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This Airbnb alternative won’t destroy Canada’s housing market
(breachmedia.ca)
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this post was submitted on 27 Oct 2023
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You can't redistribute your way out of a shortage. Any solution to the housing crisis that doesn't involve a shitload more housing is rearranging the deck-chairs on the Titanic.
It’s more than just that though. Adding more housing to the market without dealing with large scale short term rentals and people hoarding investment properties will just lead to more hoarding as the people who already own property use the basically nonexistent interest rate to leverage their assets to keep buying up more profit properties.
They’ve already tackled interest, but they still need to do the rest before building more will actually help.
In the meantime, freeing up housing not currently available to homebuyers who want somewhere to live would certainly help, and would free up more long term rentals as well, which would help with the absurd prices rentals have reached.
No. The fix is to correct the issue of investors.
Punishing housing taxes of 50% of the value of the house per year for every house per family beyond the first.
Ban ownership of housing by companies and all non-permanent residents.
Great, so some renters convert into owners, but net occupancy doesn't change, rent doesn't go down, and the market gets worse because there's less incentive to build more.
Then what?
If there's less chance of people being able to make bank on housing by buying up properties to rent out short term at $500 a night then housing costs go down even if supply doesn't go up. Those people are way more willing to pay $50k over asking than someone who will be paying the mortgage and living there full time.
I thought building more houses required backhoes and concrete, but you do it your way and see how that works.
I like the idea, but how would that work for apartment buildings?
The individual apartment owners have a share in the complete building.
This isn't a really good take, but I keep hearing it all the time. There's around 2.4 people per housing unit in Canada based on the latest data from Stats Canada and CMHC. That's not really a shortage, between families and room mates it's very easy to fit that 2.4 number into what we have available.
The "shortage" is people wanting it a) at a lower price and b) wanting larger housing than they currently have. c) wanting it in specific places that are highly desirable (specific cities)
I'm not saying it's wrong to want larger houses or want it cheaper, but there isn't actually a shortage of housing to meet people's basic needs.
If someone wants to eat a steak, but can't afford it, we don't say there's a shortage of beef. If someone had the money but couldn't buy it because it wasn't available at the grocery store or butcher, that's an actual shortage.
It's lower in every other G7 country.
2.4 might not sound like much, but then consider all the single people living alone. We could live in bigger groups like they do in the third world, but that's going to be unpopular with a lot of people.
Yes, yes it is. But again that's do to low supply shifting equilibrium prices higher.
"lower in every other G7 country" Sure it's technically lower, but I'd say that we're pretty fucking close to our comparable countries by lifestyle. We're 99.3% of the unit rate of the US, and 98% of the rate of the UK. We'd only need to build one more year of new units at the 2022 rate to match the UK rate.
You're missing the point though. What we WANT and what we NEED are not the same thing.
Is there there a shortage of Mansions in West Point Grey because I'd love to live there but can't afford it? No.
Pricing is the mechanism by which we balance WANT and NEED. If you want your own place, you can pay for it. It's not like someone who has money can't find a unit.
There is an underlying problem in the pricing, but it has very little to do with a shortage of houses. It has to do with wages and land value extraction.
That's still a lot extra if you want to catch up in, say, a decade, but I digress.
I don't think this is the first time I've encountered you pushing for the most technical sense of "shortage", but I still don't get why that's the hill you want to die on. We all agree there's an issue, whatever we call it.
Explain, if you would. It sounds like you have your own idea about why housing prices are higher than we will culturally tolerate.
I'll jump in and offer my (uninformed) opinion. It seems that housing is seen as more of an investment. Developers build higher end houses rather than lower income housing because the profit margins are higher. In this context, reducing the value of housing as an investment by making it harder for owning multiple properties while making it easier for people to own one house could go a long ways to settling out the cost of housing in the mid to long term simply by changing the incentives on what to build.
Short term, just getting some housing supply out of short term rentals and absentee investors hands could put some more housing on the market now.
Is it enough? I doubt it, but we can do more than one thing.
Oh, okay, so the "empty houses in Vancouver" idea. Now, I'm also uninformed about the ins and outs of landlording, but it sounds like you make a decent amount being a slumlord with maximally many tenants, too.
I can, at least, attest that investments usually have their own economic logic, and there's no free lunch there either. If you want to make a lot of money from an investment, you either come in with a big sum of money to start with, or you need to get lottery-winner lucky. That's why I was a bit skeptical about that explanation from the start, and why the physical lack of supply explanation seems like the simplest one now.
I think the "empty houses" isn't all or nothing. A house used for an AirBNB results in empty hotel rooms, and is "less full" than a rental that is rented for the whole month. Likewise a large house, with a single occupant is less full than an apartment building on the same land with even a 50% occupancy rate. This is the whole "missing middle density" comes in.
My impression is that developers would rather buy a bunch of land, throw up some upper scale housing, sell it, and move on. You are right that building an apartment building and renting it out is also a viable investment strategy, but it just seems that there are more developers selling houses than landlords building apartment buildings. Granted landlords kind of suck to, so condo's would be better I would think, but what do I know?
The shortage is investors hoarding.
Investors rent their units out. If there were too many investors, rents would crash because of a supply glut.
The reason investors exist is because there's a shortage. Things that are plentiful don't get people hoarding them.
Explain your reasoning to mulriple people I know renting a single room or a basement while the entire rest of house is empty due to the foreign owner moving back to thier country after adding a single person to get around vacancy law. one friend hasn't seen their owner in over 3 years. 3500 sq ft home empty. There are tons of these that drive housing scarcity and can't go above 2.4
There aren't as many as you think, and it's a small number in the scale of the Canadian housing market.
Remember, the residential ownership rate in Canada is still above 65%. Dedicated rental units add another 20-25% to that, then theres a bunch of smaller scale concepts that use up the remainder like multiple ownerships, vacation homes, etc.
I agree that the absent foreign owners need to be pressured out, they aren't helping, and my proposal to fix the housing situation does that as a side effect anyways. It's just not a big enough problem to move the needle compared to the actual problem.
Until we reign in land values appreciating, housing prices can't go down. Land values will not go down by zoning for more units, they actually go up when you do that.
Residential ownership at 65% includes people that buy a house and don't move in, but claim it is occupied. there is one across the street. Sold last year, nobody moved in weeds have grown through the porch boards. when trying to rent, many of the properties were foreign owned and manager said owner never comes here so you can rent as long as you like. However they wanted extra non legal terms like we would be responsible for house repairs etc. manager stated owner didnt care if it was rented or not. Had sat empty for more than six months...with no income. The owners are rich enough to just sit on properties. This happens more than you think, especially in Vanvouver.
Yes and no. They can only claim one residence, and they have to be PR status.
Vancouver(metro)is not the only part of Canada, it's only about 6% of the total units in the country.
Everyone claims they know a home that's empty, but they also know a few hundred that are occupied. They can't see the percentage is very low because of mental bias.
The residency rule is new. it will help, but you realize people lie right? A friend of mine knows a foreign owner, they own 4 places, they just put random family names on paperwork. They take actions to look like they want to fill with tennants, but they absolutely don't care if it stays empty, because the goal ia not a supporting income. i was renting a townhome via property manager, we had an issue that needed owner consent, and strata waa getting extremely frustrated that the properry manager could not provide service address or phone number of the owner. it is a absolute shit show in BC.
If these liars make up a large enough percentage of the market that they would actually impact housing prices, then why is there absolutely no data on them.
The government and other bodies estimate black market, underreporting, and unreported stats all the time. Everything from drugs through to illegal guns gets tracked. There's absolutely nothing on this though.
I don't have a problem with cracking down on these people, go right ahead, but the high cost of housing/land isn't a Canada only problem and is happening even in countries with little to no immigration or foreign ownership. That by itself should tell you that the primary factor is something else.
It's a very nice scapegoat. Go ahead and kill it and then tell me housing prices are affordable again, I'll be waiting. Luckily I bought my own house already, so that I can make a huge profit while these policies all fail. The government has no intention of actually fixing this, because the actual fix would upset too many voters (by devaluing their homes)
Probably the same reason BC had well known money laundering at the casino and through paying cash for housing and cash for exotic cars and did nothing for over a decade plus. i'm not saying it is the only driver, Airbnb takes homes out of the residential pool. As well as pandemic bumping costs. i'm totally on the fence about how to handle known vacancies. On one hand it needs to stop, but ratting out owners seems like when german neighbours rattes out jews to the ss. Just has a icky feeling of turning over people to tue gov't.
We had numbers on money laundering the entire time. The fix was being ignored, but not the reporting on it. In this case, there's no reporting on it.
The problem with this situation is that you're right, but not in the right way. Airbnb DOES take housing out of the residential pool. It's just not enough to affect prices by a significant amount. Even the highest studies I've seen say it accounts for less than 20% of the total increase in value we've seen over the last few years.
It's just a very easy to blame demographic, it's a small enough number of people and often foreign. Like I said though, go ahead and ban it, it doesn't bother me at all. Just don't come crying to me when 10 years from now housing is STILL more expensive than today because we didn't address the actual problem.
I'm a homeowner, I own one house. I'm the problem. My wife and I have made over a million dollars in appreciation over the last decade. Until that stops, housing will never become affordable. None of the proposals from governments address that at all, because it would hurt too many homeowners and they'd get voted out.
Until existing house prices drop significantly, we will never see affordable housing. Even if you managed to just stop them growing (0% growth rate in house costs) it would take something like 70 years for houses to become affordable at current wage growth rates.
You are right nobody will push for a fix because everyone has too big a mortgage that is not really the true property value in a normal market. So the problem remains under reported. The numbers to look at are what a house sold for compared to asking price. 15 yeara ago ( in Southern ontario ) you never paid over always under asking or close to. Different now since displaced Toronto owners bought in London amd Windsor. Here in BC we had 1 day on market and a flurry of "investors" dropping 50k to 100k over just to secure it. We also have bus tours and flyers for offshore buyers. Maybe it is difficult to equate linear connection numbers but a single house sold over asking drives up rest of "values" because the person that didn't make the cut on that place steps down a home level but offers more to secure it. Pushing the person in that market out. It has a knock on effect increasing price throughout the market, not just one house. And the biggest casualty is a low income earner being pushed to the street. so I don't see 1 out of 50 homes being Airbnb or foreigned owned as a 2% problem. Maybe I'm at the class level where I see how much it affects friends, family, coworkers, so claiming it isn't a big issues seems incorrect.
Yes, if demand is higher than supply, price goes up.
The problem is that demand for housing will ALWAYS exceed supply, not matter what. Even if everyone had a home, people would want bigger homes. Even if everyone had a detached home, people would want better views. Even if everyone had a detached home with a view, people would want a vacation home.
The demand for housing is effectively infinite. Unfortunately, the supply is constrained by reality. Even if we wanted to build five times as many units across the country, we couldn't. There aren't enough construction workers and there isn't enough material available.
You're suggesting that 2% of the market coming back available would help, and you're not wrong, it would help, it just would not move prices in any meaningful way for the people currently being pushed out of the market. We are building around that many units new each year, and prices have been going up 10-20% per year anyways.
Meaningful change means prices going DOWN relative to wages. That's not going to happen until land prices go down, and land prices won't go down until the government changes how we tax property so that regular homeowners stop making money off doing nothing but having got there first.
Agreed on wages vs prices. Homes are not affordable and I don't think they will be for my childrens generation. I'm not suggesting the 2% coming back into market will increase supply to lower prices, I'm saying stopping the seemingly endless cash from foreign investment would have a price impact so that average joe isn't competing with an offshore government backed purchasing fund.
While I ageee with you somewhat on the housing , I was in Windsor Detroit when you could pick up a property for taxea owing, or 2 bedroom detached for $20k simply because there were more homes available than buyers during a poor economy. The Toronto prices though soon changed that when people sold and moved to windsor detroit area. Now those houses are easy $300-400k
The average joe will still compete with the average joe, that's what I'm trying to say. There are 40 million people in Canada, plenty of bidders for housing in desirable areas, only about 15 million people live in the top 5 cities.
The residential ownership rate isn't going down particularly fast right now and it's still higher than it was 20 years ago, there's little evidence that all the property is being scooped up by foreign investors or corporations at all. It's mostly still the same Canadians buying property.
In BC in 2022, transactions involving foreign buyers were around 1% of all real estate deals. - https://globalnews.ca/news/9382591/bc-foreign-homebuyer-ban/ Yes the taxes and bans allowed PRs and others to buy still, but it's really not as big a segment of the market as people think, and the experts agree on that.
Maybe 2022 transactions were slow but this from 2019 says Vancouver has 11% foreign ownership https://vancouversun.com/news/local-news/dan-fumano-a-75-billion-snapshot-of-foreign-owned-vancouver-real-estate