Housing will never be affordable as long as it’s treated like an investment.
The government could solve the housing crisis, and then they’d have to deal with the crisis of elderly citizens who were counting on selling their homes for 2 million dollars to fund their lifestyle in retirement.
They’re going to pay a lot of lip service towards building housing these next 20 years without actually doing anything, because doing something would negatively impact property values.
It literally was affordable just fine when it was treated as an investment before, back in the '90s. It’s always been treated as an investment. What happened is we stopped building enough of it.
If you stop making enough food, people starve.
If you stop making enough housing, people go homeless.
Population growth of adults has gone up, while housing production of bedrooms has gone down.
I don’t get why this is complicated.
I thought the pandemic gave everybody a very harsh lesson about what happens to prices when we stop making stuff (two words: chip shortage) but I guess lessons are hard.
The only way it makes sense as a financial investment is if population continues to grow and homes values continue to rise above inflation - it’s inherently unsustainable.
Seriously, a simple though would show how bad of an idea financializing a basic human need is.
Homes are infrastructure.
No, this is revisionist history. The 90s were part of a nearly 15 year period when house prices were flat in Canada. For quite a few years your return would have been negative. People in the 90s were not thinking of their house as their retirement account.
We did stop making enough housing, but it’s precisely that artificial scarcity that is making people treat it as an “investment”. If we make enough, it will not be treated primarily as an investment anymore, which is how it should be.
The 90s followed the extremely high interest rates, which were why housing was flat. People couldn’t easily buy in, so demand was reduced.
But that just further corroborates the point: when housing was at its most affordable it was not considered a good investment.
It’s also important to note that housing remained flat even when interest rates went down, partially because of a healthy stock of non-market and market housing.
Housing will never be affordable as long as it’s treated like an investment.
Owning a home IS an investment. Renting is not.
Nobody would want to own a home if they didn’t get some kind of return on investment when it came time to scale down/retire/put it in your will, etc.
“Affordable housing” should really be “affordable renting”.
EDIT: if you’re going to downvote, at least explain why. This is the reality of the housing/rental market we all live in. Don’t shoot the messenger.
Do you get a return on investment directly in merely owning a car? No, of course not. People still buy cars. (To avoid confusion: cars open other economic opportunities, but just sitting on a car by itself is not an investment.)
On the other hand, if cars did become an investment, people would hoard cars and they would be less affordable for people who actually use cars productively. High real estate prices are similarly hurting the economy.
Cars and homes are two totally different things. Why even compare the two?
Also, some people do buy cars to resell at a profit. The vintage and classic car industry is one example of that.
Houses are an investment because they sit on land that increases in value over time. Some people don’t even profit from the sale of their house, but from the sale of the land.
What is the argument, then?
Stats Canada makes it clear that rental housing is affordable for those making less than the median income (25% of expenses spent on housing), and that most mortgage holders are not spending more than 30% of their household income on housing.
By definition, it’s all affordable if you aren’t making well below the median income for an individual (which is $32,000 after tax).
Can we use more low-cost housing? Absolutely.
I’ve never argued against that, but I think people need to understand the definition of affordable housing and what that actually means.
When you profit off of merely sitting on land, you are essentially leaching off of society. Economists call this “economic rent”, which is a kind of theft where a person gains from the productive activity of others, without producing anything of value themselves. This is why the nickname for a land tax is “the perfect tax”. You didn’t “produce” anything from the increase in real estate price. Like a car, your house structure itself is actually a depreciating asset and is worth less every year.
This is different from a productive investment like a share in a company, because a company can use that money to invest in useful capital, like factories or workers. This is why Canada’s obsession with real estate “investment” is causing the economy to contract in terms of GDP-per-capita.
Your last few paragraphs denying that there is a housing affordability crisis in Canada is completely and ridiculously outside the mainstream. Literally no expert agrees with you.
The reason to own a home is that it’s yours. You don’t have to obey the tyrannical whims of your landlord and you cannot be capriciously evicted. Homeownership is self-defense.
You’re being downvoted because this is the attitude that got us into, and is keeping us in, this mess. Let us be precise with terms: housing is not a speculative investment. You don’t buy a house because you presume it will appreciate 100-1000% by the time you sell it. That attitude leads to the paradox that the government is unable to stop: you either build/allow affordable housing, lowering prices and crashing people’s speculative investment, or you restrict new home building through restrictive zoning and NIMBYism run wild, letting houses appreciate to the point of unaffordability.
You buy a house to live in long term: to buy it back from the bank and own it all to yourself. You have right to sell it for an equal or roughly price tracking rate with inflation. That’s a good investment. Every Canadian has the right to buy affordable housing. Saying affordable housing is affordable renting is not only reductive but downright prejudicial: people don’t rent because they’re poor. They rent because they want the freedom to move without selling a house. They rent because they are building lives as students or young families or their careers. They rent because they choose to invest their money in something other than house equity. And all the real, concrete policies which help new homeowners (ie building more housing) help renters: these two groups are not at odds with each other.
