There was an interesting exchange yesterday in the BC Legislature between John Horgan and Christy Clark regarding the Vancouver housing market.
Mr. Horgan asked Clark several times to give her thoughts about, and plans to deal with the severe affordability problem. After several rounds of “we’re working on it, stay tuned”, Clark finally gave the following response.
The member asks: what about others, particularly Vancouverites, who are faced with this? I’ve given him my answer to that, but I will also say that affordability in the city of Vancouver is a major issue that we need to address. We need to attack it from a number of different fronts. We do need to be careful as we attack the issue, though, that we don’t go about reducing the equity that people have in their homes already. We need to make sure that the solutions we find for affordability across the board, particularly in Vancouver, aren’t ones that have unintended consequences that end up robbing people of equity that they’ve built up over the years.
This is not the first time Christy Clark has expressed a desire to see improved affordability in Vancouver — but without the “unintended consequences” of lower prices. I’m not sure why it’s so hard for her to understand that lower prices are the only real solution to the current problem.
On the other hand, if she somehow comes up with a way to lower housing prices without lowering housing prices, the Nobel Prize committee would probably be very interested in hearing about it.
Lower prices aren’t a solution either. If a house or condo has to be sold at a lower price than the builder will pay the trades less. So with 40% of the BC economy dependant on housing and real estate development than more affordable housing means less jobs.
As long as governments chase cash, scare us with electronic currencies and roll out bank bailins and negative interest rates then people will want to park money away from cash and banks
That drives money into quality real estate and stock markets. So London, NY and Vancouver real estate appreciates as does the German DAX and US Dow.
The problem is nowhere near as simple as you make it out to be.
True, there will be pain during a correction, as there always is, but the alternative is worse. I think the US housing market is much healthier thanks to their correction.
IMO, lower prices will be reflected in lower land values not lower wages. That’s what happened on the way up.