The only developed country that doesn’t seem to have a housing crisis right now is Japan. After their real estate market collapsed in the 90s, they instituted a number of reforms to make housing less attractive as an investment vehicle. Now housing there tends to depreciate over time, not appreciate. Consequently, it’s viewed not as an investment but as a consumer product, much like buying a car, and there is competition that brings costs down.
I think this is the sensible approach we need to follow in the rest of the developed world, but I don’t think it’s not going to be politically feasible until a lot of homeowners feel a lot of pain and give up on the idea of housing as an investment
it’s not going to be politically feasible until a lot of homeowners feel a lot of pain and give up on the idea of housing as an investment
This is the biggest issue. It’s fine to say we need to stop treating houses as investments, but most people own houses and it is their largest investment. Yes, billionaires and megacorps are profiting off it too, but if the government passed legislation tanking the prices of houses, the billionaires would be fine. Everyone 50+ who was getting ready to retire will loose most of their life savings. It needs to be a slow process, unless we’re all ok going through a market collapse like 1990s Japan
but most people own houses and it is their largest investment…
While this is currently true, it’s going down each year.
Between 2011 and 2021, homeownership declined across Canada and overall, there were 2.5% fewer Canadians living in owner-occupied homes in 2021 compared to a decade earlier.
So over the course of ten years home ownership went down 2.5%, but population went up from 34 million to 38 million. This quite literally isn’t sustainable.
Everyone 50+ who was getting ready to retire will loose most of their life savings
So at a certain point we have to ask, what’s worse, two generations who don’t own homes, or one generation loses it’s life savings.
This is one of the issues with democracy: people vote in their own interests. Perhaps I should be more specific: this is the problem with democracy in a culturally fragmented nation. Without shared values and a sense of camaraderie, people don’t vote altruistically, but self-interestedly. They don’t care about their neighbours because their neighbours don’t care about them. I live in Denmark now which is very culturally homogenous and people do vote altruistically. They vote for higher taxes because they know their neighbours share their values. They identify with each other like a loose family. This is one of the drawbacks of multiculturalism which is rarely discussed.
I’m a member of a generation whose wealth is tied up in home ownership. I say let 'er rip!
We can’t keep putting off a fix forever, so the earlier we tackle it, the better. No matter what we do, someone has to suffer, at least a little bit, so get it over with.
There is also plenty of money available to help ease the suffering if only we had the courage to tax properly.
It also might not hurt to let the institutional lenders and the investment class just eat some losses.
