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The numbers don’t lie: The housing crisis is not caused by a supply shortage (www.policyalternatives.ca)
submitted 9 months ago by to c/canada@lemmy.ca
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the housing crisis has been created by banking practices that have directed excessive amounts of credit into the property market, and especially residential mortgages. As a result, buyers can bid prices up to ever-higher levels, resulting in a market where people must pay more for the same type of housing. Hence financialization can be defined as an inflationary tendency in the housing market that is induced jointly by banks’ desire to expand mortgage lending and buyers’ confidence that the value of their properties will rise.

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However, the image of a bubble bursting and prices returning to a more rational “equilibrium” level does not seem to apply to the housing market. Because housing is a necessity, people are willing to pay high prices for it. Bidding wars can therefore persist even when relative supply grows, so long as credit markets enable them.

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[–] 1 point 9 months ago (3 children)

That's what I'm saying, there's too many people in houses that aren't the right size for them. It's not a supply issue, it's a distribution issue.

If you make 1100 dinners, and there are 1000 people, but you give two dinners to 400 people you're going to run out before everyone gets a dinner. There's no shortage of dinners though, it's simply a distribution issue.

People don't have to stay in a house that's far too large for them. Allowing or encouraging them to do so is actually a huge problem.

My parents are a perfect example of this, they have a house with 4 bedrooms, and a suite with 1 more bedroom. They had the suite rented out, but decided they didn't need the money so they stopped. It's literally just the two of them in a 5 bedroom house. They also have a one bedroom cabin elsewhere. Was that 4 bedrooms useful when they were raising my sibling and I? Sure, but we haven't lived there in 25 years.

We need policies that encourage scaling house size to family size, so that the distribution issue gets resolved. We need policies that encourage essentially force density in desirable locations. Those are the only way we solve the housing issue. We cannot, no matter how hard we try, build our way back to affordable housing.

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  • [–] 1 point 9 months ago (2 children)

    The government should scrap capital gains if you downsize to an appropriate sized house (and can prove you lived there with a larger family and they've moved out, to discourage house flippers just overbuying)

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  • [–] 2 points 9 months ago (1 child)

    There's nothing to scrap, Capital gains taxes are already already waived for selling your primary residence in Canada.

    My preference would be a policy that taxes all properties (just the land, not the building) and then refunding that money to every Canadian citizen (and maybe people who are on a PR track working towards citizenship) equally. That way if you have a big property with a high land value, and only 2 people living there, you're not getting most of your tax back, but if you've got 3 kids and 2 adults in a 5 bedroom house in a suburb, or the same in a townhouse closer to the core, you're breaking even, and if you choose to live as a couple in a 1 bedroom apartment (low land value per unit) or a larger place but further out of town where property is cheaper, you may even get a little bit of extra money back each month.

    That way people are paying everyone else for the amount of desirable land they want to consume. You want a mansion in downtown Vancouver, go right ahead, pay everyone else for that privledge. You don't need as much and are happy to have a small apartment just outside the core? Thank you for your sacrifice, here's some cash from Mr. Mansion.

    This scales nicely and encourages people to only use what they need at a given time, and also encourages development of density of properties that have high land values because people want to live there.

    It also directly taxes non-citizens who want to own land here. Paying every Canadian for the fact that they're consuming land in Canada.

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