Through its website and daily newsletters, The Peak (a ZoomerMedia property) offers Canadians the news they need to understand business, tech, and other must-know stories.
In this dispatch, The Peak explores how housing – those who own homes versus those who don’t – is the main factor in Canada’s growing wealth gap, and why one company believes that robots could help relieve the country’s housing shortage. Plus, we ask the question: what if financial products like credit card cash advances, payday loans, or home equity loans were labelled like food?
The Wealth Gap Is Driven By One Main Factor
The growing wealth gap really comes down to one thing: housing.
New data from Statistics Canada last week made this clearer than ever. It showed that a family who owns a home, has no pension, and whose primary earner is between 55 and 64 has a median net worth of $914,000. But for the same family renting a home, their median net worth is just $11,900 – 98.7 per cent less. It might be surprising to learn how much wealthier homeowners are, especially with all the news about mortgage delinquencies lately. But here’s the reality: renters generally earn less than homeowners and have been dealing with rising rents across the country. Even though some homeowners are seeing their mortgage payments going up, they tend to have higher incomes, more savings, and – thanks to rising home prices – more wealth as their homes increase in value. The bottom line? Homeownership has become the biggest driver of wealth in Canada today, even more so than pension savings. — Meera Raman
House-Building Robot Gets Put To The Test
Could the solution to Canada’s housing shortage lie in robots picking up the slack?
Driving the news: Horizon Legacy, a robotics company, has adapted a robotic arm to (literally) lend a hand with building rental units near Kingston, Ontario. The arm, called Val 2.0, is similar to the tech used on car assembly lines and can quickly lay concrete walls.
- Per the Globe and Mail, the contraption works by layering a concrete-like substance and cuts the number of people needed to build exterior walls down from 20 to five.
Why it matters: While Canada’s overall labour productivity per hour worked has risen 27.5 per cent since 1997, productivity in the construction sector has declined 5.8 per cent over that span. And when looking at the last 40 years, the sector hasn’t generated any productivity growth.
- A lack of skilled workers has been a major factor, a problem that could get worse with a quarter of Canadian construction workers expected to retire in the next 10 years.
Bottom line: Tech solutions like Val could enhance productivity in the sector, but high material costs, building restrictions, and labour shortages still stand in the way of building the 3.9 million new homes that are estimated to be needed in the next seven years. — Lucas Arender
What If Financial Products Were Labelled Like Food?
You know that nutrition facts label you try to avoid when you’re munching on your third bowl of chips? Imagine if financial products had something similar that provided clear loan information to consumers.
Some advocates think this could really help people make better choices when borrowing money. There are so many ways to borrow – like credit card cash advances, payday loans, or home equity loans – but it can be tough to figure out how much you’ll actually have to pay back in interest. Product labels with information like interest rates and monthly payments right up front would provide a one-stop shop to help Canadians choose the best option, and better understand what they’re signing on for. Although Canada doesn’t have these kinds of labels yet, both Canada and the U.S. have rolled out measures to make mortgage-related costs clearer in an effort to help consumers. In reality, a full financial product label is likely far off from happening due to the major lift it would take to implement, but it’s a pretty neat idea. — MR
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