Forty years ago, just after she became Britain’s prime minister, Margaret Thatcher launched a revolution that transformed her country. Under a policy known as “Right to Buy,” she made property owners out of thousands of people who had been living in public housing.
In the four decades since the policy was introduced, the program has run its course as many of its original aims have been subverted by investors looking to make a quick buck and an overall housing shortage that has sent British property prices skyward.
Still, in its initial incarnation, the policy that allowed low-income renters to purchase their council house at a discount to the market price was an overwhelming economic and social success. It seemed to validate the idea that owning your home makes you a better citizen.
“There is in this country a deeply ingrained desire for home ownership,” Michael Heseltine, who oversaw the policy, told the British House of Commons in 1980. “The Government believes that this spirit should be fostered … [It] encourages a personal desire to improve and modernize one’s own home, enables parents to accrue wealth for their children and stimulates the attitudes of independence and self-reliance that are the bedrock of a free society.”
Since then, governments around the world have come to the same conclusion. Policies promoting home ownership, particularly among minorities and low-income earners, have been championed by politicians on both the left and right. Canadian governments have got in on the act, progressively loosening lending rules and subsidizing first-time buyers.
And, as the head of the Canada Mortgage and Housing Corporation sees it, they’ve created an enormous mess, leaving us with a housing affordability crisis and “a divisive inequality gap that drives us apart at a time when that feels increasingly dangerous.”
In a strident speech last week, CMHC president Evan Siddall took a swipe at many of the policies promoted by the government that employs him, including (without directly naming it) the First-Time Home Buyer Incentive (FTHBI) introduced in this year’s federal budget.
There is a certain irony, if not tragedy, in the fact that government policies that subsidize home purchases only end up making the dream of home ownership ever more elusive for millions of Canadians by driving up prices. That might not be the case if provinces and municipalities eased zoning laws and greenbelt policies that prevent densification. But by stimulating housing demand while restricting supply, our governments are working at cross-purposes.
Politics is at the root of our dysfunctional housing market. Ottawa artificially boosts demand with programs such as the FTHBI to woo millennial voters, who have been conditioned to believe that home ownership is their God-given right because, well, their parents’ generation had it so easy. As if the minimum 25-per-cent down payments and double-digit mortgage rates that were once standard was having it easy. Buying a home has always involved sacrifices.
So, what if the joke’s been on all of us house-poor, renovation-obsessed and HGTV-addicted homeowners (owners being a bit of misnomer, given that most of us with mortgages will never truly “own” our home) all along? What if we’ve been sucked in by, as Mr. Siddall calls it, “a real estate industry that is drunk on its excess?”
“We need to call out the glorification of home ownership for the regressive canard that it is,” Mr. Siddall said in his speech. “Renting is a perfectly valid option, and may, in fact, be the best long-term option … Overpromotion of home ownership is both economically and socially counterproductive, contributing to the increasing division between rich and poor.”
Of course, he’s right. But we just can’t help ourselves. Buying a house may be the most irrational purchase most of us will ever make. Yet, we will go to ridiculous lengths to indulge our irrational sides. We try to justify plunking down more than half of our disposable income on mortgage payments, property taxes and (in many cases) condo fees by telling ourselves that we’re building a nest egg for retirement. But it’s mostly a lie.
The truth is, human beings have always associated home ownership (even when it wasn’t called that) with status and safety. A rented dwelling may provide both of those things, but we are hard-wired to own. Even Cuba has come to recognize that. With home ownership comes a sense of control over our lives. And our most powerful emotions are the most irrational ones.
If you’ve ever watched Love It or List It on HGTV, you know what I’m talking about. The amount of emotional energy we are willing to expend on a home that we own is one of those untreatable conditions that makes us human. The feeling that comes with owning your home may be overrated, but it’s still pretty glorious. You will never reach that high in a rental.
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