Part 2 - In depth: Here's how badly home price growth has outstripped average weekly earnings in Canadian provinces

Home price inflation in Canada has stoked many theories on its origins and what to do about it. Part of the problem is not just the fuel that has ignited this massive run up in prices, but also the affordability aspect of the equation. And that's a conversation about wages, their growth rates, and whether or not it's enough money for one's expenses.

Getting neck deep in the data is one of the ways to really get a grasp on what's affecting affordability for Canadians. To keep things simple, for now, we're strictly focusing on home prices and their growth rates, all while setting aside other things like food, transportation, and other essential living expenses. Eventually, we'll get to all those things.

National average weekly earnings for May of this year was reported at $1,031 CAD by Statistics Canada, and here's how this number and its growth rate over nearly 20 years stacks up against national home price growth over the same period:

Meanwhile, the lowest paid workers are those in food and accommodation services, and arts, entertainment, and recreation. These folks bring home between $400 and $600 per week. How these people survive on these wages is not easy to understand. It's also harder to believe they actually earn that much when home price and rent growth, on a national scale, have not dipped into negative territory (not even once) to provide some well-needed relief.

Below, I've mapped out a select few provincial average weekly earnings, including overtime for all employment categories, alongside the national average. I've included the provinces for which housing market data is more available and standarized. Take a look:

Each province can be further broken down into Statistic Canada's classified businesses. Due to limited space here, however, we'll have to cover them another time.

The first chart holds the data for British Columbia, take a look:

Between April 2015 and November 2016, both wage and home price growth contracted. Things have been volatile, but if you pay attention to wage growth compared to other provinces, Alberta has experienced some of the higher rates, ranging as high as 7 and 8 percent. In other provinces, as you'll see below, wage growth has had an upper limit of 5 percent. Since last year, home price growth has been contracting, meanwhile, wages have struggled to recover. When compared with BC, however, things look more in line with wage growth, but workers still had a tough time catching a break.

That being said, nowhere have workers been chasing home prices harder than in Ontario:

Instead, we see more volatile wage growth, and a labor market that doesn't seem very tuned relative to home prices. Looking at this data, especially the recent years where home price growth is taking off again, it wouldn't be surprising to see this become more of a national issue as the Quebecois press for added support from the federal government.

So, at the end of it all, average weekly earnings relative to the national average don't really tell you much about home prices. What's more, the national wage and home price growth chart (the first chart I showed you above) is quite accurate about what's happening in pretty much every province. The thing that worries me the most is, when home prices correct, what will happen to the Canadian economy? 

If unemployment starts ticking up, surely that will affect average weekly earnings. Canada didn't have a labor market disruption in 2008 like the US did. Just look at wage growth at the national and provincial levels; they kept humming along during that period. What's more, the IMF says a home price crash would force the banks to add risk (therefore, costs) to new mortgages and those eventually looking to refinance their variable and fixed contracts. I guess we'll have to wait and see to find out.