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This paradox sounds like what my Canadian friends describe Vancouver BC as. The house prices on the west part of Vancouver are more than $1.5M CAD for a single

by steven2012 11y ago

This paradox sounds like what my Canadian friends describe Vancouver BC as. The house prices on the west part of Vancouver are more than $1.5M CAD for a single family home, but the average salary is around $60-70k. There is almost no real industry in Vancouver, except for tourism, and some people that work in HQ for mining companies, etc, so there isn't enough actual high-wage earners to afford paying those preposterous prices. And yet the house prices keep going up. Everyone says it's mainland Chinese coming in a driving up the prices, but that's what they've been saying since the 1980s, so it can't be true.

herge 11y ago
A system like that is very easy to counter. If residents are truly not the ones buying property, they can simply vote for stringent renters protection, and liberal squatting laws. That will quickly dry up the market for foreigners buying property and letting it sit there.
- eru 11y ago
  Land value taxes would be more useful.
csomar 11y ago
I don't know about Vancouver BC. But I'll give a highlight about my country capital (Tunis) which is a third-world. Home prices in the good places go from $250K to $2M and the infrastructure is not as good as you'd expect. The average salary is from $3k to $5K. Here is the thing: 1. Lack of good places to have a home. This means you have to bid for land. 2. Lack of good places in other cities, which means rich people in other cities moving to bid on these places. 3. Lots of people make money abroad (foreign salaries) and return after 15 years of work to buy land and construct a home. 4. Older people who would not sell or rent land/homes they need (my parents and some relatives) aka as land/homes hoarding. 5. A good portion of these homes are owned/inherited through generations and they are not interested to sell because of the lack of new/better opportunity. There must some similar reasons if the price holds for too long.
nugget 11y ago
There were two major trends that started around 1980 and contributed to housing prices rising meaningful faster than inflation and natural population growth: first, women joining the work force and creating dual-income families, and second, the drop in interest rates from >10% in the early 80s to <4% today. Both leveraged prices up. Neither can reoccur. Very few people foresaw this potential third trend which is foreign money seeking safe haven in urban US real estate. If a large number of the wealthy citizens of every other country on earth decide they want to live in San Francisco and New York, that could continue to push prices up and disconnect them from local market fundamentals like wage affordability. The reaction to this should be to increase land value taxes but California and New York in particular have taken an almost completely opposite approach, taxing income highly and land and property very little.

herge 11y ago

A system like that is very easy to counter. If residents are truly not the ones buying property, they can simply vote for stringent renters protection, and liberal squatting laws. That will quickly dry up the market for foreigners buying property and letting it sit there.

eru 11y ago
Land value taxes would be more useful.

csomar 11y ago

I don't know about Vancouver BC. But I'll give a highlight about my country capital (Tunis) which is a third-world. Home prices in the good places go from $250K to $2M and the infrastructure is not as good as you'd expect. The average salary is from $3k to $5K. Here is the thing: 1. Lack of good places to have a home. This means you have to bid for land. 2. Lack of good places in other cities, which means rich people in other cities moving to bid on these places. 3. Lots of people make money abroad (foreign salaries) and return after 15 years of work to buy land and construct a home. 4. Older people who would not sell or rent land/homes they need (my parents and some relatives) aka as land/homes hoarding. 5. A good portion of these homes are owned/inherited through generations and they are not interested to sell because of the lack of new/better opportunity. There must some similar reasons if the price holds for too long.

nugget 11y ago

There were two major trends that started around 1980 and contributed to housing prices rising meaningful faster than inflation and natural population growth: first, women joining the work force and creating dual-income families, and second, the drop in interest rates from >10% in the early 80s to <4% today. Both leveraged prices up. Neither can reoccur. Very few people foresaw this potential third trend which is foreign money seeking safe haven in urban US real estate. If a large number of the wealthy citizens of every other country on earth decide they want to live in San Francisco and New York, that could continue to push prices up and disconnect them from local market fundamentals like wage affordability. The reaction to this should be to increase land value taxes but California and New York in particular have taken an almost completely opposite approach, taxing income highly and land and property very little.