The Elephant on the Campaign Platform
As we all know, BC has one of the biggest housing bubbles in the world. The collapse of the global housing bubble is directly responsible for the economic crisis we now find ouselves in. So we would expect BC’s political parties to spotlight this to demonstrate their grasp of economic issues, right? Wrong. None of the parties uses the phrase “housing bubble”, or even ventures the thought that maybe housing in BC is too expensive and prices have to come down.
At least the Liberals are giving us what we would expect. They have been cheerleading this bubble all along, so why should they stop now? But why the silence from the other parties?
The housing bubble is the greatest scam ever perpetrated on workers by the rich, yet the party of the workers, the NDP, won’t mention it. It’s also the biggest misallocation of resources ever seen in a market economy, yet the party of sustainable development, the Green Party, has nothing to say either.
What do the party platforms (available on their websites) have to say?
“Pushing the federal government to change federal tax laws to encourage the development of market rental housing … Encouraging new market rental and co-op housing through the Market Housing Partnership Program in concert with the private, non-profit and cooperative housing sectors.”
Developers build condos rather then purpose-built rentals because condo owners are willing to pay prices out of line with rental value. They cannot be incented to build rental housing unless the government takes the role of the condo specuvestors by supplying cheap capital. This is a subsidy to land owners and developers. It will not affect market rents.
“BC Greens will establish a provincial housing program that works with municipalities to build affordable housing or to purchase existing housing that can be moved into permanent rental housing.”
This is a subsidy to existing property owners and developers. If housing is not affordable prices must fall. The housing has to be rented out at market anyway. Purchasing existing stock does not affect rental supply.
“Commit 1% of the total provincial annual budget to solving the housing crisis.”
The “housing crisis” is simply one of inflated prices due to speculation. The government does not have to spend a dime to end speculation.
“Mandate BC Housing Corp to purchase units of market housing within current or stalled projects to provide an expanding pool of permanent below market and market rental housing”
Can you believe this? An outright handout to the developers. These projects will have to be sold anyway, either to owner-occupiers or landlords at prices they are willing to pay.
I am not trying to pick on the Green Party BTW. They have more policy planks on housing than the NDP so there’s more to criticise.
Both the parties are trying to fix a problem that does not exist. There is not a problem with general rental affordability. The problem is with people with special needs who cannot afford the market rent.
To be fair, both parties do advocate programs to assist those with special needs or to allocate public lands for non-market housing. This is a legitimate role for government. Subsidies for market housing are not. They only make it more expensive.
There is one simple, universal measure the government could take to remedy the discrimination against renters built into the property tax system – a refundable renter’s tax credit equivalent to the homeowner’s grant. This would also be largely self-financing, because by requiring renters to document their rent payments on their income tax returns it would put an end to evasion of rental income by landlords.
How can the provincial government put a stop to speculation so that housing prices reflect rental value and no more? Easy. A speculation tax. For any property sold within, say, 5 years of purchase, all capital gains are taxed 100% by the province. Exempt principal residences and purpose-built rentals. Problem solved.
The provincial government could also increase housing supply at no cost, by assessing for taxation unimproved land that has been approved for development by municipalities as though it already had improvements. This would provide an incentive for municipalities to approve land for development and make it economically unfeasible for owners to sit on raw land, and so increase housing supply.
Revenue from these policies could be earmarked for providing housing for those with special needs.
The Liberals simply want to pretend that the current housing bubble, which is already collapsing, is sustainable. The NDP and Green Party both advocate spending money on schemes that would not make housing more affordable. But effective measures to make housing more affordable could actually bring in money to the government.
What’s the better choice?
As to who to vote for May 12, that’s up to you. I must say that distasteful as it may sound, I would prefer to see the Liberals re-elected. I don’t want to see anyone else blamed for the collapse of Gordo’s house of cards. Perhaps after the “golden decade” has been revealed to be fool’s gold all the parties can start getting serious about what kind of sustainable economic future is possible for BC.
Your comments are welcome as always.
-patriotz
RSS 2.0 comments feed. Both comments and pings are currently closed.
April 22nd, 2009 at 9:11 pm
Patriotz,
As usual, your observations are deeply thoughtful and highly knowledgeable. Please keep posting!
April 22nd, 2009 at 8:55 am
When do we ever hear realtors telling people NOT to buy? When do they ever advice buyers to wait because if they buy now, they will lock in a huge debt and with high mortgage rates down the road, their lifestyle will be severely ruined — no dining out, no travel, no Canucks playoff tickets, etc.?
The world is in severe recession right now. Jobs are disappearing and no one sees a light at the end of the tunnel. In the meantime, these snake-oil salesmen with their media whores keep saying that it’s a good time to buy. They must be trying to lure the newbies (first time home buyers) because the pros are certainly tuning them out. “When first-time buyers stop entering the market it’s like sand in the gears of the housing market,” says one snake-oil salesman. Translation? No newbies = no commission. Then they’ll have to actually work for a living (oh no!) They desperately want newbies to buy now, never mind the fact that these newbies (in their 20s and 30s) will have to eat pork-n-beans or spaghetti out of a can for the rest of their healthy young life. I personally would rather stick a shotgun in my mouth and pull the trigger.
Now is the time to delever (get rid of debt) and not to pile on more. Anyone with a right mind can tell you that.
The snake-oil salesman quoted above even went on to “predict” that home price would rise, while the economist predicted a “moderate” fall of 20% this year alone. http://ca.finance.yahoo.com/pe.....y-20090414. Also note the title refering to these scums as “housing experts”. ROTFL. Just when I thought I had seen it all, I have seen too much!!!
April 22nd, 2009 at 6:30 am
Patriotz,
That is ao similar to the black/white Chipman is capable of.
April 22nd, 2009 at 12:58 am
I like the idea of seeing the Liberals re-elected so no one else is blamed for the collapse of Gordo’s house of cards.
Some of you are articulate and visionary. Most of the candidates of all 3 parties are sad jokes.
April 22nd, 2009 at 12:37 am
Anon:
That’s when Levy starts insisting that its now a “great” time to buy a home in Vancouver because there has supposedly been a lot of lower-market action recently.
That reminds me of the famous scene in “1984″. A politician is on a platform ranting about how Oceania is the eternal enemy of the people, Then someone comes up and whispers in his ear, and the next sentence he starts ranting about how Eastasia is the eternal enemy of the people. Or was is the other way around?
I don’t know who are the bigger jackasses – people like Good and Levy, or the people who waste their time listening to them.
April 21st, 2009 at 9:47 pm
Heard the morons on CKNW this morning (thought I might get some meaninful feedback on BOC rate cut); my own fault though, havn’t tuned into any Corus station because those info-mercials were driving me nuts. The response of those two clowns to the most simple question asked by that caller ensured I will tune out, hopefully until they go belly up – cant come soon enough and be more deserving.
April 21st, 2009 at 9:20 pm
Just to pre-empt your comment, I guess I should have quoted you as “perpetrated on the workers by the rich”.
I still disagree with this statement – the “workers” perpetrated this on themselves by participating.
I love how people feel it is necessary to blame someone else for their own lot in life.
We all choose our own destiny in life.
April 21st, 2009 at 9:15 pm
“Perpetrated on the poor by the rich”…..
Are you kidding me you dolt.
Normally I am a fan of this blog, but if you think this bubble was anything but perpetrated on morons by morons, then you are surely mistaken.
I know lots of wealthy people renting apartments, and they didn’t perpetrate anything on anybody.
In any event, turning this into some rich vs. poor argument is a joke and you have lost a lot of credibility in my eyes.
April 21st, 2009 at 7:58 pm
The ‘deflation’ bugaboo is also being played out in Britian. The British Gov is using the same tired threats and recriminations there as ours is here. Thes bozo’s just don’t get do they, prices ‘inflated because they artificially pumped the sticker prices with cheap payments. There never was any increase in value per se, it’s all smoke and mirrors, and now that prices are ‘deflating’ the government is forecasting lower revenues…boo hoo.
http://www.dailyrecord.co.uk/n.....-21294927/
April 21st, 2009 at 6:23 pm
Yes, indeed. I have been sparring today with a realtor I connected with through Crigslist. His ad included all the usual pluses.
Naturally, I had to set him straight. And, naturally, he got his back up and sent me an “unpleasant” e-mail.
So, I replied…
You know what? These dunces won’t get it in a million years.
Soon enough, they’ll be whining, “What happened?”