Weights of housing in CPI: Canadian and US cases

Weights of housing in CPI: Canadian and US cases

In 2023, Canadian and US GDP per capita are 53k and 80k USD respectively. At the same year, average house prices in Canada and US are 486k and 431k USD respectively. Given these numbers, you might naturally expect weight of housing in CPI in Canada is higher than that in US. However, this is not the case.

In 2020, weight of housing in US CPI basket is 42.6%; weight of housing in Canadian CPI basket is 29.78%. Why is Canadian weight much lower? I don’t know. But the numbers make Canada look better.

In a society where housing costs are less than 30% of income, housing is deemed affordable. Canadian CPI weight on housing is 29.78%, magically below the threshold of 30%. Thanks to the heroic efforts of the Canadian government economists, Canadians are enjoying affordable housing.