The hypothetical single income earner that we are debating would pay an average rent of $2250/mo for a 1-bedroom in Toronto. Roughly 10x the cost of TV, internet, and phone. This cost has risen from ~$1750/mo in 2017 at roughly ~10% per year.
For perspective, our hypothetical individual would be experiencing house price inflation equal to a new TV, phone, and internet bill every year.
Absolutely agreed that there are worse categories than your phone/internet/tv bills. And yet even this relatively small and apparently I Yunsignificant non-discretionary (or was some of it discretionary? Or all of it?) item still makes up 4.5% of your net income. That I still call significant.
Once I have a house the inflation on that also doesn't affect me that much any more (sure, evaluations increase my tax bill - which btw is a NA thing that is irrelevant in Germany for example as long as you have a mortgage) but other items do.
The underlying problem here is that one of our numbers must be wrong. The options I could see are
1. The marginal cost of housing has little to do with what individuals pay in the short-term.
2. The median income earner requires or will require substantial subsidies or raises to keep pace with the increased costs of their home. Roughly 3-4% per year assuming that housing is the only item inflating.
3. Either the median income, median rental, or tv+internet prices we've quoted are wildly off the mark.
I'd bet that #2 is the correct interpretation of the statistics. While option 1 is possible, it hides low-quality substitutions and assumes that one can always make a substitution such as living with parents for longer.
All very fair points. I think one thing that makes a huge difference is whether you rent or own. There's obviously so many nuances to this all.
I realize that we (or at least I am) also mixing up various things, even though I chose to quote a particular city's median income for the example.
If you are renting and your rent goes up 10% that obviously has a large effect. If you have a house and rent goes up 10% you don't care at all. If rent goes up like that, it's probable that house/condo sale prices go up too and you have to pay more in taxes. I bet the increase in taxes makes a smaller hole in your pocket, though I might be completely wrong. But this also depends on whether we stick with the example or move on to other countries, where there's no such thing as separate municipal/school taxes or where rent control is in place.
For perspective, our hypothetical individual would be experiencing house price inflation equal to a new TV, phone, and internet bill every year.
(1-bedrooms displayed the lowest price increase of any housing category in Toronto according to https://www.zumper.com/rent-research/toronto-on )