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The federal government seems completely disengaged in the issue and they've left the entire problem to the bank, whose only tool here is to continue to ratchet

The federal government seems completely disengaged in the issue and they've left the entire problem to the bank, whose only tool here is to continue to ratchet up rates, no matter how much pain this is causing homeowners (and eventually renters as investors bail on their properties, thus likely inducing the eviction of their tenants). Meanwhile in Spain where their government has been quite engaged and busy on the issue, enacting policies to limit severe price increases, they've already reached the 2% inflation target. Another way is possible.

hospitalJail 3y ago
Isnt it TBD if Spain made the right call? Action doesn't necessarily mean things are good.
- Tiktaalik 3y ago
  I guess. But at the moment they've hit 2% without inducing the same financial level of trauma on homeowners. Seems like a success so far. Wait and see I guess.
belval 3y ago
> policies to limit severe price increases What does that even mean? In Canada the issue is that most places have 10 houses for 20 buyers to it ends up being a game of who can pay more as it should be. Restricting price increases just means buyers are restricted on something else, it does not magically create 10 new houses to meet demand. We should not be rent-controlling assets, instead you need to take actions that match the number of houses to the number of buyers. You can do that by: 1. Incentivizing builders to build 2. Reducing immigration (at least in Canada) 3. Changing zoning laws to build more densely 1. is not appealing because in Canada there is a strong sentiment against growing the urban sprawl. 2. is not something the government wants to do 3. is what they've been doing for the last 10 years but turns out people don't want an apartment, they want a detached house with a yard and they are willing to put more money on it to meet their expections. Price control is not any kind of solution to the Canadian housing problem. It would create private listings and all sorts of parallel systems so that people who can pay more can still pay more.
- Tiktaalik 3y ago
  > What does that even mean? Spain has been more aggressive than Canada in enacting policies that put a lid on prices. They've intervened to limit rent increases (BC also did this), and limit gas and home heating prices. More discussion here https://medium.com/@monetarypolicyinstitute/fiscal-policy-is-superior-to-monetary-policy-in-reducing-inflation-without-harming-growth-a3b5ccd4d932 https://medium.com/@monetarypolicyinstitute/fiscal-policy-is... Some of these things have been similarly done by some Canadian provinces. We haven't seen the Feds engaged on this issue in the same way though.
  - belval 3y ago
    Apologies, I thought your original comment was referring to the housing market, not to curbing inflation in general.
- VHRanger 3y ago
  Your analysis on 3 is nonsense? People clearly want to buy non-SFH. Look at time on market and price growth for non-SFH units, people want them. Toronto for example largely doesn't have "middle" zoning, its either single-family or condo towers. Similarly for Vancouver. No surprise, Vancouver/Toronto are the worst hit compared to Montreal or Ottawa, which has a spectrum of density (rather than a bipolar distribution). Moreover, even within the SFH, there's a huge spectrum of density between something like Atherton, CA and a rowhouse district in Philly.

hospitalJail 3y ago

Isnt it TBD if Spain made the right call? Action doesn't necessarily mean things are good.

Tiktaalik 3y ago
I guess. But at the moment they've hit 2% without inducing the same financial level of trauma on homeowners. Seems like a success so far. Wait and see I guess.

belval 3y ago

> policies to limit severe price increases What does that even mean? In Canada the issue is that most places have 10 houses for 20 buyers to it ends up being a game of who can pay more as it should be. Restricting price increases just means buyers are restricted on something else, it does not magically create 10 new houses to meet demand. We should not be rent-controlling assets, instead you need to take actions that match the number of houses to the number of buyers. You can do that by: 1. Incentivizing builders to build 2. Reducing immigration (at least in Canada) 3. Changing zoning laws to build more densely 1. is not appealing because in Canada there is a strong sentiment against growing the urban sprawl. 2. is not something the government wants to do 3. is what they've been doing for the last 10 years but turns out people don't want an apartment, they want a detached house with a yard and they are willing to put more money on it to meet their expections. Price control is not any kind of solution to the Canadian housing problem. It would create private listings and all sorts of parallel systems so that people who can pay more can still pay more.

Tiktaalik 3y ago
> What does that even mean? Spain has been more aggressive than Canada in enacting policies that put a lid on prices. They've intervened to limit rent increases (BC also did this), and limit gas and home heating prices. More discussion here https://medium.com/@monetarypolicyinstitute/fiscal-policy-is-superior-to-monetary-policy-in-reducing-inflation-without-harming-growth-a3b5ccd4d932 https://medium.com/@monetarypolicyinstitute/fiscal-policy-is... Some of these things have been similarly done by some Canadian provinces. We haven't seen the Feds engaged on this issue in the same way though.
- belval 3y ago
  Apologies, I thought your original comment was referring to the housing market, not to curbing inflation in general.
VHRanger 3y ago
Your analysis on 3 is nonsense? People clearly want to buy non-SFH. Look at time on market and price growth for non-SFH units, people want them. Toronto for example largely doesn't have "middle" zoning, its either single-family or condo towers. Similarly for Vancouver. No surprise, Vancouver/Toronto are the worst hit compared to Montreal or Ottawa, which has a spectrum of density (rather than a bipolar distribution). Moreover, even within the SFH, there's a huge spectrum of density between something like Atherton, CA and a rowhouse district in Philly.