Housing will never be affordable as long as it’s treated like an investment.
The government could solve the housing crisis, and then they’d have to deal with the crisis of elderly citizens who were counting on selling their homes for 2 million dollars to fund their lifestyle in retirement.
They’re going to pay a lot of lip service towards building housing these next 20 years without actually doing anything, because doing something would negatively impact property values.
It literally was affordable just fine when it was treated as an investment before, back in the '90s. It’s always been treated as an investment. What happened is we stopped building enough of it.
If you stop making enough food, people starve.
If you stop making enough housing, people go homeless.
Population growth of adults has gone up, while housing production of bedrooms has gone down.
I don’t get why this is complicated.
I thought the pandemic gave everybody a very harsh lesson about what happens to prices when we stop making stuff (two words: chip shortage) but I guess lessons are hard.
The only way it makes sense as a financial investment is if population continues to grow and homes values continue to rise above inflation - it’s inherently unsustainable.
Seriously, a simple though would show how bad of an idea financializing a basic human need is.
Homes are infrastructure.
No, this is revisionist history. The 90s were part of a nearly 15 year period when house prices were flat in Canada. For quite a few years your return would have been negative. People in the 90s were not thinking of their house as their retirement account.
We did stop making enough housing, but it’s precisely that artificial scarcity that is making people treat it as an “investment”. If we make enough, it will not be treated primarily as an investment anymore, which is how it should be.
The 90s followed the extremely high interest rates, which were why housing was flat. People couldn’t easily buy in, so demand was reduced.
It literally was affordable just fine when it was treated as an investment before, back in the '90s.
Yes, that’s how investments work. They are less money at the beginning and then grow over time. If you want apple stock to be affordable like it was in the 90s you’d need to harm the investments of everyone who has already bought it. If you want housing to be affordable you need to hurt the property values of everyone who already has a house.
Housing will never be affordable as long as it’s treated like an investment.
Owning a home IS an investment. Renting is not.
Nobody would want to own a home if they didn’t get some kind of return on investment when it came time to scale down/retire/put it in your will, etc.
“Affordable housing” should really be “affordable renting”.
EDIT: if you’re going to downvote, at least explain why. This is the reality of the housing/rental market we all live in. Don’t shoot the messenger.
Do you get a return on investment directly in merely owning a car? No, of course not. People still buy cars. (To avoid confusion: cars open other economic opportunities, but just sitting on a car by itself is not an investment.)
On the other hand, if cars did become an investment, people would hoard cars and they would be less affordable for people who actually use cars productively. High real estate prices are similarly hurting the economy.
Cars and homes are two totally different things. Why even compare the two?
Also, some people do buy cars to resell at a profit. The vintage and classic car industry is one example of that.
Houses are an investment because they sit on land that increases in value over time. Some people don’t even profit from the sale of their house, but from the sale of the land.
What is the argument, then?
Stats Canada makes it clear that rental housing is affordable for those making less than the median income (25% of expenses spent on housing), and that most mortgage holders are not spending more than 30% of their household income on housing.
By definition, it’s all affordable if you aren’t making well below the median income for an individual (which is $32,000 after tax).
Can we use more low-cost housing? Absolutely.
I’ve never argued against that, but I think people need to understand the definition of affordable housing and what that actually means.
You’re being downvoted because this is the attitude that got us into, and is keeping us in, this mess. Let us be precise with terms: housing is not a speculative investment. You don’t buy a house because you presume it will appreciate 100-1000% by the time you sell it. That attitude leads to the paradox that the government is unable to stop: you either build/allow affordable housing, lowering prices and crashing people’s speculative investment, or you restrict new home building through restrictive zoning and NIMBYism run wild, letting houses appreciate to the point of unaffordability.
You buy a house to live in long term: to buy it back from the bank and own it all to yourself. You have right to sell it for an equal or roughly price tracking rate with inflation. That’s a good investment. Every Canadian has the right to buy affordable housing. Saying affordable housing is affordable renting is not only reductive but downright prejudicial: people don’t rent because they’re poor. They rent because they want the freedom to move without selling a house. They rent because they are building lives as students or young families or their careers. They rent because they choose to invest their money in something other than house equity. And all the real, concrete policies which help new homeowners (ie building more housing) help renters: these two groups are not at odds with each other.
You don’t buy a house because you presume it will appreciate 100-1000% by the time you sell it.
Do people buy homes expecting that they will *lose * value over time?
Yes, I do think people BUY homes (as opposed to renting one) because it WILL gain value over the life of ownership. Someone living in a house for 50 year should be able to sell it and live off the earnings until they are dead. Why not?
Every Canadian has the right to buy affordable housing.
I agree, but not every Canadian understands the expectation of what “affordable housing” really means.
It’s generally recognized that “affordable housing” means housing that does not exceed 30% of a HOUSEHOLD income before tax.
Stats Can says that people with mortgages allocated 1/3 of their goods and services spending to shelter costs ($30,000 / year) with $17,000 going towards mortgages.
By comparison, renters only spend 25% of their spending towards rental payments ($12,200).
Both would still be considered “affordable housing”, yet it’s clear that someone making a median income would realistically be able to afford rental housing, and not homeownership.
Saying affordable housing is affordable renting is not only reductive but downright prejudicial: people don’t rent because they’re poor. They rent because they want the freedom to move without selling a house. They rent because they are building lives as students or young families or their careers. They rent because they choose to invest their money in something other than house equity.
Yes! I completely agree! Renting is not a downgrade from homeownership, but it is distinctly different. That’s why I’d argue that owning a house is an investment, while renting is not (although, renting allows you to invest in other areas).
We need more affordable rental space, so that every Canadian who earns an income can afford a place to live.
I simply think it’s unrealistic to believe that every Canadian could ever be able to afford to buy a house with an individual income below the median ($32,000).
Oh so you wouldn’t want to own a home if it didn’t pay well? Yeah. Same. And why should I get so shafted for wanting to live in a small apartment as opposed to ‘investing’ in a home?
A home is meant to be a depreciating asset like a car is. You need to maintain and repair it in order to sell it. You live in it, therefore it would be okay to pay a bit for it, buuuuut thanks to government subsidies and bankers and housing shortages, you are guaranteed to profit.
I don’t support downvoting you. I disagree with you, but you’ve made a concise and detailed argument for neoliberalism.
A home is meant to be a depreciating asset like a car is.
It is. Granted, it has become crazy expensive to buy a new home, so the used market has risen to compensate. Actually, we’ve seen the same thing happen in cars recently. New cars have become crazy expensive, so the used car market has gone up in price too.
But that’s outside of investing. Nothing says depreciating capital cannot be an investment. Consider a widget that cost $100 to buy and after one year is completely worn out and worth $0. But that widget during its useful life produced trinkets that you were able to sell for a profit of $120. There you go, a 20% return on investment, even though the capital is now worth nothing.
Cars and houses will always fundamentally be investments as long as they remain useful tools of production.
A home is meant to be a depreciating asset like a car is.
A car and a home are two very different things, so they can’t be compared here.
Even the land your home is on increases in value over time, and I’ve yet to see a home in good condition that’s worth less than the amount it was purchased for. Unless you’re talking about those ghost cities in China.
What exact reason would you give to devalue a perfectly good home?
I did not downvote, but I’d like to offer my point of view.
Owning a home IS an investment. Renting is not.
I think this is a superfluous distinction. Purchasing real estate can be an investment vehicle if you aim to recoup the investment through appreciation (land speculation) or income generating usage (like rentals). It may also not be an investment if you just want to purchase a property to live in it - this is a passive asset, much like a car. You can “rent” your car (and time) to the gig economy, and car prices can rise and you can make a profit by selling one, but in a stable supply market that’s not the norm so cars are generally not regarded as investments. Conversely, renting retail space for commercial usage is an obvious example of income generation on top of a rented property, so rental costs are a factor in other types of investments.
Nobody would want to own a home if they didn’t get some kind of return on investment when it came time to scale down/retire/put it in your will, etc.
Plenty of people want to own a home regardless of financial returns. Ownership has its perks, there are plenty of people willing to pay for it. It is a bit of a luxury good nowadays, but one that is very entrenched in most cultures as a symbol of “making it”.
