Sixteen Volts

Compared to Europe, people in North America have a lot more living space. Of course, the extra square feet usually come with the additional price of a daily two-hour commute, but even in cities, the apartments tend to be significantly larger. I remember once overhearing a discussion of two older ladies where they strongly disapproved a family of two adults and two children sharing an 1100 square feet apartment, for the supposed lack of living space. In Finland, a family of four having so much apartment space would be practically luxurious.

When we finally stopped renting after three years of living here and went and bought a place of our own, we paid a bit under two hundred grand (Canadian) for it. As soon as the agent let us in and we looked around, we both knew that this was the place we wanted: the others that we had taken a look at simply did not even compare. Everything from floor to ceiling was better than anything else that we had seen in our price range. The place was virtually a steal, and fortunately nobody else was bidding at the time. It is so much fun not to live in a housing bubble.

The housing prices of Mississauga are significantly lower than in the neighbouring big city Toronto, in which it's hard not to claim that a housing bubble is going on. Nowhere as bad as in certain other large population centers in America, but still. But here in the provincial and much more relaxed Mississauga there is no bubble going on whatsoever, which makes me wonder why more Torontonians don't move here, pocket the difference and commute to the city in, say, the speedy Go Train, reading the paper and playing with the laptop while having a hearty laugh about the savings.

Heck, housing costs here in Mississauga are still significantly lower than even back home in Tampere with its 200,000 inhabitants. Perhaps a more appropriate data point for price comparisons would be Helsinki, which is roughly the same size as Mississauga. So let's compare the prices and see what happens. In Canada we have the MLS listings and in Finland we can use the Huoneistokeskus search form to play around with.

It should quickly become clear that for the same price of roughly 200,000 Canadian dollars, you typically get almost twice as many square feet in Mississauga than in Helsinki or Tampere. And the square feet come with a quality and amenities virtually unheard of in Finnish apartment buildings, such as a 24/7 doorman and guards and a gym. In Finland, you are lucky if your place comes with a dishwasher. And just look at the sad pictures of the apartment buildings themselves, the gray element blocks that look like something out of the Soviet Union. On department in which the Finnish apartment buildings win is that they have real saunas, though. I have yet to see a sauna here that wasn't just somebody's idea of a sad joke, with the temperature remaining under 50C and tossing water on the stove being completely forbidden. But at least here we have the hot tub adjoining the pool. And when the pool area is on the roof level like in our place, you can just lounge in the tub and enjoy the magnificient view over the suburbia.

I remember the first place we moved to in Finland as newlyweds. It was about 350 cozy square feet. But the rent wasn't bad either, less than $300 a month, enabling us the save and completely pay off my student loan in a year or so, and then start investing in the bull market. After a few years of that, we moved to rent a place which was about 900 square feet. That apartment felt nice then (and many of our friends agreed, hoping that they'd find a place as nice), and the rent was still about $800 a month. But I am pretty sure that if I saw that apartment with its plastic floors and the simple bathroom right now, the place would look pretty scummy since our current place has become "the new normal". The day we moved in this place, when the truck driver guy from the moving company first opened the door and stepped in, I remember his first reaction was to gasp and proclaim what an insanely great apartment this is. Remembering what our previous apartment, which had itself been luxurious compared to our previous residence in Finland, had looked like 20 minutes ago when we left it empty, it was hard to disagree with him.

What could be the reason for the massive difference in housing prices between Mississauga and Helsinki? The interest rates are about equal, so that can't be the reason. The population in both areas grows in roughly equal annual rate, and probably actually faster around here, with all the immigrants moving in. Both places get a real winter that requires certain level of insulation. So what could be the reason, then? I can think of only one reason: whereas here the builders can obviously build as much as they want without bureaucrats first putting them through a grinder, in Finland certain people in power find it to be in their own interest to create artificial scarcity of living space. Just try building anything anywhere near anything and see what happens. The cost of construction is probably much higher too, with all the unions and the government taking their cut in every turn. Let's hope that the Finns will eventually wake up and realize how this makes them lose tens of thousands of euros on average, and do something about it.

Posted by Ilkka Kokkarinen on Sunday, January 22, 2006 at 2:18 PM