Pertinent satire:
You are subsidizing landlords by giving this stimulus. It’s not that bottom up.
You are subsidizing landlords by giving this stimulus. It’s not that bottom up.
The younger generation also benefits from CERB and there are other appropriate programs for youths and students.
This was purely to prevent a housing collapse.
What about the people who would have been made homeless, perhaps permanently, by the housing market collapsing ferociously as you pointed you?
What do you think happens mortgage lending in such a scenario?
What percentage of current renters have a 20% downpayment ready for even something as large as a 50% drop in home values? In Toronto, last I checked it as 1.1m for the average house and about 800k for a reasonable condo. How many current renters do you honestly think have $110k/$80 ready for a downpayment?
A housing market collapse only benefits those with great sums of capital on the sidelines waiting to deploy.
That actually depends on where you live - here in Ontario, we have laws that give tenants the right to stay even if the landlord sells/loses the property. The new owner must allow the tenants to stay, with the same lease terms, even if the new owner is a bank.
So 1.1m for a house is probably a problem. What is the alternative to fixing that?
The USA, Ireland and others have already been through housing busts in the last 10-15 years and it had no effect on home ownership.
>So 1.1m for a house is probably a problem. What is the alternative to fixing that?
Keep in mind we're talking about prices in some of the most attractive places to live in, in North America. Places that are also the target of skilled immigration and migrants with money also.
As you probably know, it might be $1m for a starter condo in NYC, but you can pick up a detached house in a decent area elsewhere for a quarter of that.
The unaffordability of the cities is a function of supply vs demand. If you want to bring down city property prices, simply reduce the need for cities.
You can’t create more homeless when there’s just as much housing to go around as there was before.
you cannot have a strong economy while housing has crashed.
housing is at the top of the needs hierarchy. when people have money they will put as much as they can into housing. so if the govt gives everyone $10,000, probably 30-50% of that will flow to housing. that doesn't mean that their intention or only goal is to "support the housing market."
Housing crashed = cheaper housing = more labor mobility = labor can spend more money on their "higher level needs" like eating at restaurants or elective medical care or online shopping.
Would you say "you cannot have a strong economy while the food prices have crashed"? Obviously not, lowered food prices would be seen as a good thing by everyone.
Until the companies providing the food go out of business. Or get bought out by foreign firms with no incentive to provide good food or service, e.g. Tim Hortons (owned by burger king, which is in turn owned by a Brazilian firm).
If you want to cut out the middleman, Canada could’ve paid mortgage bondholders directly through mortgage servicers on behalf of tenants and landlords.
For example, a bank only agrees to hold onto your money, because it will actually spend it for you.
Whenever you "saved" money, unless it was in your own coffin of gold, you actually just gave it to someone else to spend it with the promise that whenever you want it back they'll have it.
That said, if the market crashes, they won't have it. Because the bank's plan to "have" your money when you ask for it is actually to give you someone's else's. Cause your money has already been spent, either loaned to someone who wanted to buy a house, or start a business, etc.
That means if all those loans defaults, the bank actually won't "have" your money, it'll have lost it.
This is at a high level (from my understanding), why the government always bails out banks and bank related markets like home loans. If the bank go broke, everyone's money is gone.
FDIC is basically just saying "we'll pay it out of taxes'.
The whole thing is a shell game.
Not trying to insinuate anything here, but I'm giving you some data points to show that it's not just a matter of moving money from spenders to savers, but there are other things involved.
Tenant -> landlord -> bond holders. Then what? Where does the chain end?
The state building decent affordable housing on a massive scale to increase the supply and bring down the absurd prices.
The UK managed it post-WW2 when it occurred to the government that hundreds of thousands of well trained, very fit young men who'd been taught to kill where going to need somewhere to live over the next two decades.
At the peak of that in the 60's we built 400,000 council houses (in addition to private housing) per year.
In 2017 we built 160,000 in total.
Also back in the 60's there where strict rules on the size of family council (state) built housing around size - so those 400,000 houses had more generous room sizes on average.
The thing the plan lacks is a plan to get around the fact that home-owners will go ballistic and that government disproportionately listens to them and I say this as someone who will be buying a house in the next couple of years.
Ironically I'll be putting an ex-council house high on my list because a lot of them where built like battleships, had high ceilings and nice room sizes and frequently decent sized gardens.
Picking one I know from growing up.
https://www.google.com/maps/@53.7817901,-0.2459041,3a,75y,31...
Oh and to make it worse, Covid has and will decimate the house building industry, it's already an ogliopoly (the top 10 builders account for >50% of all houses built and artificially restrict supply to protect prices) - the remaining small builders are basically knackered at this point.
They really did build some nice ones.
What we really need is people with a bold vision of how to solve the problems, someone like Ebenezer Howard who started the garden city movement in the late victorian era but frankly we don't have them and if we did they likely wouldn't get elected anyway.
It seems like we are stuck on this one way downward spiral when it comes to housing for no sensible reason I can see.