Quote:
Originally Posted by GGG
Why does housing cost what it does?
It seems like more supply should be able to eliminate any housing affordability problem. But a long with excess supply another thing that needs to be realized is that near city centres SFHs should eventually not exist.
How many new homes would it take to tank the housing market?
The other thing is with housing in Calgary is the median family income supports the purchase of the median SFH so that seems pretty balanced. If you wanted to reduce the market further you would have to increase qualifying standards for loans and down payments to make the affordability of housing drop. This might be offset by increased investment into rentals though.
Part of the problem is that so much money has been printed and instead of causing inflation it’s being hidden in stocks and houses and other assets. The only solution is to decrease money supply and there is a lot of resistance to that.
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I believe it's a whole bunch of factors that have come together at one time.
1. low interest rates
2. the debasement of our currency by printing money
3. the rise in commodity costs
4. the shortage of labor
5. the demand by immigrants or people from other countries
6. the difficulty to invest in the low risk fixed income market in such a way as to overcome inflation and taxes
7. the belief that the house prices will inflate continuously without periods of deflation
8. the changes in lifestyle because of the pandemic e.g. being able to work remotely using technology
9. etc.
I don't think the banks should make it easier to get loans, as we may end up with a crash in the market similar to what happened in the US.
IMO it will take an increase in interest rates to cool the market.
As for trying to flood the market with new homes, I believe this country is far to burdened by red tape and taxes to make that happen in any reasonable time period.
I understand that much of the house purchasing is happening with the help of "the bank of Mom and Dad".