Happy Monday Morning! The Canadian housing market is a funny thing. Despite a constant barrage of policy measures hoping to fix the crisis, affordability continues to deteriorate. As affordability issues deepen, policy measures are becoming more aggressive. Just to recap, over the past few years various levels of government have introduced a foreign buyers tax, an empty homes tax, a mortgage stress test, a speculation tax, rent controls, and finally an outright foreign buyers ban. We’re at the phase where you throw things at the wall and see what sticks.
Government at all levels have created the problem with housing cost inflation
Feds printed money creating the rise in housing costs
Federal, municipal and provincial tax increases due to overspending take a big bite out of people’s incomes
Interest rate increases as a result of inflation, result in much higher costs of financing which elevates costs of construction and debt service which is passed along to renters and purchasers
Now those that created the problems talk about more legislation to curb the problem they created. Their solutions to the problem are frought with issues which will only create more problems . Example is BC government fast tracking high rise low income housing near transit facilities. Sounds like a recipe for slum areas similar to US project housing.
Exactly. The effects of quantitative easing are taught in any freshman economics course. It's almost laughable watching this unfold. I found this excellent blog when Steve started talking about this over 2 years ago.
I suspect there are a lot of *very* uncomfortable people with revenue properties looking at how they will get off the sinking ship - without taking a bath.
Shame on you Airbnb people who got to have a sniff of how lucrative the hotel industry is...
What's Steve implying here with the zoning power change abating housing gains? Having more mixed use lots will prevent appreciation?
"Nothing is off the table. So long as the housing crisis fails to subside, policy measures will get more extreme. Need I remind you that the BC Government effectively removed zoning power from municipalities just a few weeks ago. This would have been considered unfathomable even a few years ago.
In other words, if you’re betting on another decade of record house gains think again."
I agree that they have no choice at the moment than to go nuclear - this is an existential crisis for the Liberals, and really all levels of government at this point.
Government at all levels have created the problem with housing cost inflation
Feds printed money creating the rise in housing costs
Federal, municipal and provincial tax increases due to overspending take a big bite out of people’s incomes
Interest rate increases as a result of inflation, result in much higher costs of financing which elevates costs of construction and debt service which is passed along to renters and purchasers
Now those that created the problems talk about more legislation to curb the problem they created. Their solutions to the problem are frought with issues which will only create more problems . Example is BC government fast tracking high rise low income housing near transit facilities. Sounds like a recipe for slum areas similar to US project housing.
Exactly. The effects of quantitative easing are taught in any freshman economics course. It's almost laughable watching this unfold. I found this excellent blog when Steve started talking about this over 2 years ago.
I suspect there are a lot of *very* uncomfortable people with revenue properties looking at how they will get off the sinking ship - without taking a bath.
Shame on you Airbnb people who got to have a sniff of how lucrative the hotel industry is...
One million immigrants? I thought it was half that.
International students would contribute to the 1 million figure.
What's Steve implying here with the zoning power change abating housing gains? Having more mixed use lots will prevent appreciation?
"Nothing is off the table. So long as the housing crisis fails to subside, policy measures will get more extreme. Need I remind you that the BC Government effectively removed zoning power from municipalities just a few weeks ago. This would have been considered unfathomable even a few years ago.
In other words, if you’re betting on another decade of record house gains think again."
Good writeup Steve.
I agree that they have no choice at the moment than to go nuclear - this is an existential crisis for the Liberals, and really all levels of government at this point.