a t i o n s f o r p l a n n i n g . Change i n Tas te The h i s t o r y of the " p l a n n i n g movement" beg in s w i t h a concern t h a t the wo r s t abuses of c r o w d i n g , l a c k of s a n i t a t i o n and gene ra l u n h e a l t h i n e s s a s s o c i a t e d w i t h i n d u s t r i a l tenement hous ing i n B r i t a i n , Europe and North Amer i ca be e r a d i c a t e d . P rog re s s was made, b e g i n n i n g w i t h l e g i s l a t i o n f o r the p u b l i c h e a l t h , and l a t e r i n c l u d i n g c o n t r o l s ove r the d e n s i t y a t which hous ing might be b u i l t , r e g u l a t i o n to ensure a s u f f i c i e n c y of l i g f r t , and so on. A lways the s t anda rd s g o v e r n -i ng the q u a l i t y of hous i ng were r a i s e d and the d e n s i t y a t 97 which hous ing was b u i l t g r a d u a l l y became l o w e r . Th i s p roces s was of cour se the r e s u l t of a g r e a t many f o r c e s , o n l y one of which was the v o i c e of the p l a n n i n g p r o f e s s i o n u r g i n g g r e a t e r hous ing s t a n d a r d s . I f i t i s t r u e t h a t a change i n t a s t e of the consumer f o r hous ing i s t a k i n g p l a c e , the t r a d i t i o n a l and nob le goa l o f the p l a n n e r , t h a t i s to i n c r e a s e the s t a n d a r d a t which the p o p u l a t i o n i s housed, may have to be m o d i f i e d . I t may be t h a t we have reached a t h r e s h o l d w i t h r e s p e c t to hous i ng s t anda rd s t h a t few consumers w i sh to e x c e e d . A case might c o n c e i v a b l y be made f o r e x p e c t i n g an a b s o l u t e dec rea se i n the s t a n d a r d of f a c i l i t i e s a t wh ich new hous ing i s b u i l t . I n c r ea sed m o b i l i t y and l e i s u r e t ime w i l l work i n c o n c e r t to take the r e s i d e n t away from h i s p r ima ry r e s i d e n c e more o f t e n and f o r l o n g e r p e r i o d s o f t i m e . I f , as i t seems l i k e l y , a l e i s u r e - b a s e d l i f e - s t y l e i s to become common, more emphasis w i l l be needed on the p l a n n e r ' s p a r t toward d e v e l o p i n g the commun i t y ' s c a p a b i l i t y i n making o p p o r t u n i t i e s f o r an a l l - r o u n d f u l l l i f e . R e s i d e n t i a l use may remain the l a r g e s t s i n g l e l and use i n most c ommun i t i e s , but i t may be t h a t p l a n n i n g emphasis can be removed from t h i s use and be more p r o f i t a b l y p l a c e d i n p r o v i d i n g f o r more comple te s o c i a l and r e c r e a t i o n a l o p p o r t u n i t y w i t h i n the communi t y . 98 I n t e r e s t - P r i ce Sens i t i v i t y The f a c t t h a t the r a t i o of p r i c e to income shows a c o r r e l a t i o n w i t h the l o c u s of i n t e r e s t r a t e l e v e l s over t ime i s one t h a t c o u l d become a v a l u a b l e t o o l i n making more p r e c i s e f o r e c a s t s of hous ing demand w i t h r e s p e c t to p r i c e . A f a i r degree o f s o p h i s t i c a t i o n has been deve loped i n the f o r e c a s t i n g of income l e v e l s , but i n the p a s t , p l a n n e r s have had to app l y some r u l e of thumb to de te rm ine what these income l e v e l s might mean i n terms of hou s i ng p r i c e s . With the knowledge t h a t i n t e r e s t r a t e s a f f e c t hous ing/ income r a t i o s , the fo rmer r u l e s of thumb can be m o d i f i e d a c c o r d i n g to e x p e c t a t i o n s about the b e h a v i o u r of i n t e r e s t r a t e s . With more s tudy the e f f e c t of i n t e r e s t r a t e s on the hous ing/ income r a t i o c o u l d be de te rm ined more e x a c t l y . The i n t e r e s t e f f e c t on p r i c e s p a i d f o r hou s i ng w i l l be o f i n t e r e s t to both p l a n n e r s and d e v e l o p e r s - - f o r p l a n n e r s as a b a s i s f o r e x p e c t a t i o n s w i t h r e s p e c t to hous i ng d e n s i t i e s and f o r d e v e l o p e r s r e g a r d i n g the s e l l i n g p r i c e of t h e i r hous ing and the concomfi t a n t t d e t e r m i n a t i o n of f o r m . Th i s i n f o r m a t i o n used as a f o r e c a s t i n g t o o l has a drawback however, and t h a t i s t h a t the f o r e c a s t s i t a l l o w s w i t h r e s p e c t to hous ing p r i c e s can on l y be as good as the f o r e c a s t s c o n c e r n i n g the b e h a v i o u r of i n t e r e s t r a t e s . The e f f e c t of t h i s i s to s i g n i f i c a n t l y reduce i t s wor th beyond the s h o r t term excep t as e s t i m a t i o n s may be made r e g a r d i n g the economy ' s p o s i t i o n i n the bu s i ne s s c y c l e a t any t i m e . 99 The D e e l i ne i n the P r i ce/1ncome R a t i o Wh i le i t i s i m p o r t a n t to know the e f f e c t of the change i n t a s t e and v a r i a t i o n s i n the l e v e l of i n t e r e s t c h a r g e s , perhaps the most s i g n i f i c a n t r e s u l t o f t h i s r e s e a r c h f o r p l a n n i n g i s t h a t , whateve r the r e a s o n , the r a t i o of hous ing p r i c e to income i s showing a d e c l i n e . In the s e c t i o n i m m e d i a t e l y p r e c e d i n g , i t was s t a t e d the p r i c e / i n c o m e r a t i o was l i k e l y to have some b e a r i n g on the form of hou s i ng be ing b u i l t . More p r e c i s e l y , as t h i s r a t i o d e c l i n e s , i t i s p o s s i b l e t h a t the d e n s i t i e s a t wh ich hous ing i s b u i l t w i l l i n c r e a s e , and t h a t t h i s c o u l d be t r u e not on l y i n redeve lopment o f o l d e r areas of communi t ies but a l s o i n new development as the suburban f r i n g e spreads beyond the c i t y . The mechanism by which the d e c l i n e i n the r a t i o of house p r i c e s / i n c o m e might e f f e c t an i n c r e a s e i n r e s i d e n t i a l d e n s i t i e s i s not complex . For the purpose of t r a c i n g the i m p l i c a t i o n of t h i s r e s e a r c h r e s u l t f o r d e n s i t i e s , the c o s t of l and (per a c r e ) and the c o s t of b u i l d i n g (pe r square f o o t ) can be s a f e l y r ega rded as exogenous l y d e t e r m i n e d . I f i t i s assumed t h a t i n f l a t i o n r a i s e s the l e v e l s of i ncome, l and c o s t s and b u i l d i n g c o s t s a t r o u g h l y the same r a t e , any d e c l i n e i n the house p r i c e / i n c o m e r a t i o must r e s u l t i n d e c l i n e s i n l and component, b u i l d i n g component, o r b o t h , o t h e r t h i n g s such as i n t e r e s t r a t e s r ema i n i n g e q u a l . 100 In the r e a l w o r l d , whether a d e c l i n e i n the hou s i n g/ income r a t i o r e s u l t s i n a d e c l i n e i n r e a l component w i l l depend on the r e l a t i v e r a t e s of i n c r e a s e of incomes and b u i l d i n g and l and c o s t s , as w e l l as o t h e r f a c t o r s - - f o r examp le , i n c r e a s e d commuting d i s t a n c e ( e x p e n d i t u r e ) may a l l o w s a v i n g s on the l and component of h o u s i n g - - b u t i t i s b ' e l i e v e d , f rom t h i s d i s c u s s i o n and the e v i dence p r e c e d i n g , t h a t a t r e n d toward g r e a t e r d e n s i t i e s i s a d e f i n i t e p o s s i b i l -i t y . BIBLIOGRAPHY Banz, George. "Housing Need - the Slippery Customer", Ontario Housing, vo l . I I, No. 1, Feb. 1965. Becker, G. H. Cornell Home Buying Study Annual Report: 1958, Cornell Univers ity Press, Corne l l , 1958. Beyer, Glen H. Housing: A Factual Analys is, MacMillan, New York, 1968 Beyer, Glenn H. Housing and Society, MacMillan, New York, 1965. Ea r l i e r Ed i t ion: Housing: A Factual Analys is, MacMillan, New York, 1958. Binhammer, H. H. Study of the Residential Sector in the Canadian Economy, Unpub. Ph.D. Thesis, McGill Univers i ty, 1961. Blank, D. H. and Winnick, L. "The Structure of the Housing Market", Quarterly Journal of Economics, v. 67, May 1953, pp. 181 - 208 Buckley, K. Capital Formation in Canada 1896 - 1930, Canadian Studies, in Economics No. 2, University of Toronto Press, Toronto, 1955. Canada. Report of the Task Force on Housing and Urban Development, Queen's P r i n te r , Ottawa, 1969. Carver, Humphrey Houses for Canada, Univers ity of Toronto Press, Toronto, 1958. Canadian Housing S t a t i s t i c s , Central Mortgage and Housing Corporation, Ottawa, annual. Chung, Joseph Hee Soo Housing and Mortgage Loans: Post-War Canadian Experience, Ph. D. Thesis, Univers ity of Toronto, 1967 102 Dube, Yves; Howes, J . E., & McQueen, D.L. . Housing and Social Cap i ta l , submission to Royal Commission on Canada's Economic Prospects, Hu l l , Quebec, 1954. Firestone, 0. J . Residential Real Estate in Canada, Univers ity of Toronto Press, Toronto, 1951 Friedman, Milton A Theory of the Consumptive Function, Princeton Univers ity Press, Princeton, 1957. G i l l i e s , James M. Canadian Housing Leg i s l a t ion , A case study of housing problems and po l i c i e s . Univers ity of Rochester Press, Rochester, N.Y., 1954 Grebler, Leo; Blank, David M.; Winnick, Louis Grebler, L. et a l . Capital Formation in Residential  Real Estate: Trends & Prospects, Princeton Univers ity Press, Princeton, 1956. Guttentag, J . "Winnick's Case for a Changing Att itude Toward Housing',' Quarterly Journal of Economics, vo l . 70, 1956, pp. 314-319. I l l i n g , Wolfgang Housing Demand to 1970. Prepared for Economic Council of Canada. Queen's P r in te r , Ottawa, 1964. Maisel, S. J . and Winnick, L. "Family Housing Expenditures: Elusive Laws and Intrusive Variances", in Wheaton, W. L.; Mil gram G.; Meyerson, M. E. Urban Housing, the Free Press, New York, 1966. Meyerson, M. Meyerson, M. ed. Housing, People, and C i t i e s , McGraw-Hill, New York, 1962. Morgan, J . N. "Housing and the A b i l i t y to Pay" Eeonometrica, v. 33, no. 2. 1965, pp. 289-306. Muth, Richard Muth, Richard, "The Demand for Non-Farm Housing" in Harberger, Arnold, ed. The Demand for Durable Goods, University of Chicago Press, Chicago, 1960, pp. 29-98. Poapst, J . The Residential Mortgage Market. Submission to Royal Commission on Banking and Finance, 1962. Reid, Margaret G. Housing and Income, Univers ity of Chicago Press, Chicago, 1962. Rose, Dr. Albert "Canadians are Among the Best-Housed People in the Modern World", Ontario Housing, v. 15 no. 4 June, 1970, pp. 11-15. Rose, Albert Canadian Housing P o l i c i e s , Canadian Welfare Counci l , Ottawa, 1968. Smith, Laurence Berk The Post-War Canadian Residential Mortgage Market  and the Role of Gov ' t . , Unpub. Ph.D. Thesis, Harvard Univers i ty, Feb. 1966. Wheaton, Wm. L. C.; Milgram, Grace; and Meyerson, Margy E l l i n , editors Urban Housing, The Free Press (MacMillan), New York, 1966. Wheeler, Michael Wheeler, Michael, ed. The Right to Housing. (Canadian Conference on Housing, Toronto, 1968), Harvest House, Montreal, 1969. Winger, A.R. "An Approach to Measuring Potential Upgrading Demand in the Housing Market", Review of Economics and S t a t i s t i c s , v. 45, no. 3, Aug. 1963, pp. 239-244. Winger, A. R. "Trade-offs in Housing", Journal of Land Economics, v. 45, 1969. pp. 413-417. Winnick, L. "Housing: Has There Been a Downward Sh i f t in Consumer's Preference?", Quarterly Journal of  Economics, Vol. 69, Feb. 1955, pp. 85-98. 

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