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Liberal governments will do everything but the one thing that will solve the problem: make it much, much easier to actually build more housing. Everything else

Liberal governments will do everything but the one thing that will solve the problem: make it much, much easier to actually build more housing. Everything else is just pointless busywork.

barbazoo 5y ago
Not sure if you mean "liberal" or "Liberal" but in BC for instance the provincial government is considering overriding municipalities that are not approving enough residential development. I don't know how much the federal government can do here? I'd appreciate any insight. https://globalnews.ca/news/8641905/bc-local-governments-housing-development/ https://globalnews.ca/news/8641905/bc-local-governments-hous...
dsnr 5y ago
This is not really guaranteed to solve the problem. It will only be a part of the solution. In many countries, including Europe, new properties are quickly snatched by investment companies that have much easier access to capital than private individuals and can easily afford to pay above market prices. People shouldn’t really have to compete with companies or “investors” on the housing market.
- hemreldop 5y ago
  Well investment companies buy to resell. If there is a glut of new houses prices will definitely go down in the medium term.
  - dsnr 5y ago
    In Germany they mostly buy to rent out and I’m sure it’s happening in other places as well.
  - ClumsyPilot 5y ago
    > If there is a glut of new houses prices will definitely go down Given the billion of investment dollars and cheap loans avaliable, it might be physically impossible to build enough homes fast enougg for the prices to go down
- ______-_-______ 5y ago
  I mean... it has to eventually. If my country has a population of 50 million and I build 800 million homes, will investors keep buying them all at above market rates (read: more than I spent building them)? Then I can build 100 million more and keep collecting infinite money?
  - b3morales 5y ago
    Yes, because they can keep shifting their imaginary money around and hedging their risk on paper until someone notices the music has stopped and the govt/rest of us are left holding the bag of turds again. (Cf. 2008)
    - ryan93 5y ago
      Are you claiming Blackstone would continue to buy houses at current prices even with a 16fold increase in supply? In 2008 the government artificially backstopped loans not a free market fwiw
  - boplicity 5y ago
    This can go on longer than you think; it leads to "ghost cities" -- huge areas full of empty housing bought by speculators. https://allthatsinteresting.com/chinese-ghost-cities https://allthatsinteresting.com/chinese-ghost-cities
    - joshlemer 5y ago
      But I bet rent is pretty cheap in those cities no?
    - rwmj 5y ago
      The other part should be a supertax on properties which are empty for more than 6 months.
    - toast0 5y ago
      It's a lot easier to build housing in the middle of nowhere USA; but there's not a large problem of ghost cities. There's certainly a lot of sprawl, but not large new construction ghost cities; although there was some overbuilding in some areas into the 2008 housing crash, and some areas where construction stalled or stopped mid-build as a result, since either the builder could no longer finance finishing or it didn't make economic sense to do so at that time. China has a lot of disconnected incentives that help it make economic sense for the participants to build and buy into a ghost city that I don't think are present in the US and Canada. If ghost cities are a real concern, you could punitively tax vacant housing that's not offered for lease or sale, and limit housing starts when housing offered for sale or lease was above some threshold price. Or you could do something like a deposit per housing start, paid back over time to the owner or occupant while occupied.
- thrwy_ywrht 5y ago
  >In many countries, including Europe, new properties are quickly snatched by investment Demand for housing is not infinite, and supply of capital is not infinite. Building more units will always help. The quantity of units which are bought and then kept empty long term is tiny in relative terms.
  - tablespoon 5y ago
    >> In many countries, including Europe, new properties are quickly snatched by investment > Demand for housing is not infinite, and supply of capital is not infinite. Building more units will always help. The quantity of units which are bought and then kept empty long term is tiny in relative terms. I think it's kind of pointless to argue over which one policy to pursue to fix this problem, why not try a multi-pronged approach? 1. Implement some policy to ban large investors from home-ownership (say no corporate ownership and a small cap on how many an individual/family can own). There are more reasons to do this than just supply. 2. Put an onerous tax on housing that is not occupied full-time. 3. Build more housing. 1 & 2 would help ease some (but not all) pressure that makes 3 less desirable.
    - after_care 5y ago
      1 and 2 will essentially prevent any sort of a rental market, and rentals clearly play a valuable role for lots of society.
      - tablespoon 5y ago
        > 1 and 2 will essentially prevent any sort of a rental market, and rentals clearly play a valuable role for lots of society. Not if the rule is scoped to single-family homes and individual units in multi-owner buildings. Purpose-built rental housing (e.g. apartment buildings) would be exempted for obvious reasons. The intent is to keep large investors out of markets where owner-occupancy is typical. Even in my original comment I did make allowances for single-family home rentals, but they'd have to be from small-scale landlords. Also suggestion 2 wouldn't prevent a rental market anywhere there's demand for housing, it would just force landlords to drop rents aggressively to get units occupied. And obviously, as is true for any internet comment suggestion of regulatory changes, actual implementation will be more complicated than can be expressed in a pithy comment that lays out the gist.
- CPLX 5y ago
  It shouldn't matter all that much. Rented homes are an excellent (not perfect but very close) substitute for purchased homes. People don't like to rent because of instability or unpredictability of pricing. But a large and growing long term rental market where it's straightforward to find a new place and nobody has an incentive to kick you out or raise your rent is really just fine. You might be thinking, right but if you rent you'd be giving up the ability to make all that money from appreciation that homebuyers get BUT THAT IS ACTUALLY THE PROBLEM WITH THE ENTIRE SYSTEM because you can't have affordable housing and also have housing as a guaranteed investment that always builds wealth the two concepts are fundamentally incompatible with each other and when you get that you're really starting to understand the problem.
  - wnolens 5y ago
    I like the conclusion, but I've created some elaborate financial models to compare buying versus renting (+ investing the difference in S&P500). And so have a few very intelligent friends. It almost NEVER works out in favor of buying except for some crazy flukes like pandemic accelerating prices in Toronto. I think it's largely cultural? Canadian's (more than any of my American friends) are fed the idea that owning a home is the best financial decision and the holy grail of life. It may happen to be the best financial decision for them, but because they lack the information that it's not and wouldn't otherwise invest very well. Even in spite of that information, I still want to spend money and buy a house. I've been asked for vacate my apt for property sale more than once, and faced +800/mo rent spike (NYC...), and I'm over it.
    - paconbork 5y ago
      Yeah that's basically where I'm at. The ability to not have to move and the ability to improve the place and keep the value of my improvements are worth a large premium to me.
    - Sohcahtoa82 5y ago
      > I've created some elaborate financial models to compare buying versus renting (+ investing the difference in S&P500) [...] It almost NEVER works out in favor of buying I can't see how that's possible. Rent is pissing away money, and from the rates I've seen, the monthly rent on a house is often very close to the monthly mortgage payment, so the "investing the difference ins S&P500" ends up being moot. For my house, Zillow estimates the monthly rent value at $2,400/month, which is almost exactly what my mortgage payment (including property tax) is. And in 10 years, that payment will become ~$570 once the mortgage is paid off and all that's left is property tax. Meanwhile, if I chose to rent instead, after 10 years, my rent would probably be well $3,500/month. Yeah, owning means I'm paying maintenance and repair costs, but those certainly don't add up to anywhere near what the rental payment would be. I fully reject any claims that in the long term, renting could ever possibly be better than buying from a purely financial perspective. A mortgage is constant (Unless you fell for the scam that is an ARM) and eventually goes away. Rents perpetually go up and don't leave you with an asset.
- JoshTriplett 5y ago
  Investors in real estate make money by either selling or renting; either way, more homes still means lower prices. Keep providing more supply until it meets demand.
  - tempestn 5y ago
    Right. Every new property bought by an investor is another rental property. As these are added, it will reduce rents, which makes renting more attractive compared to owning, as well as making rental properties less attractive to investors. On the margin these will reduce demand for properties to purchase, bringing down prices.
- givemeethekeys 5y ago
  > This is not really guaranteed to solve the problem. In Europe, new properties are not readily snatched up. Just look at Italy. A growing supply that outpaces demand is literally the only solution. Every other solution will cause a black market.
- graeme 5y ago
  Show me a country you’re talking about, and show me their housing starts per capita relative to Japan, a country which allows building If well below, you haven’t an argument.
MisterTea 5y ago
I'm sure the conservatives are equally responsible NIMBY's as well.
impostervt 5y ago
This seems like the only real, market based solution. Various taxes that could be implemented (or bans like from this article) will either have no effect or unforeseen consequences. The market, right now, is constrained by regulations. Adding more regulations is unlikely to fix things.
SECProto 5y ago
> Liberal governments will do everything but the one thing that will solve the problem Construction permitting is mainly a municipal issue, with a bit of provincial thrown in there. Municipal representatives are not aligned with particular parties, and provinces are mostly not governed by Liberals at the moment (7 conservative, 2 Liberal, 2 independent, 1 NDP, 1 Saskatchewan "we aren't conservative, pinky swear!" Party. The federal Liberals don't have much control over the situation (though there are other specific actions I think they should take)
deleted 5y ago
[deleted]
bryanlarsen 5y ago
Federal Liberals can't do anything about that, it's a provincial responsibility. The Ontario provincial Conservatives commissioned a report into how to make housing affordable, and then completely ignored almost everything it said. This summer, I'm voting for whoever promises to actually implement the Housing Affordability Task Force report.
- Tiktaalik 5y ago
  It's only considered a provincial responsibility now because the Fed Liberals of the 1990s completely got out of housing involvement with their big austerity budgets of the era. The Federal government was deeply involved in funding both for-profit and non-profit housing in the 1970s, the last era where Canada built a lot of housing.
  - bryanlarsen 5y ago
    The comment I was referring to was talking about red tape and zoning, though.
dboreham 5y ago
It's very easy to build housing here in Montana but that hasn't stopped property prices from rising significantly.
- RandallBrown 5y ago
  Is it really easy to build more housing in a place like downtown Bozeman? Like if a developer wants to buy up a block of single family homes and replace it with a large condo building, can they do that?
- chasebank 5y ago
  Idaho is the same way.
- mperham 5y ago
  Sure it's easy to build. As long as it's a single family home. The least efficient form of housing.
sct202 5y ago
The 100 year old building I live in would never have been approved under current requirements; the approval meetings would be going in circles about how it has too many units, not enough parking, not enough green space etc.
ars 5y ago
Just like building roads can't reduce traffic, building houses can't either. It will just cause induced demand as more people will go to that area to live. Instead we should encourage people to carpool - live as roommates, or have small apartments, instead of each person getting their own single family home. /s (sort of)
- rs999gti 5y ago
  > Just like building roads can't reduce traffic, building houses can't either. Mega tower condos could solve housing issues, but the NIMBY folks and local governments need to get out of the way - https://citylimits.org/2018/10/26/cityviews-proposed-mega-towers-an-affront-to-lower-east-side-residents/ https://citylimits.org/2018/10/26/cityviews-proposed-mega-to...
gregable 5y ago
Folks here lean Bay Area, but I don't think Canada has the same issue of preventing construction. For example, in Toronto, you get about 30-40k new housing starts a year in a city of 3M. https://ycharts.com/indicators/toronto_on_housing_starts https://ycharts.com/indicators/toronto_on_housing_starts. >1% / year isn't terrible. Your statement isn't wrong, but I don't know how much it applies to Canada Real Estate particularly.
- paconbork 5y ago
  Isn't Toronto a pretty unique case in North America? If I understand this [1] correctly, then they're 4x the next largest city in terms of construction cranes. I thought I remembered reading that part of the reason why is that there's a regulation that developers use that let's them construct condo towers with substantially less regulatory overhead, but I can't seem to find it. [1] https://www.rlb.com/americas/insight/rlb-crane-index-north-america-q1-2021/ https://www.rlb.com/americas/insight/rlb-crane-index-north-a...
jl2718 5y ago
Maybe stop government mortgage insurance. It’s nothing but public liability for private gains.
gideon_b 5y ago
If you have all the cash you need and a bare lot in Vancouver with services set up, you're still two years away from getting shovels in the ground. The permitting is straight out of a Joseph Heller novel.

Liberal governments will do everything but the one thing that will solve the problem: make it much, much easier to actually build more housing. Everything else is just pointless busywork.

barbazoo 5y ago

Not sure if you mean "liberal" or "Liberal" but in BC for instance the provincial government is considering overriding municipalities that are not approving enough residential development. I don't know how much the federal government can do here? I'd appreciate any insight. https://globalnews.ca/news/8641905/bc-local-governments-housing-development/ https://globalnews.ca/news/8641905/bc-local-governments-hous...

dsnr 5y ago

This is not really guaranteed to solve the problem. It will only be a part of the solution. In many countries, including Europe, new properties are quickly snatched by investment companies that have much easier access to capital than private individuals and can easily afford to pay above market prices. People shouldn’t really have to compete with companies or “investors” on the housing market.

hemreldop 5y ago
Well investment companies buy to resell. If there is a glut of new houses prices will definitely go down in the medium term.
- dsnr 5y ago
  In Germany they mostly buy to rent out and I’m sure it’s happening in other places as well.
- ClumsyPilot 5y ago
  > If there is a glut of new houses prices will definitely go down Given the billion of investment dollars and cheap loans avaliable, it might be physically impossible to build enough homes fast enougg for the prices to go down
______-_-______ 5y ago
I mean... it has to eventually. If my country has a population of 50 million and I build 800 million homes, will investors keep buying them all at above market rates (read: more than I spent building them)? Then I can build 100 million more and keep collecting infinite money?
- b3morales 5y ago
  Yes, because they can keep shifting their imaginary money around and hedging their risk on paper until someone notices the music has stopped and the govt/rest of us are left holding the bag of turds again. (Cf. 2008)
  - ryan93 5y ago
    Are you claiming Blackstone would continue to buy houses at current prices even with a 16fold increase in supply? In 2008 the government artificially backstopped loans not a free market fwiw
- boplicity 5y ago
  This can go on longer than you think; it leads to "ghost cities" -- huge areas full of empty housing bought by speculators. https://allthatsinteresting.com/chinese-ghost-cities https://allthatsinteresting.com/chinese-ghost-cities
  - joshlemer 5y ago
    But I bet rent is pretty cheap in those cities no?
  - rwmj 5y ago
    The other part should be a supertax on properties which are empty for more than 6 months.
  - toast0 5y ago
    It's a lot easier to build housing in the middle of nowhere USA; but there's not a large problem of ghost cities. There's certainly a lot of sprawl, but not large new construction ghost cities; although there was some overbuilding in some areas into the 2008 housing crash, and some areas where construction stalled or stopped mid-build as a result, since either the builder could no longer finance finishing or it didn't make economic sense to do so at that time. China has a lot of disconnected incentives that help it make economic sense for the participants to build and buy into a ghost city that I don't think are present in the US and Canada. If ghost cities are a real concern, you could punitively tax vacant housing that's not offered for lease or sale, and limit housing starts when housing offered for sale or lease was above some threshold price. Or you could do something like a deposit per housing start, paid back over time to the owner or occupant while occupied.
thrwy_ywrht 5y ago
>In many countries, including Europe, new properties are quickly snatched by investment Demand for housing is not infinite, and supply of capital is not infinite. Building more units will always help. The quantity of units which are bought and then kept empty long term is tiny in relative terms.
- tablespoon 5y ago
  >> In many countries, including Europe, new properties are quickly snatched by investment > Demand for housing is not infinite, and supply of capital is not infinite. Building more units will always help. The quantity of units which are bought and then kept empty long term is tiny in relative terms. I think it's kind of pointless to argue over which one policy to pursue to fix this problem, why not try a multi-pronged approach? 1. Implement some policy to ban large investors from home-ownership (say no corporate ownership and a small cap on how many an individual/family can own). There are more reasons to do this than just supply. 2. Put an onerous tax on housing that is not occupied full-time. 3. Build more housing. 1 & 2 would help ease some (but not all) pressure that makes 3 less desirable.
  - after_care 5y ago
    1 and 2 will essentially prevent any sort of a rental market, and rentals clearly play a valuable role for lots of society.
    - tablespoon 5y ago
      > 1 and 2 will essentially prevent any sort of a rental market, and rentals clearly play a valuable role for lots of society. Not if the rule is scoped to single-family homes and individual units in multi-owner buildings. Purpose-built rental housing (e.g. apartment buildings) would be exempted for obvious reasons. The intent is to keep large investors out of markets where owner-occupancy is typical. Even in my original comment I did make allowances for single-family home rentals, but they'd have to be from small-scale landlords. Also suggestion 2 wouldn't prevent a rental market anywhere there's demand for housing, it would just force landlords to drop rents aggressively to get units occupied. And obviously, as is true for any internet comment suggestion of regulatory changes, actual implementation will be more complicated than can be expressed in a pithy comment that lays out the gist.
CPLX 5y ago
It shouldn't matter all that much. Rented homes are an excellent (not perfect but very close) substitute for purchased homes. People don't like to rent because of instability or unpredictability of pricing. But a large and growing long term rental market where it's straightforward to find a new place and nobody has an incentive to kick you out or raise your rent is really just fine. You might be thinking, right but if you rent you'd be giving up the ability to make all that money from appreciation that homebuyers get BUT THAT IS ACTUALLY THE PROBLEM WITH THE ENTIRE SYSTEM because you can't have affordable housing and also have housing as a guaranteed investment that always builds wealth the two concepts are fundamentally incompatible with each other and when you get that you're really starting to understand the problem.
- wnolens 5y ago
  I like the conclusion, but I've created some elaborate financial models to compare buying versus renting (+ investing the difference in S&P500). And so have a few very intelligent friends. It almost NEVER works out in favor of buying except for some crazy flukes like pandemic accelerating prices in Toronto. I think it's largely cultural? Canadian's (more than any of my American friends) are fed the idea that owning a home is the best financial decision and the holy grail of life. It may happen to be the best financial decision for them, but because they lack the information that it's not and wouldn't otherwise invest very well. Even in spite of that information, I still want to spend money and buy a house. I've been asked for vacate my apt for property sale more than once, and faced +800/mo rent spike (NYC...), and I'm over it.
  - paconbork 5y ago
    Yeah that's basically where I'm at. The ability to not have to move and the ability to improve the place and keep the value of my improvements are worth a large premium to me.
  - Sohcahtoa82 5y ago
    > I've created some elaborate financial models to compare buying versus renting (+ investing the difference in S&P500) [...] It almost NEVER works out in favor of buying I can't see how that's possible. Rent is pissing away money, and from the rates I've seen, the monthly rent on a house is often very close to the monthly mortgage payment, so the "investing the difference ins S&P500" ends up being moot. For my house, Zillow estimates the monthly rent value at $2,400/month, which is almost exactly what my mortgage payment (including property tax) is. And in 10 years, that payment will become ~$570 once the mortgage is paid off and all that's left is property tax. Meanwhile, if I chose to rent instead, after 10 years, my rent would probably be well $3,500/month. Yeah, owning means I'm paying maintenance and repair costs, but those certainly don't add up to anywhere near what the rental payment would be. I fully reject any claims that in the long term, renting could ever possibly be better than buying from a purely financial perspective. A mortgage is constant (Unless you fell for the scam that is an ARM) and eventually goes away. Rents perpetually go up and don't leave you with an asset.
JoshTriplett 5y ago
Investors in real estate make money by either selling or renting; either way, more homes still means lower prices. Keep providing more supply until it meets demand.
- tempestn 5y ago
  Right. Every new property bought by an investor is another rental property. As these are added, it will reduce rents, which makes renting more attractive compared to owning, as well as making rental properties less attractive to investors. On the margin these will reduce demand for properties to purchase, bringing down prices.
givemeethekeys 5y ago
> This is not really guaranteed to solve the problem. In Europe, new properties are not readily snatched up. Just look at Italy. A growing supply that outpaces demand is literally the only solution. Every other solution will cause a black market.
graeme 5y ago
Show me a country you’re talking about, and show me their housing starts per capita relative to Japan, a country which allows building If well below, you haven’t an argument.

MisterTea 5y ago

I'm sure the conservatives are equally responsible NIMBY's as well.

impostervt 5y ago

This seems like the only real, market based solution. Various taxes that could be implemented (or bans like from this article) will either have no effect or unforeseen consequences. The market, right now, is constrained by regulations. Adding more regulations is unlikely to fix things.

SECProto 5y ago

> Liberal governments will do everything but the one thing that will solve the problem Construction permitting is mainly a municipal issue, with a bit of provincial thrown in there. Municipal representatives are not aligned with particular parties, and provinces are mostly not governed by Liberals at the moment (7 conservative, 2 Liberal, 2 independent, 1 NDP, 1 Saskatchewan "we aren't conservative, pinky swear!" Party. The federal Liberals don't have much control over the situation (though there are other specific actions I think they should take)

deleted 5y ago

[deleted]

bryanlarsen 5y ago

Federal Liberals can't do anything about that, it's a provincial responsibility. The Ontario provincial Conservatives commissioned a report into how to make housing affordable, and then completely ignored almost everything it said. This summer, I'm voting for whoever promises to actually implement the Housing Affordability Task Force report.

Tiktaalik 5y ago
It's only considered a provincial responsibility now because the Fed Liberals of the 1990s completely got out of housing involvement with their big austerity budgets of the era. The Federal government was deeply involved in funding both for-profit and non-profit housing in the 1970s, the last era where Canada built a lot of housing.
- bryanlarsen 5y ago
  The comment I was referring to was talking about red tape and zoning, though.

dboreham 5y ago

It's very easy to build housing here in Montana but that hasn't stopped property prices from rising significantly.

RandallBrown 5y ago
Is it really easy to build more housing in a place like downtown Bozeman? Like if a developer wants to buy up a block of single family homes and replace it with a large condo building, can they do that?
chasebank 5y ago
Idaho is the same way.
mperham 5y ago
Sure it's easy to build. As long as it's a single family home. The least efficient form of housing.

sct202 5y ago

The 100 year old building I live in would never have been approved under current requirements; the approval meetings would be going in circles about how it has too many units, not enough parking, not enough green space etc.

ars 5y ago

Just like building roads can't reduce traffic, building houses can't either. It will just cause induced demand as more people will go to that area to live. Instead we should encourage people to carpool - live as roommates, or have small apartments, instead of each person getting their own single family home. /s (sort of)

rs999gti 5y ago
> Just like building roads can't reduce traffic, building houses can't either. Mega tower condos could solve housing issues, but the NIMBY folks and local governments need to get out of the way - https://citylimits.org/2018/10/26/cityviews-proposed-mega-towers-an-affront-to-lower-east-side-residents/ https://citylimits.org/2018/10/26/cityviews-proposed-mega-to...

gregable 5y ago

Folks here lean Bay Area, but I don't think Canada has the same issue of preventing construction. For example, in Toronto, you get about 30-40k new housing starts a year in a city of 3M. https://ycharts.com/indicators/toronto_on_housing_starts https://ycharts.com/indicators/toronto_on_housing_starts. >1% / year isn't terrible. Your statement isn't wrong, but I don't know how much it applies to Canada Real Estate particularly.

paconbork 5y ago
Isn't Toronto a pretty unique case in North America? If I understand this [1] correctly, then they're 4x the next largest city in terms of construction cranes. I thought I remembered reading that part of the reason why is that there's a regulation that developers use that let's them construct condo towers with substantially less regulatory overhead, but I can't seem to find it. [1] https://www.rlb.com/americas/insight/rlb-crane-index-north-america-q1-2021/ https://www.rlb.com/americas/insight/rlb-crane-index-north-a...

jl2718 5y ago

Maybe stop government mortgage insurance. It’s nothing but public liability for private gains.

gideon_b 5y ago

If you have all the cash you need and a bare lot in Vancouver with services set up, you're still two years away from getting shovels in the ground. The permitting is straight out of a Joseph Heller novel.