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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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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