“If we all agree that lowering the value of current homes is not a realistic policy option, then it’s critical we get more creative in order to increase housing affordability.”
- Daniel Fontaine, Editorial, 24HRS, 14 Dec 2011. Mr Fontaine is “former Chief of Staff to Vancouver Mayor Sam Sullivan”
Hat-tip for the above link to ’4SlicesofCheese’, who adds:
“No, we don’t all agree, that’s the problem right there. Policies like mortgage relaxation led us here, why should we not use policies to address this as well?”
Policy makers are very reluctant to take any steps that lead towards price reductions:
“At a public debate, both Robertson and NPA leader Suzanne Anton said neither would put limits on foreign investment, which many observers believe is behind skyrocketing real estate prices in Vancouver.”
- from 24hours, 13 Nov 2011
“…government’s role should be to modulate severe market swings and not precipitate them. Shocking the market has potential to wreak havoc on households, especially those who may be over-leveraged or recent buyers.”
- Sandy Garossino, independent candidate for City Council in recent elections, VREAA, 11 Nov 2011
“This is a tough one. As a home-owner I do not want my home to drop too much in value but that said a correction is definitely needed in our city regarding real estate prices.“
- Joe Carangi, NPA City Council candidate, VREAA, 2 Nov 2011
“People who already own homes would be unfairly hurt by a policy that would lead to a drop in real-estate values. If the current homeowner has taken out a mortgage for say 90% of the worth of their home, and values then drop by 10%, the homeowner has lost 100% of her or his equity. I am strongly supportive of policies that would bring new housing to market at below market cost.”
- Tim Louis, COPE City Council candidate, at VREAA, 11 Nov 2011
The longer speculative bubbles remain inflated, the greater the number of citizens who get on board before the inevitable crash.
Humane policy makers with a Martian perspective (complete outsiders) wouldn’t hesitate to deflate the bubble instantly, to stop it doing further damage. To do that, they’d simply have to cut off the fuel supply (cheap government backed financing). The bubble would pop; prices would crash; citizens could then get on with sorting out a sensible housing policy amidst the sensibly priced rubble. Vancouver wouldn’t be bothered by another speculative mania in housing for a generation.
In the real world, policy makers shuffle around woefully inadequate ideas aimed at, they believe, decreasing the overall pain.
Calls for ‘affordable’ new-build housing are almost all band-aid solutions. They largely would result in relatively low quality product at proportionally roughly the same elevated costs as all other local properties. Those buying into such schemes would be the most vulnerable to the coming inevitable price deflation.
In the grand scheme of things, though, it doesn’t really make much difference to the outcome whether policy makers step aside or shuffle around paper while it all plays out. As they’re paid to do stuff, we suspect we’ll all be shown a good deal of shuffling.