Working people not being able to afford a home or losing your life savings during a housing bubble burst?
This opinion piece at the Vancouver Sun says it’s not a question of if, but when – and when it does burst the damage to the economy will be far worse than the current affordability question.
The damage will be huge. In 1989, the Toronto bubble burst, and six years later house prices had decreased 50 per cent. Many speculators lost all of their life savings. Financial institutions were in crisis. All home building activities stopped. Unemployment increased. The flow of immigrants decreased sharply. A general economic recession developed.
Governments cannot prevent the bursting of the Vancouver bubble. They can only adopt policies to slow its growth. But these will be opposed by the many who benefit from the price increases and who, as is the case during all euphoric phases, insist that “this time, things are different”.
Read the full article here.