A number of thoughtful readers have made suggestions, increasingly so in recent months, that we all somehow attempt to “do something” regarding the state of Vancouver’s housing market.
‘mjw’s personal anecdote [7 Oct 2011] about two UBC professors leaving for Alberta as a consequence of housing prices, concludes with “I think that some sort of activism is needed to highlight and make people aware of the game that is being played out.”
Recent suggestions by ‘Vesta’, ‘jesse’, ‘Gord’, and others, were discussed in a thread headed ‘Consequences, Intended and Otherwise‘[14 Sep 2011].
Today at VREAA, Vesta again calls for some kind of action, and talks of “a small group starting to coalesce”, of “someone in this city very involved in politics and very concerned with what is happening”, and again asks people to “write/phone City Council, MLAs, etc”.
We think you know that we are pretty much on the same page as you in hoping that the housing distress can be resolved. We would very much like to see Vancouverites being able to get on with productive activities that are not hobbled by excessively draining RE costs. Housing costs are at the very least a distraction, sometimes a disaster.
We do believe that getting the word out, educating, is the very best form of activism.
But, other than describing what we see, what is the desired ‘message’? On this we are unclear.
Our concerns are that a great deal of coming distress is ‘baked into the cake’… There is no way we could hope to ‘educate and extricate’ the City of Vancouver from this mania without a great deal of pain.
We can educate those who will listen such that they try to get out early, but only a very small minority would ‘escape’. And, realize that every ‘escapee’ would have to sell to someone who then takes the subsequent fall… so there would be no resultant net gain for the group.
Understanding the nature of speculative manias, we see no way forward but for a flushing-out of all speculation from the system. This will result in a price crash of 50%-66%, and general (temporary) mayhem for the economy and the society. Many will be devastated by that outcome. As we wrote some time ago, a real estate bear market will be Vancouver’s defining social and economic event for this decade.
There simply is no way of landing this bubble ‘softly’… there never is. Never.
Having said that, what is the very best overall outcome we could hope for?
How do well meaning citizens who understand what is going on direct the ‘action’ of any proposed ‘activism’?
We are very, very strongly opposed to any actions that would further ‘socialize’ the risk of being in the housing market. We would see such action as bordering on criminal. Such mispricing of risk has been an important cause of our bubble in the first place. We are strongly opposed to ‘bail-outs’ of any kind. In fact, we believe that the government should back even further away from back-stopping speculation, by tightening CMHC-backed lending. Buyers and lenders have to take full risk for their actions. So, please, no suggestions that public money be used to attempt to bankroll a soft landing in any way: such action would further punish the prudent (and, by the way, would be doomed to fail before it even started).
But, this may not be very helpful: we’re telling you what we don’t want.
What do those calling for ‘action’ suggest we call for?