this post was submitted on 03 Sep 2023
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The solution is to build more housing.
So BlackRock can buy it and rent it out to people for $3,000 a month? What use is more housing if rich people who own 1,000 houses are just going to buy it? The solution is more complicated.
The solution is complicated because people can't agree on the problem.
As with your comment and subject of the article there is plenty of people that are perfectly happy with the housing crisis as long as the remain to the favourable side of it.
Partly because it varies regionally, but there are definitely some consistent threads woven across the country that could be pulled.
If there is too much inventory the price for rent will go down.
I don't think that will happen. The empty houses problem is probably much exaggerated, since it gives less returns then renting them out.
That would require making more land and increasing the capacity of existing high-use, aging infrastructure for water, sewage, power, and trash. I can find you a cheap place to live out in the sticks. Hell, the town down the road from me has brand new, 3BR 2.5BA 1900SF homes with garage for $270k (USD). You only need 2BR/1BA and 1100SF? $150k. Thing is, it's a 30-40 minute drive to the center of my 200,000 person MSA. But this isn't a fun, entertaining city with excellent walkability, public transit, a major airport, and multiple concert venues and public spaces so people aren't flocking to move out here.
That is part of the solution, the othee part is not letting a foreign owner buy a place and leave it vacant.
Why do people always specify "foreign" owners? I don't see how being born in Canada should enable one to hoard housing.
Because the people who are the actual problem love that Canadians are looking abroad for the source of the problem instead of a wee tad closer to home.
House Hoarding is also an issue, but at least a Canadian is going to rent it to make cash and provide housing. Foreign owners often sit on empty prooerties to move money from China (or elsewhere) and so you have a full house vacant. This creates a lot of housing supply issues thus driiving prices artificially. If we had enough units available for anybody looking, even canadian house horders woyld see rental price drop, and make it not so lucrative to rent
That's literally what price is for. The higher the price, the fewer people actually looking. Eventually equilibrium is found where what is for sale matches those serious about buying.
If you think there are more people looking than there are units, expect prices to climb a whole lot more.
It is actually the more demand drives higher price. high price doesn't stop people needing housing, it just means everyone pays more and affordable housing for low income gets bought up by middle income because the higher prices in their old home range. i'm in BC it has not stopped climbing, even though they are building everwhere. The 5 year old house across the street from me is empty with weeds growing up through the porch, because it got sold and the new owner did not occupy it.
An increase in demand at a given price will see the price climb, but in doing so demand will decline in kind. That is why the price rises β to allow those who demand something more to "win", pushing other parties who were interested at the lower price out of the market. "I would like to have something" isn't what defines demand.
Housing is more inelastic than a lot of things, but there is always a bowing out point. The average person might be able to eke out a million dollar home, but they'd never be able to buy a billion dollar home. They'd go find a tent to pitch in the forest, or something.
The data clearly shows that early 2022 was the top of the market. Maybe it will climb again, but for now that is not true.
People don't move to a tent when they have a family, they still buy a home or rent at high rates and do less living as a result. i have been iin BC 13 years it has increased every year, and new developments are constant. it is going to keep going up until there are more units in the supply than the demand. it is simple economics 101 with a fair market system.
They do when they can't afford a house. Like, actually can't afford a house, not just saying they can't afford a house on an internet forum while occupying one just fine behind the anonymous internet username.
Indeed, although BC prices peaked in 2022, so we're already there. The higher cost of housing on the backs of higher interest rates has no doubt quashed some demand. A higher cost sees a decline in demand. Imagine that.
Its a slow in sales, not that housing demand got less. people are just forced into higher rent situations instead.
Sales have slowed and people have found alternative options, but demand hasn't declined...?
Formally, demand requires desire to purchase a good or service β which I imagine is still there when it comes to housing, but also willingness to pay the price β which has clearly eroded, by your own admission.
In reality, the cost got too high and demand backed away. That's how it works. That's literally why we put a price on things which do not have an infinite supply β to scare excess demand away. Outside of a shortage, which is a situation where some external factor prevents price from rising, price will rise until enough demand is sacred away that the supply can meet what demand remains.
The houses get bought by the slightly richer class, demand for a house doesn't stop here when we have tens of thousands of new people moving to vancouver area every year. It means people pay drastic rent or , sublet half their living room has a living space, with the hope of getting into the market. Rates and price inflation prevents those wanting a home to actually aquire one. As soon as somebody does eek out enough they are competing in bidding wars here because of a housing shortage. Shortage produces upward pressure on pricing in every market including housing. Nobody is setting fake high prices thereby curbing demand. The prices are that high because it will get sold at that price, the demand is there for it. We need more units, more density, and stop letting people have vacant homes. Once that happens the market will deflate because there will be leas demand on available supply of units. i would agree with you if we had un sold units sitting on the market forever and then you can say demand is low, But we don't have that here, we have a shortage of dwellings.
But, again, hope is not demand. One must also have the willingness to pay the price. Running away to rent because you are unwilling or unable to pay the price is a clear sign of there not being demand from that segment of the population.
Literally the opposite. A shortage is formally defined as a situation where an external mechanism, such as government intervention, prevents price from rising.
It is a situation where demand exceeds supply, with price not being able to act as a corrective measure. Instead, a good or service will typically be acquired through lottery, first come-first served, etc. instead of going to the highest bidder.
In practice, it is likely you experienced a shortage of toilet paper at the onset of COVID-19. Because of price gouging laws, vendors were unable to raise the price of toilet paper to scare away the poor, and as such everyone was still able to afford it despite there not being enough to go around. It didn't matter how much cash you had in hand, there was no guarantee that you would be able to buy it.
You may have also experienced a doctor shortage. As we require medical doctors to receive the same payment for the same care no matter who the patient is, this prevents you from trying to pay more to secure your spot ahead of the poorer guy next to you. This means that service is provided, typically, on a needs-based basis instead of a price-based basis.
Price rising to correct for excess demand is in no way a shortage. That's a normally functioning market. Calling that a shortage would mean that essentially everything in existence is in shortage, which would make for it to be a rather pointless distinction.
Exactly. We've found equilibrium. The number of homes on the market is quite well matched to the number of actual buyers in the market. There are a lot more people wishing they could buy, yes, but that is absolutely not demand. Hoping and praying is quite different to actually putting money where your mouth is.
Here rent can exceed mortgage monthly price, the high prices mean higher down payment which many cant afford, but housing demand doesnt go down, there are more buyers than units, thus price remains high. Everything else you listed goes against supply and demand theory so I can't have an on going conversation that contravenes known economic theory. Hope you have a good rest of your week.
No doubt. Mortgage costs are but a tiny fraction of the cost of owning a home. If rental costs are anywhere near the mortgage cost you have found yourself one hell of a steal!
You really think that if I show up with a billion dollars, I wouldn't be able to find a home to buy? That's silly. Demand is perfectly satisfied by the supply.
Those who desire, but lack willingness, are not satisfied by the supply, but they don't matter. They're just metaphorical 13 year old boys with a Ferrari poster on the wall, wishing that they could afford to have one. That's not demand, literally. That's just dreaming.
Go on.