This via email from a reader, who prefers to keep their name out of it, so here shared anonymously:
“I like reading your blog. Thanks for the perspectives.
The perspective that the Vanc prices are a “bubble” and “will crash”, implies that “it is all froth, no substance”, and there are no fundamentals behind what is happening.
I like reading your articles. However, l remain unconvinced about lack of fundamentals. Such as:
Globalization (ie sort of free movement of capital, people, products, information).
Low interest rates (ie:prices are about selling mortgage payments).
Low Canadian dollar make Cdn “cheap” (tanked to support oil exports).
Vancouver is a safe haven for rich people (ie: income tax evasion, no extradition, free education & health care as no income taxes).
BCLiberals and Fed’s are wealth managers for corporations/real estate & construction industry/etc. (ie: bought and rewarded by).
Property ownership is a right (ie owners and buyers can sell/buy how they like; just like for your car/used computer/etc).
Vancouver and area is a nice place to live. (for many reasons, not perfect, but nice). Some net 50,000 people moving here per year creates demand for housing.
Declining inventory of detached homes relative to all inventory (gobbled up for condos/etc).
Prices will not crash and stay low; rather they will fluctuate, but generally will follow inflation as minimum.
Vanc is not some industry dependent town that booms and busts; it has it’s own appeal/demand.
Not to say there are not issues. There are:
Public policies not in Cdn public interest.
Other sectors crushed by unaffordable housing.
And many others too in education, infrastructure, congestion, cultural.
Our governments can/should be doing more:
Buying up land in advance of transportation development (that is then allocated to public housing at cost, like how Whistler does; keeps cost lower).
Advancing mortgage money at Provincial rates.
Builds are done at cost, and exclude developers who add 20% profit to cost.
Rules to keep this housing in “affordable housing pool” (not allowed to be sold for “market”; see Whistler model, or Coop model?).
As a taxpayer – l am not in favour of subsidies. One taxpayer paying another kind of taxpayer. Not fair. And then tax payers are subsidizing the profits to banks, land developers, developers, speculators, etc. Not fair.
We need to shake off the concept that the free market solves social policies. The evidence is they don’t. The free market (made up of banks, developers, real estate industry, construction industry) can never ever sell housing that is affordable – not when their goal is “what the market will bear” or “sell to the highest bidder”, and maximize profits. Only a controlled gov’t intervention, at zero cost to the tax payer is fair to both taxpayer and those in need of affordable housing.
That there will be a crash? I don’t think so. Not permanent. Too many rich people/corporations depend on prices where they are. So does the gov’t who is both the silent partner (makes money) and wealth managers for these industries.
I think looking at what is “fair” for the most people, and “good” for all constituents, would be a more compelling perspective to effect helpful change on affordability. My two cents.
Thanks for these thoughts, Anonymous Reader.
I have many thoughts, but I’ll share just one:
Market participants (whoever they are) “depending on prices where they are” have never prevented market crashes.