Real Estate discussions

[ecbin]

Originally Posted by BaddieB

If the government is buying these apartments, it artificially increases the prices of the housing as there is now more demand for the housing than there otherwise would have been. It makes the housing more expensive for everyone else, even if marginally. This is 'crowding out' the market.

There's also the opportunity cost. This is a billion or so dollars that the government taxed its people, who could have spent it better on themselves than the government could have.

Condos are also a depreciating asset. Unless we want the government to now have an incentive to keep the rents on these condo high to eek out a profit, which again is not good for affordability.

It's a lose-lose.

The government has been involved in the housing market one way or another forever and, in particular, they have been in the social housing business in some way since the 50s (with the biggest drop-off in the 90s when we had the debt crisis). I live steps from a social housing project and we've got huge developments in the south of False Creek and in Champlain Heights (and many others) that are forms of subsidized housing for Canadians.

If you don't think the government should be in the housing business in this way then nothing anyone says will change your mind about this no matter how it's run.

I'm mostly a "let the market decide" guy - I want liberal zoning rules so that we can a shit tonne of housing so prices come down that way but I'm also cognisant that it's not the only solution and it's also not going to work for all demographics so you have to have some component of gov't intervention especially in a housing crisis.

[chowhou]

Originally Posted by ecbin

- The GST rebate solution for Ontario wasn't useful here as it would only help 2nd time home buyers, they wanted to help first time home buyers.

What kind of logic is this? The GST rebate is for new homes. New homes help first time home buyers.

[BaddieB]

Originally Posted by ecbin

The government has been involved in the housing market one way or another forever and, in particular, they have been in the social housing business in some way since the 50s (with the biggest drop-off in the 90s when we had the debt crisis). I live steps from a social housing project and we've got huge developments in the south of False Creek and in Champlain Heights (and many others) that are forms of subsidized housing for Canadians.

If you don't think the government should be in the housing business in this way then nothing anyone says will change your mind about this no matter how it's run.

I'm mostly a "let the market decide" guy - I want liberal zoning rules so that we can a shit tonne of housing so prices come down that way but I'm also cognisant that it's not the only solution and it's also not going to work for all demographics so you have to have some component of gov't intervention especially in a housing crisis.

The problem with social housing is that it takes money away from people who spend their own resources to shelter themselves. If you paid for your own housing, you are also paying for other people's housing, which makes housing effectively less affordable. Sure, there are ways to have a social housing program that could theoretically be profit-neutral, but I don't think Canadian governments today have a good record of that, and there is zero incentive for politicians to achieve this other than re-election.

I think people who live in expensive coastal cities just cannot imagine markets working for housing. But it can. Texas does not have rent control and barely has a government housing presence, yet you can get a 2-bedroom apartment, 700-900 sqft, for $1000 a month. I see plenty of promotions for two to three months of free rent. Sure, Texas has a lot of land, but Metro Vancouver has plenty of room for infill.

For those who really need assistance, I'd rather just give them money directly so they can decide what housing works for them rather than the government deciding. It preserves the market effect.

[Migrant_Coconut]

Originally Posted by whatnext

Apparently someone forgot to tell Gregor..

Gregor's an idiot, remember?

Originally Posted by ecbin

- The GST rebate solution for Ontario wasn't useful here as it would only help 2nd time home buyers, they wanted to help first time home buyers.

On top of that, GST's only 5%... so what, buy 20 houses, get one free?

[ecbin]

Originally Posted by chowhou

What kind of logic is this? The GST rebate is for new homes. New homes help first time home buyers.

It's for new homes AND first time home buyers. The Feds wanted to make it for all buyers of new homes which wasn't what Eby/BC wanted - they wanted to focus on people trying to get into the market for the first time.

Developers, OTOH, wanted it since it was a big break for them.

[ecbin]

Originally Posted by BaddieB

The problem with social housing is that it takes money away from people who spend their own resources to shelter themselves. If you paid for your own housing, you are also paying for other people's housing, which makes housing effectively less affordable. Sure, there are ways to have a social housing program that could theoretically be profit-neutral, but I don't think Canadian governments today have a good record of that, and there is zero incentive for politicians to achieve this other than re-election.

"The problem with public schools is that it takes money away from who want to spend their own resources to educate themselves"

Isn't the whole point of government to take money away from people and spend it on things that are public goods?

Originally Posted by BaddieB

I think people who live in expensive coastal cities just cannot imagine markets working for housing. But it can. Texas does not have rent control and barely has a government housing presence, yet you can get a 2-bedroom apartment, 700-900 sqft, for $1000 a month. I see plenty of promotions for two to three months of free rent. Sure, Texas has a lot of land, but Metro Vancouver has plenty of room for infill.

I've been in Saskatoon where a nice home costs $300k which is less money that what it costs to construct a 600sf laneway in Vancouver so yes I can imagine a world where the markets work. Even if I got my way and up zoned the entire GVRD to allow 6 story wood framed single stair homes on any lots it wouldn't make a dent in the housing crisis in the next 5 years so it feels rather cold to say tough shit to the people who need housing NOW.

Originally Posted by BaddieB

For those who really need assistance, I'd rather just give them money directly so they can decide what housing works for them rather than the government deciding. It preserves the market effect.

Well, we seem to hate handouts as much as bailouts.

[Migrant_Coconut]

Originally Posted by BaddieB

Sure, Texas has a lot of land, but Metro Vancouver has plenty of room for infill.

We really do not need Texan infill. Houston has 20+ lane highways, the ninth-worst congestion on the continent, and only 36% park coverage.

[BaddieB]

Originally Posted by ecbin

I've been in Saskatoon where a nice home costs $300k which is less money that what it costs to construct a 600sf laneway in Vancouver so yes I can imagine a world where the markets work. Even if I got my way and up zoned the entire GVRD to allow 6 story wood framed single stair homes on any lots it wouldn't make a dent in the housing crisis in the next 5 years so it feels rather cold to say tough shit to the people who need housing NOW.

Vancouver's housing market is already correcting. Rent and housing prices are continuing to go down despite inflation. There is indeed a 'dent' happening, and we just need to let that continue by getting out of the way. Markets work.

Originally Posted by Migrant_Coconut

We really do not need Texan infill. Houston has 20+ lane highways, the ninth-worst congestion on the continent, and only 36% park coverage.

We don't need Texas sprawl but we need Texas supply if that makes sense

[Migrant_Coconut]

Originally Posted by BaddieB

We don't need Texas sprawl but we need Texas supply if that makes sense

They’re literally one and the same. Both stem from Texas not zoning anything whatsoever.

[MalcolmTucker]

Originally Posted by BaddieB

If the government is buying these apartments, it artificially increases the prices of the housing as there is now more demand for the housing than there otherwise would have been. It makes the housing more expensive for everyone else, even if marginally. This is 'crowding out' the market.

How is it crowding out? As long as the units are occupied, there is no crowding out.

[jollyburger]

Condos in Vancouver will be excluded from the deal because the math doesn’t work, said Eby, and the government will focus on units it can acquire at below the cost of construction or through bankruptcy proceedings so “it doesn’t provide a cent of profit for developers.”

Only first-time homebuyers will qualify. If it’s anything like the NDP’s other housing programs, there will be income testing that renders most middle-class buyers ineligible anyway.

Carney, for his part, sounded frustrated at the whole debacle.

“I don’t think we’ve done, myself included, a particularly good job at rolling this out and explaining exactly what this is,” he said.

Within that information vacuum, Conservative Leader Pierre Poilievre has flooded the zone with phrasing describing the program as “a transfer of wealth from the have-nots to the have-yachts” that benefits Liberal friends in the development sector. Carney had to deny Thursday he’d been put up to the idea by donors.

The federal Liberals must be furious.

This is not the housing package Ottawa wanted to sign with B.C. Carney had proposed dropping the 7 per cent GST on new home purchases in B.C. The goal was to emulate Ontario’s housing deal, which is effectively a broad-based tax cut on new homes for all sorts of middle-class buyers that has been a shot in the arm for the real estate sector.

But B.C. said no.

Housing Minister Christine Boyle wanted a “made-in-B.C.” housing plan and dragged out negotiations.

Instead, all she and the BC NDP have ended up doing is creating a made-in-B.C. mess.

https://www.biv.com/news/commentary/rob-...cle-leaves-eby-on-the-defensive-12476735

[Alex Mackinnon]

Originally Posted by BaddieB

Then why not let other investors buy in bulk? Why hasn't that happened? Probably because the business case makes no sense as the asking prices are again, above market. If it's not selling, it is above market. If there are no buyers, you either lower prices until you get a sale or hold it and not get a sale.

But instead of letting house prices fall, the government steps in to artificially inflate demand and prices so a lucky few people can get subsidized housing. Housing is more expensive than it needs to be for everyone else, via taxation and inflated prices, so that two thousand or so people can have subsidized housing.

I just need to subsidize demand

Do other investors have the ability to borrow at gov't rates or print their own currency? Might be a key distinction.

[whatnext]

Originally Posted by jollyburger

https://www.biv.com/news/commentary/rob-...cle-leaves-eby-on-the-defensive-12476735

Yes, the article pulled no punches. The danger of rushing out policy made on the fly..

...Eby tried to blame Ottawa.

“The federal government wanted us to come out early when the prime minister was in town to share the details,” he said. “I think in hindsight we should have waited and made sure all the details were available.”...

[MalcolmTucker]

Originally Posted by whatnext

Yes, the article pulled no punches. The danger of rushing out policy made on the fly..

...Eby tried to blame Ottawa.

“The federal government wanted us to come out early when the prime minister was in town to share the details,” he said. “I think in hindsight we should have waited and made sure all the details were available.”...

It would be funny, but the policy has been under development for at least two years now. That it went over like a lead balloon in the run up to the last election, and similarly now, shouldn't be a surprise.

[BaddieB]

Originally Posted by MalcolmTucker

How is it crowding out? As long as the units are occupied, there is no crowding out.

The crowding out effect refers to the decrease in private sector investment due to increased government borrowing and spending, which can raise interest rates and reduce available capital.

By stepping in as a massive buyer of last resort to buy thousands of vacant condos, the government artificially prevents prices from falling to a natural market bottom, crowding out everyday home buyers who are waiting for housing to become actually affordable. They also taxed money from people to fund this, which is the other side of the equation.

[BaddieB]

Originally Posted by Alex Mackinnon

Do other investors have the ability to borrow at gov't rates or print their own currency? Might be a key distinction.

That quite literally crowds out the market.

[MalcolmTucker]

Originally Posted by BaddieB

The crowding out effect refers to the decrease in private sector investment due to increased government borrowing and spending, which can raise interest rates and reduce available capital.

By stepping in as a massive buyer of last resort to buy thousands of vacant condos, the government artificially prevents prices from falling to a natural market bottom, crowding out everyday home buyers who are waiting for housing to become actually affordable. They also taxed money from people to fund this, which is the other side of the equation.

The properties are financed today. They'll be financed in the future. Doesn't make one iota of difference on crowding out, unlike lets say, borrowing $100 billion to pay for military spending.

On the market bottom side, I guess that could be true, but I wouldn't use crowding out to describe it.

[BaddieB]

Originally Posted by MalcolmTucker

The properties are financed today. They'll be financed in the future. Doesn't make one iota of difference on crowding out, unlike lets say, borrowing $100 billion to pay for military spending.

On the market bottom side, I guess that could be true, but I wouldn't use crowding out to describe it.

1. It crowds out the market because capital is extracted from the private economy via taxation
2. The gov uses its borrowing power to out-finance and displace regular buyers.
3. Aside, Moral hazard

[kikin]

What is with all the political parties jumping on the "real estate affordability" situation all together now, claiming there is a "real estate crisis" when realistically prices are lower and more affordable now than they have been in years?? All of them seem to be on the same populist page with the "housing crisis" meaningless slogan.

There seems to be two different directions they are coming from though, Carney's definition of "crisis" is that builders can't sell their developments, whereas others think the "crisis" is that the prices are "too high" and want everything to crash (which would be hugely damaging and all of the Canadians already struggling to pay their mortgages will take it up the proverbial on all sides then)

The real lack of affordability with anything we have to deal with now is the insane taxation levels we have to pay and the lower standard of living we have due to our country's economic uncompetitiveness and slowly declining dollar with more government debt servicing to look forward to as we go along.

[ecbin]

Originally Posted by BaddieB

1. It crowds out the market because capital is extracted from the private economy via taxation
2. The gov uses its borrowing power to out-finance and displace regular buyers.
3. Aside, Moral hazard

I mean, the govt in all forms, has been in the real estate business forever. All branches of govt own lots of land in prime locations and some actively buy real estate all the time for development purposes. In some cases they buy it for their own use but in other cases it's for development purposes to make money (Translink now has a real estate arm).

NO ONE seems to complain about those uses of public money crowding out the market but this $1.4b experiment is the ONE use that's not ok because it's buying completed developments rather than buying holes in the ground.

And in this case the gov't is buying these homes on a temporary basis - they will be flipping them all and attaching subsidies to them anyways so the $1.4b won't end up being close to that amount (the actual spend is $300m).