Today, readers are responding to The Globe’s weekend read: Bubble trouble: In Vancouver’s housing market, pain has set in. With falling sales and prices, patient buyers are sitting on the sidelines, waiting for sellers to face reality
I am a Vancouver homeowner and I am delighted to see the values drop. We were destroying our city. Now we just need to get a city council that stops wasting our money.
As a 32-year-old, I am definitely feeling the schadenfreude here. Housing prices are unrealistically high across much of the country, and I would like few things better than to see that market crash so that I can have a shot at buying a decent house myself.
The fallout from the end of the housing bubble will likely lead to a "Made in Canada" recession from which there may be no easy exit. The oil industry isn't in any position to bail Canada out this time, unlike 10 years ago, especially in our political "climate" --pun intended-- of anti-oil governments in Ottawa, BC, and Quebec. Interest rates are already close to rock bottom, and we've already been "priming the pump" with deficits in non-recessionary times, as a result of which neither the Bank of Canada nor the federal government will be in much of a position to help with monetary or fiscal policy. Nor would a strong economy outside Canada do us much good. That's because business investment per worker in Canada over the last four years, and in many provinces, much longer, has been absolutely pathetic, at about 50% of the OECD average east of Manitoba and 58% in BC (CD Howe Institute). Even in Alberta and Saskatchewan where it's still above the OECD average, it's well below four years ago. However, the real worry for all Canadians should be the unknown effect our credit and debt frenzy may have had on the stability of the financial system in the event of a recession.
We can thank the BC Liberals and the Federal Government for the housing bubble. They both knew it was fuelled by organized crime and cared little and did nothing to protect the hard working families in Greater Vancouver. Hopefully this inquiry will get some of the regulators and gate keepers under oath to see why everyone but them knew what was happening to inflate prices.
Tempsperdue in response:
Hopefully the beneficial ownership act will be applied countrywide.
The con game of BC real estate is finally being exposed. Foreign buyer / vacant property taxes should be sky high and there should be strict regulations related to where the money is coming from and third-party owners. Without these we are squandering the ability of anyone under 25 (who already only find minimum wage jobs with university educations) to buy and becoming a nation of renters.
I have absolutely no sympathy for anyone who allowed themselves to get so caught up in the bubble that they thought even $7 million is a reasonable price on anything. And better that someone who could come up with that kind of financing get left holding the bag than your average Vancouverite, the ones who have been totally left out of the market for the last decade or so.
Given the issues of this housing crisis it is time to consider ending the commodification of residential property. Housing is is the largest ‘investment’ most people will ever make. They take on enormous debt over decades, and then add more through helocs that add more debt and uncertainty. We have an economy reliant on trading in residential property that benefits a few sales people in real estate, mortgage brokers, lawyers, renovation contractors and criminals. The problems we face range from money laundering to a looming debt crisis where the average Canadian carries 170% debt to income. This is made worse by speculation, homelessness and governments that rely on milking the cash cow of real estate rather than implementing rational fiscal policies. Ownership across Canada needs to be fully transparent including the necessity of proving income has been earned and taxed in Canada. Businesses could no longer hide behind numbered companies and shuttle money around between them. Every residential property would have an individual owner who has to prove source of income to purchase and own property. It’s a reasonable start.
Without foreign money, the Vancouver market would not be at this level. Let the market tank and affordable housing will return. Cater to the majority, not to only the rich.
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