Plutus' Normative.

My name is RAE. I'm going to become financially independent and wealthy.

This is a simple, no nonsense account of my journey.

The Canadian Housing Market in Layman's Terms - Part 4 - A Comment on Urbanization

The Canadian Housing Market in Layman's Terms - Part 4 - A Comment on Urbanization

In Part 3, I had briefly touched upon the multitude of reasons that has kept demand for housing high. Among those is net migration to cities. It's commonly described as urbanization.

In the year 1800, the United States had less than 2% of it's population living in cities. Today, it's more than 80%. The entire world collectively passed the 50% mark a couple of years ago. It doesn't take a rocket scientist to see that the world collectively is headed to where the United States currently sits. Combined with the guaranteed rise of the world's population to 10 billion, that's a lot of people migrating to cities.

I will also make an assumption here that new cities are less likely to pop up, and that this net migration is going to get absorbed for the most part by currently existing cities.

This means the world's current cities are going to grow.


There's really only two ways for a city to grow: either by spreading out and expanding its footprint (urban sprawl), or by keeping its footprint the same and cramming more people in (urban densification).

So far, the trend is towards urban densification.

This doesn't mean that urban sprawl is going to disappear, it just means that cities are choosing to accommodate a larger number of people by increasing their density more than their sprawl.

This implies that land that comprises a city is going to become increasingly scarce. And any in-demand resource that has a decreasing supply fetches a higher price.

It's one of the reasons why condos have seen such a boom in Canada, especially in the GTA and the Metro Vancouver area. Building up is an easy way of making use of an increasingly scarce resource.


Despite the sky-high real estate prices in the GTA and Metro Vancouver area, and the many discussions in media of booms and eventual busts, I think it's reasonable to expect this pressure to persist in the long term.


If you would like a deeper, significantly more scientific dive into urbanization, the video below is a fantastic start. I got goosebumps when I first saw it: many vague, seemingly independent ideas in my head suddenly connected.

This video touches on something that in science is known as 'scalability', which I studied in graduate school. It's a really deep concept, and perhaps someday I will expand upon it.

Until then, sorry not sorry for sending you down this rabbit hole.

The Mindset of a Successful Investor - Part 2 : Ross Grant

The Mindset of a Successful Investor - Part 2 : Ross Grant