Let’s get political

Yesterday we had an article about a politician seeking feedback on affordable rent in Vancouver – this feedback would presumable be used to lobby for government support of affordable housing.

Government policy at all levels affects rents and house prices in a number of ways, from zoning rules to tax law, but it is the belief of many people at this particular blog that one of the biggest market forces when it comes to house prices is the Canadian Mortgage and Housing Corporation. The CMHC has been buying up mortgage debt from banks and in 2008 were ordered to approve as many ‘high risk’ mortgages as possible to help support the housing market.

On that note, we received the following email from AZ:

With a minority conservative government, and a provincial liberal party teetering on extinction,  there is the ability to cause real change if everyone who is passionate on the topic is rallied under a common banner.

Therefore, I was hoping to have a posting that requests people to write to their MLA, MPs, City Council, and the media to inform them that there will be a political consequence for ignoring the current real-estate situation. And, most importantly – post what they have written to their elected officials on your blog, and if possible – the response that they receive.

Here is my story and what I wrote to my MLA and MP:

My wife and I are both professionals with “prestigious” (or so I am told) careers and are both university graduates with post-graduate degrees.  In most parts of the world the hard work and time we put into school and our current 60 hour work weeks would afford us a house we can call our own.  Unfortunately, salaries for most professionals in Vancouver are in the area of 20% lower than in other parts of the world for comparable work.

But with low wages, and high home prices – even responsible people like us, who have no debt (through hard work and sacrifice), and manage to save a good portion of their income (again through sacrifice) can’t afford a house without taking on ridiculous levels of debt  – in the mean time we are forced to pay high levels of rent.

My concern is that a bad situation will be made worse through bad policy – The solution is not about rent control, co-operative housing, or a hike in minimum wage: it is through prevention of market speculation on housing – anything else is a bandage solution.  The victims of this practice of speculation are far and wide – from the young professionals, to the blue-collar worker, to the new immigrant family.

Housing is a basic need and the market of this need should not be allowed to be cornered.  To allow this is akin to pushing up prices on groceries or medicine due to speculation of future price appreciation – these items are essential to living and are required to form healthy sustainable communities.

The high cost of home ownership through speculation has forced property values to ridiculous levels and has forced many to rent longer than they would have otherwise. As well, those who are financing their mortgages by passing rent cheques from their tenants to the bank are also desperately trying to stay afloat and thus raising rents.

Four facts that must be understood for this solution to be fixed.

1) The victims of high-rent are not just the unemployed, elderly, single parent families – but the employed, the young professionals, and the otherwise “financially uncompromised”.

2) The problem of high rent is high housing prices and low wages– which forces renters to stay renters for longer than they would otherwise, thus increasing the demand and price of rental units.

3) The culprit of high rent and housing costs is market speculation – which drains the economy by creating a micro-environment of inflation on a fundamentally required staple.

4) The solution is to curb housing speculation by:  increasing taxes on non-primary residences severely (property and capital gains), prevent CMHC insurance of loans on non primary residence housing and for housing with a price tag of over $500,000, increase the amount required for a down-payment to 25% (this prevents an individual from buying multiple condo units on speculation of price appreciation).   Although these items make home ownership seem more inaccessible it would serve to reduce home prices to “true” supply-demand fundamentals, prevent speculation, strengthen the personal balance sheets of Canadians,   make renting more affordable (by shifting some renters into homes by displacing speculators), and by encouraging real economic development by moving capital from real-estate into professional and resource based areas of the economy.

The Federal conservatives attempted to address these needs, although they were the ones that added to problem to begin with (See Flaherty’s first budget speech).  Without arguing details on the aforementioned, more needs to be done.

I find the situation extremely frustrating and I have chosen to vote exclusively on this issue at the Provincial, Federal, and Municipal levels.”

I am sure if MPs and MLAs in the region receive a 100 or so emails – they will start to talk.

Have any of you written your MP or MLA on this subject and received any interesting responses?  If you feel this issue is important will you be writing any letters to politicians at various levels of government?  Here’s a list of contact information for Vancouver area Members of Parliament.

I suspect that AZ is correct in the assumption that a ‘100 or so emails’ (or letters sent by post) would generate some talk.  On a related note reader traffic at this blog is approaching 4000 visitors a day now, which means that less than 3% of you writing in on this subject would do the trick.

So what do you think – should the CMHC be used to prop up the Canadian housing market?  Does current government policy make housing more affordable and accessible or does it encourage speculation and harm living standards by encouraging large risky debt loads?

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Herry Smith
Herry Smith
9 years ago

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patriotz
10 years ago

@Anonymous:

Then you’ll lose the little neighborhood stores, gas stations, parking lots, and so on and be left with buildings built up to the maximum the zoning would allow.

That's the whole point of zoning – to specify what kind of development is in the city's interest. If the city wants gas stations, it can zone for gas stations. BTW almost all neighbourhood stores are non-conforming uses within SFH zoning.

Anonymous
Anonymous
10 years ago

:

“The right way to do is it to tax all property as though it was developed to the allowed zoning.”

Then you'll lose the little neighborhood stores, gas stations, parking lots, and so on and be left with buildings built up to the maximum the zoning would allow.

stagnate
stagnate
10 years ago

the global story was interesting. the city is maybe hoping concord pacific can work some magic with it, not going to happen. the entire development is big time tainted, dumb idea right from the get go. i can't imagine anyone wanting to pay top dollar for a pre-occupied condo, thrown up overnight, mixed in with a bunch of social housing. like i predicted months (and even years ago), they will go with option 2 mentioned-renting the whole stock via market rentals.

Bob Arctor
Bob Arctor
10 years ago

Did anyone see global news tonight? City council had an in-camera meeting this week regarding the Olympic village. The new plan is to sell the units bulk to a developer.

We're still sitting at 36 units sold since the village came on the market in May.

BearsCry
BearsCry
10 years ago

Perhaps PaulB doesn't post the total inventory numbers for you because they would just depress you. You all think he is a hero and cheer when he posts a day that seems to show 100 net listings added. How about showing how many listings were taken off the market today as well? How many were terminated or expired?

No… keep you 100 days. Just know deep down that the reality is very different and that the market is not giving up as you all wish.

House
House
10 years ago

@chip: South Carolina has no state income tax. Mike would see what having no funding for roads, transit, schools, and police does to a state. Answer: it's not where I would choose to live. And it certainly hasn't done much to jumpstart its economy.

Eliminating taxes to improve the economy is voodoo stuff.

realpaul
realpaul
10 years ago

from garths site; This appeared in today’s PEACE ARCH NEWS, South Surrey, B.C.!! Very refreshing! A developer telling it like it is. I sure he’s going to get BLACKBALLED from his peers. ‘Hot-market’ pitch disputed By Tracy Holmes – Peace Arch News Published: September 22, 2010 12:00 PM Updated: September 22, 2010 12:35 PM A South Surrey developer “cornered” into offloading unsold inventory at below-market prices says consumers are being misled to believe the housing market is stronger than it really is. “In contrast to this situation, which is clearly indicative of a sagging market, realtors… are blogging about how ‘hot’ the market is,” reads a statement issued Monday by Watermark Developments. “Some realtors are putting the wrong perception out there,” explained Salome Sallehy, hired to help facilitate a sale this weekend at Watermark’s 2970 King George Blvd. project. “Inventory… Read more »

Anonymous
Anonymous
10 years ago

@Whitebear: It's not the speculators, it's the real estate developers who own most of the real estates. The games goes like this. The game need some from selling land. The real estate developers buy land and keep reserves. Then the real estate developers bid up the land price, essentially cornering the land price. Now, don't kid yourself, the gov't and real estates developers work very closely together to make this schema work. Real estates developers borrow money from the bank and build a lot of units. e.g. 1000 unit @ 300k a piece. The next thing to do is to release the unit by phase. Say 30 units in phase 1, then bid up the price in the secondary market, from 300k to 350k. The next step is to release phase 2, e.g. 50 units and bid up the price… Read more »

Keeping An Eye on Th
Keeping An Eye on Th
10 years ago

"There is also more pain to come amid the housing burst bubbles of Europe, as we shall explore. And in China, Canada, Hong Kong and Australia, there are still-inflated housing bubbles that have not yet popped. Before all is said and done, these unpopped housing bubbles are virtually certain to bust."

http://www.taipanpublishinggroup.com/tpg/taipan-d

"A second global wave of housing bubble pain"

"China, Canada, Hong Kong and Australia, there are still-inflated housing bubbles"

realpaul
realpaul
10 years ago

Are the litter boxes in the Electra so small that you can't fit a washer/dryer in the unit? What kind of an asshole would want to live in a domitory for the rest of their lives? What sort of moron buys a place like that? Man…talk about a sucker born every minute.

Burpy
Burpy
10 years ago

@VHB:

45.9% sell list for September. Clearly a bull massacre of a month. Time for realtors to get a second job. Commission cheques are getting harder to get because sales continue to collapse. Welcome to the crash. It is just the beginning. By the time the MSM gets around to calling the crash, all the suckers left holding are debt.

Best place on meth
Best place on meth
10 years ago

I'm sensing there's something ironic in this ad for a rental at the Electra, but I can't quite put my finger on what it is.

http://vancouver.en.craigslist.ca/van/apa/1914745

BBB
BBB
10 years ago

Leave it alone, it will pop.

The longer it takes…the better.

Heheheh…ya, lets keep this party going for another 8 years bears…

Here is to another bull run and to you having grandkids before you actually get to own..

Hahahah

Keeping An Eye on Th
Keeping An Eye on Th
10 years ago

Leave it alone, it will pop.

The longer it takes…the better.

VHB
VHB
10 years ago

Days elapsed so far 15

Days remaining 6

Average Sales this month 107

Average Listings this month 233

Projected sell/list 45.9%

SALES

Projected month end total 2246 +/- 94

95% Conf Interval lower bound 2151

95% Conf Interval upper bound 2340

NEW LISTINGS

Projected month end total 4890 +/- 117

95% Conf Interval lower bound 4773

95% Conf Interval upper bound 5007

MONTHS OF INVENTORY

Inventory as of August 31st 15962

MoI at this sales pace 7.11

Note: This is a simple linear projection of month end totals.

This provides the answer to the question

"What will month end totals be, if things continue

on the same pace we've seen so far this month?"

chip
chip
10 years ago

@House:

": If you don’t like paying taxes move somewhere else and pay for BC’s government supplied services yourself. I can list a few US states where you’d fit right in."

Then list them, and we'll see how they perform on fiscal responsibility, economic growth, in-migration and infrastructure like roads and even schools.

Go ahead.

realpaul
realpaul
10 years ago

Circular bullshit and the taxpayer gets the shaft.

http://www.montrealgazette.com/business/your+mone

paulb.
paulb.
10 years ago

@ReadyToPop:

Good to hear, and not unexpected. Why would the gov bring forward all the bubble busting lending constraints if it were not to prevent an epic national housing price collapse by curbing excess in the most excessive markets such as Vancouver?

Bring it.

House
House
10 years ago

@Mike: If you don't like paying taxes move somewhere else and pay for BC's government supplied services yourself. I can list a few US states where you'd fit right in.

ReadyToPop
ReadyToPop
10 years ago

"I, for one, am not particularly concerned about the softening we've seen in some markets in Canada in residential real estate," Flaherty told reporters, noting that Ottawa has twice tightened mortgage rules.
<a href="http://www.calgaryherald.com/business/Finance+Minister+Flaherty+worried+about+slumping+markets+tougher+mortgage+rules/3538641/story.html&quot; rel="nofollow">Finance Minister Flaherty not worried about slumping markets, tougher mortgage rules

Speaking of politics, we can only hope that the plight of young families trying to buy a home in Vancouver is finally getting through to Ottawa. Maybe the rich in this city should put down their long stem glasses and stop attending pompous camera snapping fundraisers and lobby government to create better housing/finance policy in their own backyard…..RTP

Anoymous
Anoymous
10 years ago

@patriotz:

"The right way to do is it to tax all property as though it was developed to the allowed zoning."

That would be outrageously unfair, IMHO.

5 Vancouver BC
5 Vancouver BC
10 years ago

@realpaul:Those are not bullshiters and pimps those are bearshitters and Pimp,It takes trrillions to count to re install Democracy and Capitalism and it only takes few bears and opposition to wipe it away.Some people on the bid sides put and hold their bids to low side in greed to make money but they just spew the shit underkneeth when the top dog spew on the bidders.I think Canadian should feel proud that our Country does not eat and weep politics.We should feel proud of Vancouver that it does not take decades to rebound the RE.It goes up during recession,This city is a model for this world in decades to come because there is nothing in this world,There is only this…….

☆**5 Vancouver BC*♥☆

**♥☆**♥☆**♥☆**♥☆**

Best place on meth
Best place on meth
10 years ago

@BBB:

55% is bullish?

You'd better take that up with Dave.

Edward
Edward
10 years ago

BBB how is adding over 100 net listings anything but bearish?