November 22, 2017 | The Challenge

Okay, dogs, here’s the question: could you find $400 a month, if you had to?

Apparently 82% of Canadians cannot. A bank survey this week discovered a hundred dollars a week is beyond the capacity of the vast majority of people – they spend virtually everything they earn. No surprise that 79% of the folks CIBC queried said they worry about not having enough money to retire on. Which they should. They’re pooched.

This is what happens when people pay stupid amounts of money, and many multiples of income, to get a house. Insane real estate prices have bred swelling rents, low vacancy rates, elephantine debt and what’s obviously turning into a potential retirement crisis. Young adults are straining to afford leases or dangerously over-reaching to buy property. Boomers are sitting on small mountains of windfall equity, but immobilized by not knowing where to go, with scant liquid assets and crap pensions. Employers in T.O. or YVR can’t find talent, because kids can’t stay. Real estate is our addiction, our obsession and our disease. It’s killing financial stability.

So, what does Ottawa do?

“All Canadians need and deserve housing that is safe and affordable,” the prime minister said on Wednesday as he committed $40 billion to a national housing program. Nice words. But “all Canadians” ended up being the 6% of people that social agencies say are under-housed. Over 300,000 families will eventually be receiving $2,500 to pay their rent. Many billions will be spent building about 100,000 units of housing with lease costs geared to income. At least 25% of the $40 billion in spending will be gender-based going to “to projects for women, girls and their families.” Homelessness will be targeted.

Worthy goals? Sure. Everybody deserves a roof.

But forty billion is a pile of money, and spending it won’t bring property prices down or boost the incomes of families trying to get some. Giving lower-income people free housing money is generous, but might end up putting more pressure on rents.

Meanwhile, mortgage rates are rising (the Fed indicated again this week that the next US hike comes in a few weeks), and borrowing rules are tightening. This means even as real estate values inexorably decline, the financial burden of buying and owning will remain about the same. Insurance premiums and property taxes are rising almost everywhere. AirBnB is sucking off rental inventory. Taxing scant empty houses or mythical foreigners has done nothing but allow politicians to look like they care.

Nope. Ain’t working.

So here’s our challenge. As the Number One blog in Canada on real estate bitching, financial debauchery, hormonal behaviour and breed prejudice, we have a duty to set T2 straight – before any of the $40,000,000,000 is actually spent. Are there better ways to deflower housing so average families can once again afford average homes? Raise rates? End mortgage insurance? Nix the capital gains exemption? Bigger down payments? Thirty-year loans? What?

Canada needs you, blog dogs. This could be the defining moment of a generation. Or at least until Thursday night. Every comment will be sent directly to the prime minister. Trust me. I know where he lives.

Garth Turner November 22nd, 2017

Posted In: The Greater Fool

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