Airborne Canine pointed out this PDF from the Real Estate Board of Greater Vancouver arguing that taxes and government regulation are putting home ownership out of reach of buyers.
That’s right, it’s not a problem with prices, it’s the PTT and ‘government regulation’.
As Best Place on Meth angrily points out, that last one is a bit odd. The recent changes to insured mortgages weren’t government interfering more in the mortgage market, it was less. They’re simply rolling back the increases in amortization terms to their historical norm.
He also points out a math error:
“How much do the new federal rules cost a buyer of a $609,500 home with a 15% down payment of $91,425?
$270.20 more per month”
In order to make that math work you have to disregard that you’ll be paying that lower monthly cost for 5 more years which means more interest payments. In fact a 30 year mortgage under the old terms would cost a buyer $53,849.76 MORE than the new 25 year standard term over the life of the loan.
The proposal to reduce property transfer tax and lobby the federal government to increase the amortization period for government-backed insured mortgages doesn’t actually address the root problem: Speculation has driven house prices beyond what the local economy can support. Trying to juice the market further is not a long term solution.
On a side note Data Junkie is a commenter on this blog who says they’ve done some work for the REBGV as a government relations policy analyst. If you have a questions about his experience working at the board you can post them in the comments section below. The highest rated questions will be sent on for Data Junkie to answer.
And last but not least 604x points out that the Select Standing Committee on Finance and Government Services accepts submissions from anyone through their web portal:
As 604x puts it:
Perhaps some of our VCI heavyweights like Jesse, Scuba, VHB, VMD, b5baxter, AG Sage, and the rest could submit summary data illustrating the insanity of past government policies and the impact of CMHC loosening.
The big push now from real estate lobby groups seems to be on restoring the bubble through looser finance and tax breaks. The Committee needs evidence that the bubble is ultimately destructive over (and short-term pain of adjustment downward in prices will help everyone over the longer-term).