Homeowners Refuse to Accept the Awkward Truth: They’re Rich - Owners of the multi-million-dollar properties still see themselves as middle class, a warped self-image that has a big impact on renters
Homeowners Refuse to Accept the Awkward Truth: They’re Rich | The Walrus
I disagree. Homeowners of multi-million-dollar properties have something others really want — property — but they also usually don’t actually OWN the property; they have mortgages.
And if they sold their property, some of them would be wealthy, but they’d also be homeless. And as soon as they attempted to buy another property (or even rent), they’d be back to having very limited disposable income.
So yeah; they’re still middle class. Someone else is holding the purse strings; the purse is just bigger.
For anyone who purchased a house in the last 5ish years sure. Much longer than that and they are sitting on a whole lot of equity.
Yes if they sold the house they would have 1/2 - 1 million dollars in cash and be homeless. But that's a lot of dollars better than all the other people who currently also don't own a home and don't have all that cash.
Which is sorta the point the article is trying to make.
This article is a smear job trying to say “owning a home makes you wealthy” and ignores the fact that “the cash to own 7 homes” is the real problem.
I certainly agree. Seeing as all property values skyrocketed in the past few years, those whose homes are now worth $1 million only kept up with everyone else.
Seeing as over 60% of Canadians own their home, that means that the rise of property costs merely widened the gap between those that own and those who rent. While the rise of property costs certainly isn’t a good thing, those who own property realistically aren’t any better off than they were before.
What's the statscan definition of homeowner? Aren't myself and my partner considered owners because we live with my parents in their house, so there are 4 "homeowners" living in the house.
I could be wrong but I remember reading what they consider a homeowner does not match what common sense says it is. Please point me in the direction of something if I'm wrong, I've tried looking but can't find anything.
Ownership rates are around 65%, but mortgage rates in Canada are only about 30%.
So less than half of homeowners have a mortgage, and another good chunk of those mortgages were small to begin with and are approaching being paid off.
You don't need to sell the house to benefit from owning it or it having a higher price either. You get to live in it for the cost of taxes and maintenance, that's a massive amount of freed up monthly cash flow. The house value being higher means you're paying less comparable to someone who has to rent at current market values (like a young adult moving out)
It would be less beneficial to own the house if the value was lower and rents were dirt cheap.
Mmm, headline mentions 'impact on renters' though - so we're already talking about people who not only own a house, they own a house that is not their residence and earns money for them
It kinda sorta does, but even the article body flip flops between “homeowner” and “owner of $3.2mil property” and likewise between “landlord” and “airbnb magnate”. The headline implies that landowners don’t understand the plight of the renter, and asserts that the landowner isn’t middle class anymore.
While there are good points in there, the headline misses the point that the “wealthy” don’t need to work, and can be independently wealthy purely through extracting rent from use of what they own.
Most property-rich householders aren’t there; their equity isn’t enough to sustain them.
There’s no denying the gap between renters and landholders. Renters are way worse off. But those renting out a carriage house or basement suite to be able to make the mortgage payments aren’t in the same class as the likes of Dorset Realty and those who own them.
Re: the title... Yeah no, owners of an expensive property are not only not in the "rich" class, they're likely working class as much as gig drivers and cashiers. Unless they liquidate this asset and actually go live somewhere LCOL where they can live off of the labour of others, they're still working class.
Exactly, articles like this are just confusing the meaning of class.
What makes you a member of "the working class" is that you are forced to sell your labour to survive. Fullstop. A tradesperson, and a lawyer, and a burgerflipper are all in the same class from that point of view.
As soon as your accumulated capital becomes large enough that you earn your income only as a result of your capital, then you are no longer working class, and that's when your interests diverge from the average worker and average homebuyer or renter.
A landlord with no other job, the major shareholders of a profitable business, a wealthy heir, those people make their money by siphoning value off of other people's work without actually needing to spend their time on work.
Long story short: I have no problem with a 50 year old plumber with a large family who legitimately uses that 4500 sqft house.
My issue is with Karen who used dad's money to buy 8 properties to airBnB them and insists she get special treatment because her business risks didn't pan out.
As soon as your accumulated capital becomes large enough that you earn your income only as a result of your capital, then you are no longer working class, and that’s when your interests diverge from the average worker and average homebuyer or renter.
Interestingly, almost everyone in government is a member of the capitalist class, largely because people that sell their labour can't afford the time, let alone the money, to run for office.
In case you wondered why the interests of labour are grossly underrepresented in government, despite that vast, vast majority of both citizens and voters being of the working class, this is why.
That is the point though, if like the article says l, 1/5th of owners have an investment property, they could sell it and still live in the current place and have a ton of cash. or sell both and move to a cheaper city and retire. Compared to people struggling to save for a mortgage in this crazy market.
1/5th of owners have an investment property, they could sell it and still live in the current place and have a ton of cash
That's fair, and the article goes through a few key points that I agree with. The article title is just clickbait, but annoying because it's alienating. I don't think it makes sense to write a headline based on 1/5th of that group being land speculators.
If you're dicing things up that way, there's no middle class in the first place.
:-) the middle class is the subset of the working class that has no food insecurity but has a lot of social & image insecurity
But like the rest of the working class, the middle class is one or two tragedies away from becoming homeless and marginalized, despite the lack of awareness regarding so
There never has been. You either sell your body and labour, or own enough capital for it to self sustain, or at least be sustained by the labour class.
Of course there is no middle class!
That doesn't make any sense. If you have a million dollar house, you can borrow against it or sell it like any other asset. Yes you're rich.
What if you have already “borrowed against it” and the thing you bought is the house itself? You know, a mortgage. How is a regular family with a mortgage not middle class?
Any age considerations here? 50+ year olds with no pension whose entire net worth is tied up in their home are not middle class?
A retired couple that have a reverse mortgage on their home to supplement their insufficient income are not middle class?
Honestly, even a regular person that busted their ass to pay off their house and who eventually bought a run-down property that they poured all their free time for years to fix up and rent out is not suddenly a member of the 1%.
You know what, I “own” the house my 4 kids call home. I owe pretty close to what it is worth and I can barely afford anything else with mortgage rates where they are ( certainly more than rent would be ). It needs some repairs that are going to force me to borrow from somewhere. I work two jobs ( decent ones ) trying to keep it all going. If I lose the house, I will end up with a net worth lower than a homeless person. And I have dipshits on the Internet lashing out at my wealth and privilege. For the love of God, who are you people?
We're using different definitions of the word "rich". In my definition, the one I personally see as more useful because it aligns with class struggle and shared policy interests, having a bunch of wealth parked in a passive asset is not enough to tip you over to the group of people who benefit from inequality.
On the "sell it like any other asset", you still have to live somewhere, those places cost money. On the "borrow against it", now you've got debt (that costs money to have), I guess your saying anyone with that much money should be able to make more money off it via leverage than they use?
When i think rich, i think doesn't have to work, but maybe that's independently wealthy.
So in that case the middle class were always "rich" by your definition
Therein lies the contradiction at the heart of the persecuted property owner: their wealth is deserved, by virtue of their lifetime of hard work and careful planning; at the same time, it’s not fair to tax them in proportion to that home’s staggering value.
So you’ve lived in the same house with the same job for several years/decades, but because actually-wealthy individuals and institutional investors are suddenly willing to pay a lot more for your house, you should effectively be forced to move out? Christ, just tax rental income ffs
Or, radical opinion, don't let people invest in housing. Also, I noticed BC raised their maximum rental increase from 2% to 3.5%. Almost double. So there's that too 🫠
Ontario got rid of theirs for any newly built/designated residences. Now you also have to look at what year the damn unit was first rented in. If you aren't careful with that, your landlord could legally hike up your rent by $10,000 or however much they want to, for absolutely no reason. November 15, 2018 is the date to watch out for, specifically. Anything after that is taking on a big risk, imo.
This is all so fucked. Here's an example of what I was talking about.
No where in the article does it say that homeowners should effectively be forced to move out.
We absolutely coddle homeowners, with preferential tax treatment, subsidized street parking, super low property taxes in places like Vancouver, and, most importantly, outsized power to prevent new development at the cost of renters, young people, and the poor. This is zero sum: homeowners maintain and grow their wealth, in part, at the cost of renters and actual poor people.
Increasing taxes at a higher rate than inflation on a homeowner who is given raises at the same rate as inflation (if that) is effectively forcing them to move out over time.
If the goal is to make everyone a homeowner, then
outsized power to prevent new development at the cost of renters, young people, and the poor.
is the only truly catastrophic problem mentioned so far. Everything else you listed at least incentivizes homeownership. Sure, car-centric urban design is silly and all that, but I kind of doubt most people would prefer the space reserved for parking spaces be occupied by more housing. Green spaces, bike lanes, and larger walkable areas would probably win that vote. Vertical and mixed-use housing are tried-and-true solutions to the density problem.
I would argue that the only other “catastrophic problem” is one we haven’t mentioned yet: institutional investment. In fact, I wouldn’t be surprised if they paid for this article. They’d love to see people turn on individual homeowners, and raise property taxes to the point that only institutions can afford to pay it.
Wealth is not money, can't buy bread with a staircase.
Yes and no. Wealth can be used as a proxy, usually via debt, to acquire more wealth. If this wasn't the case, Elon Musk would not have been able to buy Twitter.
This is why renters are absolutely screwed: not only are they spending the same as someone with a mortgage in many cases, but they can't leverage equity at all. Need a car repair done? Send a kid to school? Retire? Invest? If you rent, you're screwed.
You can't buy bread with stocks either but Elon is still rich.
The difference is that you can't earn a living by owning your primary residence, so you're still working class.
That's my point. Owning a home doesn't make anyone rich. Owning multiple homes which generate income is a different thing, but people here assume is that if you bough a house in London 20 years ago for pennies, then today you are a fucking Bezos swimming in money. That's not the case.
Maybe you can't, I bought a bar. It came with an owners suite.
Sort of. You can do a one-time conversion to income if you want, and income can of course be diverted towards very slowly building up wealth, but yeah they're not the same thing.
A lot of people in this thread are claiming that homeowners are not really rich. A bunch are citing some Marxist definition of “rich” or raising the bar to “never having to work again”. OK, fine: they’re “rich enough” to be a problem, then.
The truth is, homeowners in Canada have enormous power, both economic and political, and they have been advocating for policies at every level of government that have both exacerbated the housing crisis and grown their own wealth.
“But they’re working class because they can’t enjoy their wealth without selling their home!”
That’s just not true. Homeowners enjoy enormous privileges at the cost of renters, most notably blocking new developments, which homeowners do with passion. Their mortgages are guaranteed by the government, subsidized effectively at the cost of taxes by non-homeowners, i.e. renters. And homeowners have enormous generational wealth to pass on, which if we don’t address, will cause an economic caste system to permanently root itself. Yes, this is real wealth, causing real social problems. This article is right to call it out!
My wife and I had to beg, borrow, and move 2 hours outside Toronto to afford our first home. Yes we own our home and yes we are better off compared to 5 years prior, but we are FAR from being wealthy. Even if we look at the average home owners who don't have a mortgage, most of those people again are better off but not wealthy. I feel like this article is trying to shift the blame away from the top 0.1% and put it on the slightly better off but still struggling population.
Yup. This article is trying to turn the conversation in to another battle against eachother rather than the ones who are actually fucking us all.
I'll just leave this here to further my point.
https://www.readthemaple.com/canadas-top-0-01-of-earners-saw-income-growth-of-30-in-2021/
What does an article about the top 0.1% have to do with home ownership? Are you for real?
EDIT: I misunderstood this post. I thought it was somebody calling out the homeowner as rich ( I had just come off another comment and was reeling ). I realized after I posted that the poster was responding to himself.
There's no actual dividing line anywhere on the wealth or income curve. I know splitting into tribes is our species' thing, but this isn't that kind of problem. People above the very porous median point need to come down (to some degree, somehow), and people below need to come up, simple as.
How do you get a home with a mortgage?
They are middle class. In fact, there is no middle class, they are working class!! They do not own their own means of production, they are wage slaves like everyone else.
I can’t tell if you’re joking or not. Poe’s Law.
If you own a $3.5 million home in Vancouver, or you’re complaining about not being able to rent out four condos on AirBnb like one woman in the article, then, no, you’re not middle class.
That isn't the definition of working class, or middle class
If you conflate home ownership with wealth, more people will view themselves as targeted by policies that target the rich - even if that is not the reality. Useful for getting voters to oppose taxing the rich.
Ding ding ding.
This is why the rich try to muddy the waters.
They try and make it appear as if the homes and retirement funds of the middle class are somehow equivalent to the hundreds of billions owned by the rich.
Fun fact: if we would tax the rich and lower taxes on the middle class, we would get something closer to socialism. Under pure socialism, where everyone owns an equal share of the total wealth, the average household would actually be worth $1.6M.
Any household with less wealth than that is actually doing worse under the current system compared to full equality.
We need to roll back to 1955 tax rates:
Eisenhower individual income above $200,000 was taxed at 90%, above $300,000 at 91%, and above $400,000 at 92%. That’d trim Musk Bezos etc. down to size, fund education, fund social security etc.
Corporate taxes topped out at 52% - the tax rate was 30% for the first $25,000 in profits that a company made, and 52% for anything over that amount.
Of course, adjust these floors with with inflation taken into account - $300,000 in 1950 = $3,772,843.22 in 2023 - so multimillionaires and up.