Affordable Housing. Is this an idea whose time has come and gone? Or is it a "concept" that needs our attention more than ever?
My father (a business owner for most of my life) beleives that home ownership is one of the key factors in developing a healthy and strong self image for people. I subscribe to the thought that everybody should have the ability to come "home" after a hard days work and hang their hat and spend time with family and freinds. Whether through renting or ownership this should be available to everyone.
The question then is, should affordable housing be a combination of affordable rental units and affordable ownership units?
I am a believer in the "free" market. Capitalism. However, I like the term Rich DeVos coined called Compassionate Capitalism. No, I don't want to see people living on the streets. But I also don't want to see people have a house "given" to them by the government. This job belongs to charities like Raising the Roof. Why? Maybe it's because I've had to fight to enter into the housing market...and it's a fight I continue to endure because I want to do it on my terms.
However, today's market begs us to look at this problem again. Why? Take a look around you. The Canadian housing market is white hot! Prices for new homes and re-sales continue to climb to record levels. Mortgage rates are still low. And now we have 50 year ammortizations, interest only loans, and God-knows-what-other-bells-and-whistles.
The point is this: to buy a house is more expensive than it's ever been regardless of interest rates. Second, rental prices are skyrocketing as well! Third, I really don't have a clue what the solution is.
But maybe you have some thoughts that you'd care to share? We would really like to hear from YOU.......
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Who We Are...
- Karim Kanji
- Thanks for stopping by my little piece of digital real estate. This blog has undergone a variety of changes over the months and years. We started by highlighting inspirational people and stories. I've also been known to write about books and events I've attended. 2010 will be the beginning of a new era at KarimKanji.com. Our goal in 2010, and for the foreseeable future will be to offer helpful tips. Whether it be on how to properly market your product or company, use social media tools or how to be a cooler dad, this blog will aim to be, above all things, helpful. I hope you enjoy! kk
2 comments:
It is pretty clear that the high prices of real estate are due to supply and demand--lots of demand and very limited supply in the short term. That is fairly simple and obvious. The important factor that keeps supply fairly inelastic is government intervention. For example, municipal governments tend to control the zoning and density of the land within their city. They could easily increase density in single detached housing neighbourhood to multiple housing, giving the owners in those neighbourhoods automatic incentive to sell their house to a developer who will realize the highest and best use of that property. But the supply-side road block on the Federal and Provincial government level is the capital tax that will be triggered if selling a secondary house, especially when there is a very large capital gain to be realized.
These are just two simple examples why the supply side of real estate is so inelastic. The government can reduce these price spikes by eliminating capital gains tax on residential properties (primary and secondary) so that properties are closest to their highest and best use. Also the municipal government should increase density and rezone old industrial/farm land which is no longer viable to residential/commercial usage, increasing the supply of residential neighbourhoods.
do you think that demand has been "created" as a result of:
1.) real estate companies publishing articles and studies espousing the strength and long term stability of real estate.
2.) CMHC and other mortgage types (including the Federal govt) keeping demand strong via interest rates, cheap mortgages, 50 yr mortgages, no down payment mortgages, interest only mortgages, etc...
what do you think?
karim
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