When I read stuff like this I often wonder why nothing is mentioned about Canada’s lax laws on foreign ownership of multiple properties and failure to verify the legality of these owners’ funds.
Because that’s what started this shit show in the 90’s and nothing has been fixed.
Look at our suburbs. They are immense. Immensely wasting the land for car parking and large road. We fucked up pretty 50years ago and now these are the consequences. Why the fuck do we need a parking lot for each building ? Before saying the investors are evil and all that shit, look how wasteful we are building our communities. The investors only got in the market because of the way we built our neighborhood. We wasted land, we made the house supply low and we got investors trying to make money with it. Preventing investors from buying houses is probably a good idea but is only a band aid that won’t last.
Stop wasting the land and this crisis is over.
There are foreign-ownership and vacant unit laws in all affected places in Canada AFAIK. They’re basically self-reporting driven but they exist. The BC ones came first. They put a small dent in housing prices and then prices continued their upward march, and they did nothing at all for rent because the color of your landlord doesn’t really change much.
Any solution that doesn’t involve constructing abundant housing is at best rearranging the deck chairs of the Titanic and at worst scapegoating.
Basically anything short of we’re going to expropriate land and build massive amounts of rgi’s and cooperatives will fix it on the supply side of the equation.
We need to tackle the problem at the source and that’s housing being used as an investment vehicle by wealthy people and corporations as a means of wealth extraction from the working class. It’s completely choking the economy.
The problem is, for a neoliberal government, wealth extraction is the point. They’ll look at the system and see it working as intended.
On the flip side, massive build-outs of affordable housing is all downside: it doesn’t make rich people the maximum amount of money, it requires wealth distribution downwards and there’s little to no incentive to get private sector participation.
I don’t think people realize how much government has changed since ~1979 and ~1995, or how we have had two to three whole generations of politicians and civil servants who have gone their whole careers believing that government shovelling money at the private sector is the only way to do things.
Here’s a little thought experiment:
- name me one institution implemented entirely with public funds since 1995. You can even go as far back as 1980, if you want. I’m an Ontarian, so something like GO Transit, the AGO, TVO, the Ontario Science Centre, Ontario Place, etc. The number is probably around zero.
- Now, list all the entities sold off since then. The list is long, and contains some things you probably didn’t realize, like Potash Corp, Air Canada, CN, Petro Canada and more. Think about how much money we’d have, how many services we’d still have, how much we’d be able to do about, eg, climate change if we had even a few of these.
It’s a real gut-punch to realize we sold our future to billionaries for pennies on the dollar, and now those same billionaires are squeezing us for more.
At 50% they can do $4129 for a $650k
That’s a MASSIVE stretch for a typical family of 4 on your average income scenario, Once you factor in all the utils, maintenance… the $400 to $500/month property taxes, a $650/month car payment (an average family has a car payment)… and the incredibly high cost of food… they will be well over stretched at a 50%.
But to me I don’t think this bubble is going to see houses drop to the 300s like they used to be.
Is this a conclusion based on just direct impact, or did you consider the risk of people trying to bail out of a perceived-collapsing market in fear of an ever more challenging monthly payment?
I’d agree if you said it’d be difficult to even guess at the exact effects if people started panic-selling houses to unload on income properties to limit their risk - my own family was caught in that in the early '80s Calgary market and we’ve never recovered - but is there a nod to the potential for that slippage in your conclusions?
Plenty of big, big funds have massive exposure to short sellers
DRS GME to stop global financial crime
For those people who are actually wishing for the bubble to burst, remember that’s exactly what happened in 2008, and what happened back then. Literally the only people who won were the rich as they just bought out all the property that got severely discounted while other rich people got a massive payday from the government (aka regular Joe’s tax dollars) for fucking up. And the bubble simply got restored because those rich people could afford to sit on unproductive products for a decade at a time because they knew that without a constantly increasing supply of housing, the prices will explode again because housing is a requirement, not a luxury.
And the losers was everybody who doesn’t make 7 figures or more. People’s retirements were crushed, their savings crushed, their existing lives crushed. And the economy was set back for years and inflation skyrocketed for a little while, which never came back down.
And in places where such housing bubbles really burst, Japan hasn’t seen any growth for 30 years. They’re still in what they all the Lost Generation, because they realized that calling it the Lost Decade was premature and it didn’t end in 10 years. We’re watching China’s housing implode on itself right now with hundreds of thousands of people losing their entire investments and retirement savings. We’re watching 80 year olds going back to work so that they don’t starve to death while youth unemployment reaches levels so insane that they’ll take a job that only pays under the table because the company can’t afford to pay minimum wage!
You want a dystopia, you’ll get it if the bubble bursts. You’ll also get it if the bubble continues to inflate.
So the only solution is to slowly deflate the bubble by increasing housing construction so that it outpaces demand in a controlled manner until the prices come back down to something reasonable, then to continue keeping pace. And for that, we need the political will for both government subsidized housing and a overhaul of zoning laws to allow for mixed-use residential to replace all residential zoning.
Detached single family housing don’t belong in major cities, and suburbs shouldn’t be subsidized by the downtown core.
It would be relatively straightforward to block Monopoly getting played should the bubble burst–legislatively speaking–but it would require governments to intervene against it’s donor class.
Hawaii’s post-disaster response is a good template: the government has threatened to buy land to prevent investors and speculators from doing the same. In Canada, this would be like a bizarro-world version of Doug Ford’s Greenbelt giveaway: where the government buys more land, and more houses, to block speculators.
I can’t see it happening, because our leaders are either feckless cowards (on the left) or complete corporate toadies (on the right), but I can dream.
You want a dystopia, you’ll get it if the bubble bursts. You’ll also get it if the bubble continues to inflate.
Yeah, the range of ways out of this that don’t suck are small. Even if you get the mildest of fixes: property values stay steady for decades while they’re eroded by normal levels of inflation, that’s going to be hell for people waiting for the prices to become reasonable, but also hell for people who bought property as an investment and instead see it losing value. Some of those people are rich, but other people were just using it as a retirement plan.
And for that, we need the political will
The problem is that political will always aligns with the self-interest of the parties or their leaders. Since home owners vote and donate, they’re the ones who get listened to. Since property developers donate, they get listened to. Homeless people don’t vote, and definitely don’t donate to political campaigns. People struggling to make ends meet don’t take time out of their busy days to get involved in politics, they just hope someone will help them.
Since politicians invariably come from a class that not only owns houses, but often owns multiple houses, the idea that they’ll voluntarily take actions that reduce the value of their investments is pretty laughable.
Whether you hope for it or not, all bubbles burst eventually, and the government has already proven its unwillingness to do anything about it by allowing the bubble to form in the first place.
Detached single family housing don’t belong in major cities, and suburbs shouldn’t be subsidized by the downtown core.
Truer words were never spoken. If you want to be able to live on your own little plot of land surrounded by other people wanting the same thing - then development, upkeep and maintenance of all infrastructure and services needs to be paid for directly from your property tax. When you drive in to downtown to get to work, you should not expect to find parking. Downtown should belong to the people who actually live there, it’s crazy how far we bend over backwards to support a lifestyle that’s inherently unsustainable.
What is bnnbloomberg, anyway? I see them in my feed sometimes and they have highly-produced news, but they don’t seem to have a lot of it, which makes me feel like it is carefully targeted (ie propaganda)
They’ve been around forever and it’s for financial wonks so their intended audience in this case is people involved in everything financial as it pertains to houses from C level to keener analysts.
It’s legit.
Bloomberg a legit news source. Two things though:
- This BNN Bloomberg, which is Business News Network after getting acquired by Bloomberg. It’s still a pretty factual news source (sometimes even more so than Bloomberg itself)
- This isn’t news. It’s a person (Phillip Colmar, partner at Global Strategist at MRB Partners) saying what they think. It’s more like an opinion piece, improvised on live television, and most of those are indeed garbage even in otherwise respectable outlets.
Hello from Australia. if you’re expecting this bubble to pop, don’t.
Thanks for always being there to show us what our future is like. It’s the time zone thing, and it’s great that you’re always a step ahead. Will these fires consume us or will we find a way out? What will the rains and the stampede of spiders be like?How’s Thursday going so far?
“I could never get the hang of Thursdays” – Douglas Adams, writing for Arthur Dent
Especially because the people who own houses have much more political power than the people who want houses. Any government that wants to have and use political power will cater to the people who don’t want a crash.
It seems like the only realistic hope (and an outside chance at that) is for prices to stagnate for decades. If that happened, your grandkids might be able to afford houses on normal wages (assuming their parents didn’t emigrate in frustration).
Alternately, as boomers die and many of their homes go into REITs instead of younger generations as they reverse-mortgage to fund extremely expensive senescence more and more housing moves out of the voting public and populists get more and more power by catering to this disenfranchised group.
The question then is whether those populists do it with good policy or with scapegoats and hate.
