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Why it might be several years before homes are more affordable in Canada
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this post was submitted on 11 Aug 2023
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Homes will never again be affordable because the system is completely broken (and not broken in the Millhouse expression, but rather in a normal definition). We made housing a commodity rather than a necessity of life and it ended with predictable results.
Now we have the unpleasant decision of diluting the investment of millions of Canadians or continuing to allow millions of Canadians to never own a home.
man that sounds like a win win, fuck investors
Sorry, you misunderstand slightly.
I don't mean investors in the sense of speculative parasitic humans who are devaluing life by overvaluing housing.
I mean, people like me who have worked from the age of 15-49 and now own a very modest sized apartment that is grotesquely overpriced and has quite literally enslaved me to mortgage payments for years to come.
If we devalue my apartment, why did I spend decades of sweat and toil to purchase it? Then it feels like I was playing the stock market.
And this isn't the same argument as the "why should people get free school when I had to pay student loans" since one doesn't affect the other. In this situation, if the value of homes come down too significantly, it's literally devaluing my work.
I didn't create the horrible dystopian system we live in but I do unfortunately have to abide by its rules. And now that I have a tiny piece (on paper but owned by the bank) I am hoping (like most Canadians) to take that piece and cash out to retire on in 10-15 years time.
What I'd really like to see is some kind of national housing strategy that guaranteed people basic housing regardless of their income (even if it's "zero"). That housing wouldn't impact the market but it could slow down the unhealthy growth of the valuation of housing.
If we could totally slow housing valuation growth to the normal 2% inflation, while also creating affordable housing for lower income/no income earners, then the system could adjust and that could be a true win win.
a place to live?
Exactly! Imagine if I said, "If we devalue my car, why did I spend years of toil to purchase it?" I'd look crazy. You buy a car for its innate utility, just like you buy housing for its innate utility. Cars ain't an investment, and neither should housing be. Possession of artificially scarce property should not be the key to free money taken from those with the misfortune of being younger or later to market than you — that's exactly the mechanism speculators and landlords exploit, driving up economic inequality and making life 100x harder for the rest of us.
Mine are. I expect them to deliver positive return. I could not justify the cash outlay otherwise.
I know some well-to-do gear heads out there buy cars purely for enjoyment, but that's beyond my capabilities and sensibilities.
Exactly. This is basically the reality for everyone stuck renting.
What a thoughtful and respectful comment/response! This is why I come here and have stopped using reddit entirely
I considered the price of housing to be inflated, so instead of buying a home, I rented and invested the difference in the stock market.
Why is it okay for me to lose the the hard-earned money I invested in the stock market, but it is not okay for housing prices to go down? When stocks go down I still need to pay rent every month, but when house prices go down you don't lose your home.
Either we treat housing as an investment, in which case we need to accept the risk that prices will go down, or we treat it as a basic life necessity, in which case it must be affordable. We can't say: "I bought a home with my hard work, so now it must pay for my retirement".
Very well put.
I never wanted my house to be a stock market investment. It's just that I want some consistency. Tell me what I'm getting into. Are we playing this game where we bid for overpriced housing as a supplemental retirement benefit? Or are we building a better future where the former doesn't matter? I just don't want to get fucked, that's all.
But earlier you also said:
I.e. you see your home as an investment from which you expect to see a positive return, but now you are afraid that it may lose some of that value.
I get it: I would also like my investments to grow. The reality is that investing comes with risk. People who want to minimize that risk keep their money in a savings account, a GIC, or treasuries. With low risk come low returns, though. There is no free lunch.
Here is what is different: when we overbid for housing and it becomes expensive, real people suffer from homelessness and overcrowding. The same isn't true of stocks or other investments.
No, I don't see it as an investment. The way the system works sees it as an investment. We've created a system whereby housing is overvalued because it's meant to have inflationary payoffs.
My parents didn't see our home as an investment. They just bought homes at random that were close to where they worked and seemed good for kids.
There's no option for me to buy a place that isn't an investment because that's the very nature of the market.
in a way you already got fucked by buying an overpriced house and even if housing prices go down, you only get fucked more if you buy a cheaper hose relative to your current one, and only way you can really benefit from higher housing prices is also by buying a relatively cheaper house and pocketing the difference
"Waaaaaaah! I bought it as an investment! I shouldn't have to deal with the results of an overvalued investment going through a market correction!"
When you say "fuck investors" do you also mean everyone who has any savings or pension? Because these people are investors.
Like, fuck me for opening a HISA and contributing to my RRSP?
Nah I know the system that regular workers have to use for retirement, because the system's warped to only work that way. And then they get shitty, or no retirement because of how it works, they're competing in a contest that rewards the wealthiest, and the prize is more money. It should be truly savings, from an income not obliterated by the wealth inequality we have from an investment economy, or better supported by taxes from the new generation of workers, that right now have been steadily becoming less and less able to support retirees, again from wealth inequality because investment is a broken feedback loop that concentrates money away from the bottom.
Lots of people have to make use of systems they dont agree with.
The math is very simple:
There are more people wanting to buy a house than the number of houses available
Are you talking about Canada explicitly? Cause according to this article there’s about 28 vacant homes per every by homeless person (but this is for the US):
https://unitedwaynca.org/blog/vacant-homes-vs-homelessness-by-city/
It's similar for Canada.
Quote from 1st link below:
https://betterdwelling.com/new-data-shows-canada-still-has-1-3-million-vacant-homes-some-improvements-seen/
Also of possible interest, a comparison of some major Canadian and US cities:
https://homefreesociology.com/2022/02/15/unoccupied-canada/
A house being vacant doesn't mean it is available.
We didn't, though. A commodity is interchangeable. Housing is not interchangeable. A house in Iqaluit cannot meaningfully replace a house in Toronto. If housing were made a commodity it is likely we wouldn't have the problems we have, but since we have never done such a thing...