Marco wrote in with a link to this story in the Globe and Mail. Some of the most expensive cities in Canada saw price drops in new homes for October 2006: This happened in Toronto, Victoria & even oil-rich Calgary. Meanwhile in the US there is a debate over how bad their housing slump is going to get. Realtors think the worse is over, but some academics and economists disagree, with one even saying the housing glut weâ€™ve seen is comparable to the tech boom of the late â€˜90s.
So what the hell is going on here? How can we be seeing price drops with a vibrant economy and all that valuable sludge still left under the sand? Could it be that Real Estate in many places around the world is over-valued, propped up by many years of cheap credit as a ‘safe’ investment? And just how much pressure are we going to have to let out of this bubble to keep it from popping?
Obviously we’re going to need more buyers, and it appears like the answer might be closer than you think: Vancouvers booming homeless population needs shelter and we’ve got thousands of new condos being finished downtown over the next couple of years. While some people have the housing issue under control others clearly do not.
There are two ways we could approach this thing:
1) Tough Love: Outlaw homelessness, convert new empty condo units to prison cells and incarcerate the lot of them.
2) New Customers: Work with lenders to create mortgage products aimed at the homeless population, ‘zero down’ and ‘stated income’ could be helpful here.
Option 1 could be VERY expensive tax-wise, so it may not be the smartest move. The only potential flaw with option 2 is that it will take a lot of bottles and cans to get the funds together to cover legal fees and mortgage insurance, and some banks may be hesitant to lend to this market.
If nothing else works I suppose they could just go out and get a real job.