Canada wants to make homes affordable without crushing prices
Canada wants to make homes affordable without crushing prices
In a country with some of the world’s most expensive real estate, Prime Minister Justin Trudeau’s government wants housing to become more affordable.
In a country with some of the world’s most expensive real estate, Prime Minister Justin Trudeau’s government wants housing to become more affordable.
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I read an article a while back that argued the only way to really make housing affordable is to build MASSIVE amounts of housing.
Supply and demand is at least part of the problem.
It really isn't in this case, unfortunately.
Lets says I I have a farm that produces all the food people need, but because I own the only farm, I can set the price for food to whatever I want.
Helping me build ten more farms doesn't solve the problem. The problem is that I'm in a position to decide the price. Helping someone else build more farms, might work, but I already make so much I could probably buy them the moment they're done. And even if I don't, we don't actually need more farms. The one I have could already feed everyone.
Building more farms at that point, would be a irresponsible waste of this already overloaded planets resources.
The real solution is dividing up ownership of the already sufficient existing resources. This will crash prices, but that will only hurt those who already have what they need, not those currently unable to get it.
And even if I don’t, we don’t actually need more farms.
But since you are now operating more farms than needed you've ended up with a flood of product. It costs extreme amounts of money to operate a farm, so you are going to be forced to liquidate that product to pay your bills. The consumer won't pay top dollar for food they don't need, so you are going to be forced to sell it for pennies on the dollar. And now food is cheap.
And millions were wasted in hardware, work hours, ecologic capacity, industrial machinery, construction...
How is this a viable solution on a planet in the process of self-destructing due to the industrial-scale inefficiency of human economics?
And if I'm even slightly smart I'll pocket the support given to me to increase production, not actually use it.
And how is subsidizing someone else to build new farms to compete with me, not still just taking a portion of what I have, and giving it to someone else, but with extra steps that wastes time and resources?
And how is subsidizing someone else to build new farms to compete with me, not still just taking a portion of what I have, and giving it to someone else, but with extra steps that wastes time and resources?
It is a social good to have an overproduction of food to ensure that there is still sufficient food available when things go wrong. A single farm is incentivized to leave people to starve, so it is a given that expansion would be needed when moving away from that single farm in an effort to better serve the population.
The necessity of surplus capacity is not mutually exclusive with ecologically efficient solutions to economic problems.
Which is what we are discussing here.
You are attempting to forward an argument that would apply to supply issues, as if my scenario of a single farm were more than just an anecdotal example illustrating one single point of interest. (The economics of the housing market)
My entire point is that there should be multiple providers (owners) that do not collude. The number of farms used in my example is coincidental. You are basically reciting my own argument back to me.
Nothing you say can change the fact that when the capacity to meet and even exceed demand already exists, solving economic problems through excessive new supply, is inordinately wasteful.
Canada does have an unusually small number of houses, relative to its population size, as compared to most other countries. It may be true that we still have a sufficient number of houses to house everyone, but not unlike farming, houses can burn down, get hit by tornadoes, etc. and having an oversupply can also be a social good to ensure that people can still find a roof over their head when things go wrong.
So additional construction is part of the solution, in Canada's case. There's also the fact that buildings need to be located in the places people want to move to, it's not enough to simply have enough. At no point have I disagreed that critical industries should not have redundancies, so I don't know why you are repeating that argument.
That still leaves the fact the current real-estate market has issues that require severe changes to resolve. And that you can't just slap "supply" with a capital "S" on the problem and expect equilibrium to return quickly, efficiently, or indeed, at all.
We are currently in a state of equilibrium. The supply of houses is quite well matched to the demand for houses.
But you must remember that the call at the beginning of this thread was to see an increase in demand. Many are unsatisfied with the lack of demand found out there and see an increase in supply as a way to attract more buyers into the mix.
...what?
It's in equilibrium in the same way that a market with only food available for half the people, finds a price for food, and still allows the poorer half to starve.
The reason demand is low isn't because there aren't people who want to buy homes, or enough homes to buy, even. It's low because there aren't enough homes that people can afford.
My original point was meant to illustrate how this isn't being caused by simple supply and demand.
It's a power inbalance between seller and buyer, which removes the ability of the latter to negotiate pricing.
If two families need a home, but one is so much richer that they can buy two homes, why would the seller sell a home to each family, when they can net more by selling both to the richer one?
Do this long anough, and homeownersship just become another wealth-gap currency where a disproportionate amount of real-estate is held by a few, who "allow" the many to live in it.
It’s in equilibrium in the same way that a market with only food available for half the people, finds a price for food, and still allows the poorer half to starve.
Yup. It is necessary for demand to recognize some kind of dividing line between those who have the desire and willingness to shoulder a cost for something and those who do not. "I'm hungry" isn't sufficient to be counted as demand. Everyone gets hungry. The term demand would be completely meaningless if it referred to everyone. It wants to determine what you will give up in order to satisfy your hunger pangs.
My original point was meant to illustrate how this isn’t being caused by simple supply and demand.
Well, duh. Supply and demand is a tool for observing events. Of course it cannot cause anything. This is like saying a kid running away from home wasn’t caused by a neighbour who happened to see the kid exit the door. Of course. If this is your point... Why?
If two families need a home, but one is so much richer that they can buy two homes, why would the seller sell a home to each family, when they can net more by selling both to the richer one?
Right, which is why there was originally a call to see an increase in demand. With enough of a rise in demand, the poor families will naturally get included as able participants in the market. But there needs to be something to stimulate that. And expansion of the supply is one suggested way to broach that.