Voodoo Housing Economics

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.

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Why The Liberals Like Unaffordable Housing

Yesterday, BC Finance Minister Mike de Jong added his voice to the chorus of BC Liberals who are afraid that stopping the influx of foreign capital or taxing speculators could have the undesirable effect of making homes more affordable.

“You have to be careful about having the state intervene to try to regulate pricing, or depress pricing. Those who are expressing a concern, if you really assess what they are seeking, it is a reduction in the value of homes in Vancouver and that will have consequences for a lot of families”

It’s interesting that the Liberals don’t seem too concerned about the “consequences for a lot of families” caused by the incredible decrease in affordability over the last 10-15 years.

Is he really worried about families? Or is there something else the Provincial Finance Minister — who’s had a hard time balancing the books lately — might be more concerned about?

BC Property Transfer Tax History

Property Transfer Tax revenue has tripled over the last decade. Affordable housing could create a big hole in the budget that Mr de Jong would have a hard time filling. But I’m sure he’s really concerned about families…