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Vancouver will suffer from “be careful what you wish for”. If house prices drop it will kill the economy because people will will be locked in their underwater

Vancouver will suffer from “be careful what you wish for”. If house prices drop it will kill the economy because people will will be locked in their underwater homes for the rest of their lives. Deflation will destroy the entire economy.

pen2l 7y ago
It'll destroy chiefly the minority rich though, the minority capitalists. And since they are in fewer numbers than the workers, I don't know if it'll impact the greater economy so much. Somewhere in this, Vancouver might become being a neat place to be I think.
- ShroudedNight 7y ago
  As a Canadian living in Markham, I am also deeply concerned about the growing inequality (or at least its growing visibility) and the damage it can do to our social fabric. That being said, modulo some extreme reconfiguration of Canadian society, workers need someone to pay them. I think we should be _very_ cautious about unduly alienating capitalists in an indiscriminant manner.
- whatshisface 7y ago
  Unlike the situation in Marx's time, many workers have their retirement savings in "capitalist" equity devices like home ownership and the stock market. 2008 was terrible for them in America. The divide between workers who can only access linear growth and capitalists who can access exponential growth no longer exists.
  - the-dude 7y ago
    Where did they stash their wealth in Marx's time?
    - whatshisface 7y ago
      Cash, mostly.
eloff 7y ago
One can only dream that prices correct that much. But while expensive for Canada, prices are not wholly unreasonable for such a desirable city. And the population here is expected to increase by a million (33%) by 2050. That just won't be handled on the supply side the way zoning is done. So long term I expect prices to continue on the upward trajectory. Speaking as a renter with no house in the race.
- seanmcdirmid 7y ago
  Except if you have a high end tech job in Vancouver that only pays 80k/year or less. Unless you are already rich, it makes sense to get a T1 and head off south to Seattle where the houses are still pricey but the salaries are much higher.
  - eloff 7y ago
    I'm not sure exactly what that had to do with my comment, but I've long told anyone who will listen in tech that you can double your salary by moving to the US or working remote for a US company with no Canadian office. Why anyone in tech remains in Canada makes no sense to me.
    - seanmcdirmid 7y ago
      Just that Vancouver property values are not sustainable on Vancouver salaries.
      - eloff 7y ago
        They're not, but Vancouver is a very international city and owning a single family home is hardly a fundamental right. People who choose to live in Vancouver on Vancouver salaries pretty much have no hope of owning a home. That most locals can't afford it doesn't make it unsustainable unfortunately as long as there are enough people willing to live there anyway.
        seanmcdirmid 7y ago
ninth_ant 7y ago
Home prices have not fallen meaningfully since those measures were taken except at the very high end. At a certain point naysayers may have to admit they were wrong about the sky falling. Increased density allowances continue to prop up lot values on single family homes, which allows homeowners to not be underwater but also increase housing supply when they are torn down and duplexes/condos are built in place. Overall I feel like most people are happy with the outcome thus far.
chiefalchemist 7y ago
> Deflation will destroy the entire economy. How healthy and legit is an economy if this is the case? The same can be said of a Ponzi scheme, yes. It seems that the change of the rules effects the current winners the most. And thus the unsustainable persists...until it doesn't.
- bmurphy1976 7y ago
  The problem with deflation (and hyper-inflation) is that people are irrational, not that the economies are illegitimate. The danger is that people acting irrationally causes a vicious feedback loop. That feedback loop could potentially take down the best of economies
  - chiefalchemist 7y ago
    The problem with economic theory is that it assumes people are rational. There is absolutely zero historic record to support that. Until economics embraces reality it's foolish for the rest of us to hold a false god so high.
    - dodobirdlord 7y ago
      > The problem with economic theory is that it assumes people are rational. No, it doesn't. [0] > There is absolutely zero historic record to support that. Yes, there is. [1] > Until economics embraces reality it's foolish for the rest of us to hold a false god so high. Sorry to be kinda blunt here, but I'd like to appeal to you to try to maintain a higher standard of discourse on HN. [0]: https://en.wikipedia.org/wiki/Behavioral_economics https://en.wikipedia.org/wiki/Behavioral_economics [1]: https://en.wikipedia.org/wiki/New_Keynesian_economics https://en.wikipedia.org/wiki/New_Keynesian_economics
      - chiefalchemist 7y ago
        What % of economists are versed and apply Behavioral Economics? Ironic. Your reply does more to support my point than your own.
katbyte 7y ago
A lot of us are hopeful it will happen as that’s when we will buy so ️ Some will win some will lose and I have little sympathy for those who entered the market in the last 5 years expecting it to keep increasing as it has.
- petersellers 7y ago
  Your statement comes across as rather heartless. What about those of us who entered in the last 5 years just because they were ready to settle down in an area they liked?
jbay808 7y ago
I'm not sure the consequences of falling home prices will be as catastrophic for the economy as it sounds. At the moment the high price of real estate is putting a lot of strain on almost every other sector of the economy: tourism (cheaper to visit other beautiful places like Banff), tech (it's expensive to attract talent with high cost of living), services (similar deal). It's also driven out a lot of younger families which can have delayed impacts on the economy. On the other hand, it's been great for the construction industry, tax revenue, and infrastructure investment. The high price of land has also justified investments in density which will result in a lasting increase of land value even if the market cools. There are also a lot of people who have sold their expensive homes and taken the money to cheaper areas, like Victoria and Nanaimo, distributing the windfall a bit.
Tiktaalik 7y ago
Sales and land values are plunging in Vancouver and even with the accordingly significantly decreased property transfer tax revenues the economy is great and the BC NDP government has posted a big surplus. https://www.cbc.ca/news/canada/british-columbia/bc-finances-operating-surplus-1.5217333 https://www.cbc.ca/news/canada/british-columbia/bc-finances-...

pen2l 7y ago

It'll destroy chiefly the minority rich though, the minority capitalists. And since they are in fewer numbers than the workers, I don't know if it'll impact the greater economy so much. Somewhere in this, Vancouver might become being a neat place to be I think.

ShroudedNight 7y ago
As a Canadian living in Markham, I am also deeply concerned about the growing inequality (or at least its growing visibility) and the damage it can do to our social fabric. That being said, modulo some extreme reconfiguration of Canadian society, workers need someone to pay them. I think we should be _very_ cautious about unduly alienating capitalists in an indiscriminant manner.
whatshisface 7y ago
Unlike the situation in Marx's time, many workers have their retirement savings in "capitalist" equity devices like home ownership and the stock market. 2008 was terrible for them in America. The divide between workers who can only access linear growth and capitalists who can access exponential growth no longer exists.
- the-dude 7y ago
  Where did they stash their wealth in Marx's time?
  - whatshisface 7y ago
    Cash, mostly.

eloff 7y ago

One can only dream that prices correct that much. But while expensive for Canada, prices are not wholly unreasonable for such a desirable city. And the population here is expected to increase by a million (33%) by 2050. That just won't be handled on the supply side the way zoning is done. So long term I expect prices to continue on the upward trajectory. Speaking as a renter with no house in the race.

seanmcdirmid 7y ago
Except if you have a high end tech job in Vancouver that only pays 80k/year or less. Unless you are already rich, it makes sense to get a T1 and head off south to Seattle where the houses are still pricey but the salaries are much higher.
- eloff 7y ago
  I'm not sure exactly what that had to do with my comment, but I've long told anyone who will listen in tech that you can double your salary by moving to the US or working remote for a US company with no Canadian office. Why anyone in tech remains in Canada makes no sense to me.
  - seanmcdirmid 7y ago
    Just that Vancouver property values are not sustainable on Vancouver salaries.
    - eloff 7y ago
      They're not, but Vancouver is a very international city and owning a single family home is hardly a fundamental right. People who choose to live in Vancouver on Vancouver salaries pretty much have no hope of owning a home. That most locals can't afford it doesn't make it unsustainable unfortunately as long as there are enough people willing to live there anyway.
      - seanmcdirmid 7y ago

ninth_ant 7y ago

Home prices have not fallen meaningfully since those measures were taken except at the very high end. At a certain point naysayers may have to admit they were wrong about the sky falling. Increased density allowances continue to prop up lot values on single family homes, which allows homeowners to not be underwater but also increase housing supply when they are torn down and duplexes/condos are built in place. Overall I feel like most people are happy with the outcome thus far.

chiefalchemist 7y ago

> Deflation will destroy the entire economy. How healthy and legit is an economy if this is the case? The same can be said of a Ponzi scheme, yes. It seems that the change of the rules effects the current winners the most. And thus the unsustainable persists...until it doesn't.

bmurphy1976 7y ago
The problem with deflation (and hyper-inflation) is that people are irrational, not that the economies are illegitimate. The danger is that people acting irrationally causes a vicious feedback loop. That feedback loop could potentially take down the best of economies
- chiefalchemist 7y ago
  The problem with economic theory is that it assumes people are rational. There is absolutely zero historic record to support that. Until economics embraces reality it's foolish for the rest of us to hold a false god so high.
  - dodobirdlord 7y ago
    > The problem with economic theory is that it assumes people are rational. No, it doesn't. [0] > There is absolutely zero historic record to support that. Yes, there is. [1] > Until economics embraces reality it's foolish for the rest of us to hold a false god so high. Sorry to be kinda blunt here, but I'd like to appeal to you to try to maintain a higher standard of discourse on HN. [0]: https://en.wikipedia.org/wiki/Behavioral_economics https://en.wikipedia.org/wiki/Behavioral_economics [1]: https://en.wikipedia.org/wiki/New_Keynesian_economics https://en.wikipedia.org/wiki/New_Keynesian_economics
    - chiefalchemist 7y ago
      What % of economists are versed and apply Behavioral Economics? Ironic. Your reply does more to support my point than your own.

katbyte 7y ago

A lot of us are hopeful it will happen as that’s when we will buy so ️ Some will win some will lose and I have little sympathy for those who entered the market in the last 5 years expecting it to keep increasing as it has.

petersellers 7y ago
Your statement comes across as rather heartless. What about those of us who entered in the last 5 years just because they were ready to settle down in an area they liked?

jbay808 7y ago

I'm not sure the consequences of falling home prices will be as catastrophic for the economy as it sounds. At the moment the high price of real estate is putting a lot of strain on almost every other sector of the economy: tourism (cheaper to visit other beautiful places like Banff), tech (it's expensive to attract talent with high cost of living), services (similar deal). It's also driven out a lot of younger families which can have delayed impacts on the economy. On the other hand, it's been great for the construction industry, tax revenue, and infrastructure investment. The high price of land has also justified investments in density which will result in a lasting increase of land value even if the market cools. There are also a lot of people who have sold their expensive homes and taken the money to cheaper areas, like Victoria and Nanaimo, distributing the windfall a bit.

Tiktaalik 7y ago

Sales and land values are plunging in Vancouver and even with the accordingly significantly decreased property transfer tax revenues the economy is great and the BC NDP government has posted a big surplus. https://www.cbc.ca/news/canada/british-columbia/bc-finances-operating-surplus-1.5217333 https://www.cbc.ca/news/canada/british-columbia/bc-finances-...