Many residents have been priced out of Canada’s housing market, but for a large number of Canadians, their house is a vital asset for retirement and passing on wealth
In case anyone still wants to somehow debate whether the Liberals will deliver affordable housing.
“Housing needs to retain its value,” Mr. Trudeau told The Globe and Mail’s City Space podcast. “It’s a huge part of people’s potential for retirement and future nest egg.”
Well yeah. People’s entire life savings are wrapped up in their houses. We all saw what happened in 08 when the housing market crashed. It would cause absolutely massive fallout if people’s largest asset that they’ve been investing in their entire lives lost a bunch of value. It’s unfortunate that they’re not more affordable, but devaluing them would be catastrophic.
Slowing their appreciation seems like a better solution for people who bought in the last few years. Having their homes lose value in a controlled manner would ruin some people. They’d not only lose money on their life savings, they’d be trapped, unable to ever move without paying even more money, or filing bankruptcy if they don’t have more money to lose.
Slowing appreciation below inflation is depreciation/losing value. It’s a hard tagert to nail, but if we can keep the needle between static price and inflation; we’re doing well.
They’d not only lose money on their life savings, they’d be trapped, unable to ever move without paying even more money, or filing bankruptcy if they don’t have more money to lose.
This already happens, we just don’t hear about it. And we normally blame the homeowner for falling into a preditory trap.
Also the building envelope and internals IS a depreciating asset, always has been. It takes effort to maintain it.
Right now it’s just the land values rocketing so high that on many places the crack shacks sitting on top depreciates slower than land value increases. So people’s homes are still losing money, it’s just the land underneath them goes up faster.
I think we should clarify what devaluing mean - I think it’s reasonable for a house purchased in the 90s to not decrease in value if proper maintenance is applied - but what’s our rationale for housing to be a profitable investment? Why, rationally, should it gain value over time… and why should that gained value outpace interest rates, the stock market, and wage cost-of-living increases?
I’m in favor of devaluing real estate because it’s currently astronomically overvalued and viewed as an investment vehicle - if it were reasonably valued I’d be in favor of land having a flat value relative to inflation and construction having a slow depreciation rate as the materials age and require more active maintenance… with the only real increases in value coming from renovations or other active investments in the quality of the house.
Why is it that teleporting back in time, surrendering cash according to inflation, buying a house, teleporting forward in time, selling that house - then repeating that on a loop… why is that an infinite money glitch?
Similar to nature abhorring a vacuum - capitalism abhors a free money glitch (and in all other cases, free money glitches get absorbed by arbitrage).
I’m all in favor of preventing corporations and investment firms from purchasing houses, and also foe heavily taxing private home ownership after the first one. I think that would bring the demand down to reasonable levels. The houses would still appreciate due to increasing population levels through birth and immigration, but it would hopefully keep it in the affordable for average people realm. It makes sense for your largest investment in your entire life to appreciate. It absolutely doesn’t make sense when a home triples in value in 3 years. That is causing its own financial catastrophes.
But in a society where no one but the wealthiest can afford to own property, does it still make sense for its value to continue to appreciate, putting it further and further out of reach until everyone is renting from corporations who own the housing stock, except those born into wealth?
Your question starts from a false premise though, that nobody except for the wealthiest can afford to own a house. I’m from the USA, not Canada, so I had to look up the statistics for your country. You’re definitely facing a crisis, and if nothing is done, then your statement will probably be true sooner, rather than later, but it’s not accurate today. The prices of homes up there are certainly preventative for working class families, but depending on the area there are still middle class citizens buying homes. It would be disastrous for them if their homes - which have traditionally been the one source of financial stability - suddenly plummeted in value.
I totally get your sentiment since we’re facing a similar situation down here. Something needs to be done. Ideally that something doesn’t completely screw over millions of working class citizens who have made all the right moves, have been disciplined and financially wise, and through no fault of their own find themselves on the shit end of the stick yet again.
I think blocking investors and corporations from buying houses is a good step in the right direction, and probably making them sell the houses they already own too. That alone would open up a lot of inventory and stop the massive appreciation we’ve seen over the last half decade. That of course carries its own set of challenges though. What do renters do who can’t afford to buy a house, or don’t want to buy a house, when they suddenly have no more rentals available?
Idk man. I’m glad that I’m not the one who has to sort these problems out. My only point is that I hope they consider the millions of working class citizens who already own homes as they plan their solutions.
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Well yeah. People’s entire life savings are wrapped up in their houses. We all saw what happened in 08 when the housing market crashed. It would cause absolutely massive fallout if people’s largest asset that they’ve been investing in their entire lives lost a bunch of value. It’s unfortunate that they’re not more affordable, but devaluing them would be catastrophic.
Devaluing them in a deliberate and controlled manner is much better then waiting for a crash.
Slowing their appreciation seems like a better solution for people who bought in the last few years. Having their homes lose value in a controlled manner would ruin some people. They’d not only lose money on their life savings, they’d be trapped, unable to ever move without paying even more money, or filing bankruptcy if they don’t have more money to lose.
Slowing appreciation below inflation is depreciation/losing value. It’s a hard tagert to nail, but if we can keep the needle between static price and inflation; we’re doing well.
This already happens, we just don’t hear about it. And we normally blame the homeowner for falling into a preditory trap.
Also the building envelope and internals IS a depreciating asset, always has been. It takes effort to maintain it.
Right now it’s just the land values rocketing so high that on many places the crack shacks sitting on top depreciates slower than land value increases. So people’s homes are still losing money, it’s just the land underneath them goes up faster.
Edit:
Diversify yo bonds.
I think we should clarify what devaluing mean - I think it’s reasonable for a house purchased in the 90s to not decrease in value if proper maintenance is applied - but what’s our rationale for housing to be a profitable investment? Why, rationally, should it gain value over time… and why should that gained value outpace interest rates, the stock market, and wage cost-of-living increases?
I’m in favor of devaluing real estate because it’s currently astronomically overvalued and viewed as an investment vehicle - if it were reasonably valued I’d be in favor of land having a flat value relative to inflation and construction having a slow depreciation rate as the materials age and require more active maintenance… with the only real increases in value coming from renovations or other active investments in the quality of the house.
Why is it that teleporting back in time, surrendering cash according to inflation, buying a house, teleporting forward in time, selling that house - then repeating that on a loop… why is that an infinite money glitch?
Similar to nature abhorring a vacuum - capitalism abhors a free money glitch (and in all other cases, free money glitches get absorbed by arbitrage).
I’m all in favor of preventing corporations and investment firms from purchasing houses, and also foe heavily taxing private home ownership after the first one. I think that would bring the demand down to reasonable levels. The houses would still appreciate due to increasing population levels through birth and immigration, but it would hopefully keep it in the affordable for average people realm. It makes sense for your largest investment in your entire life to appreciate. It absolutely doesn’t make sense when a home triples in value in 3 years. That is causing its own financial catastrophes.
But in a society where no one but the wealthiest can afford to own property, does it still make sense for its value to continue to appreciate, putting it further and further out of reach until everyone is renting from corporations who own the housing stock, except those born into wealth?
Your question starts from a false premise though, that nobody except for the wealthiest can afford to own a house. I’m from the USA, not Canada, so I had to look up the statistics for your country. You’re definitely facing a crisis, and if nothing is done, then your statement will probably be true sooner, rather than later, but it’s not accurate today. The prices of homes up there are certainly preventative for working class families, but depending on the area there are still middle class citizens buying homes. It would be disastrous for them if their homes - which have traditionally been the one source of financial stability - suddenly plummeted in value.
I totally get your sentiment since we’re facing a similar situation down here. Something needs to be done. Ideally that something doesn’t completely screw over millions of working class citizens who have made all the right moves, have been disciplined and financially wise, and through no fault of their own find themselves on the shit end of the stick yet again.
I think blocking investors and corporations from buying houses is a good step in the right direction, and probably making them sell the houses they already own too. That alone would open up a lot of inventory and stop the massive appreciation we’ve seen over the last half decade. That of course carries its own set of challenges though. What do renters do who can’t afford to buy a house, or don’t want to buy a house, when they suddenly have no more rentals available?
Idk man. I’m glad that I’m not the one who has to sort these problems out. My only point is that I hope they consider the millions of working class citizens who already own homes as they plan their solutions.