21st Century Housing Economics
In the US, the cost to buy a house versus renting has skyrocketed.
I wasn’t able to find similar data for Canada, but like all things, I think it’s safe to assume that the trends are probably quite similar (albeit delayed slightly).
Vacation Rentals by Owners (VRBO) was launched more than 25 years ago, in 1995.
It signaled the start of a new era of rich people owning properties and renting them out to other rich people.
As cynical as that sounds, there is an actual half-decent argument behind the economic efficiency of this. Also, the towns where the properties are based get to benefit from tourists and guests spending locally for a brief stint of time.
The issue is the compounding growth in multiple property ownership and the blossoming business of consolidating ownership under a handful of companies. AirBnB, Blackrock, Vanguard and other pension companies have made rental properties a significant part of their holdings.
They’d be laughed at if they didn’t because they’ve become massive profit centres.
Even universities and colleges are getting in on the game, insisting on new apartments for foreign students.
This has spurred demand for incredible increases in housing projects, particularly in smaller destination countries … like Canada.
Of course, local labourers and small families don’t have a chance of getting in on something as basic as a ‘home’ when they’re facing Goliaths like those mentioned above.
So … not that Pandora’s Box has been opened, how do we help people get a roof over their head without the whole thing feeling like Pottersville in ‘It’s A Wonderful Life’?
It’s about time we had a serious discussion about this instead of just insisting that we fill our Greenbelt with empty McMansions.
Vacant property taxes are one approach.
Similarly, a super-tax on property owners and companies engaged in this kind of activity would be appropriate as the costs would be passed down to the owners of the properties and then on to the people using those properties. In the examples above, this would be vacationers and students (or parents of students).
Honestly, I’m just guessing. Believe it or not, I’m OK with admitting that I’m not an expert.
These are just opinions.
BUT … we ALL have to start demanding solutions to the housing crisis that doesn’t look at the problems in two-dimensional ways. It’s NOT a supply issue. It’s a demand issue that’s only going to get worse as long as we continue to enrich those who are making it worse.