B.C. tenants to see the highest rent increase in 15 years – Government Intervention Gone Wrong!
The main problem with big government is they never admit when they’re wrong, this problem would have been long remedied had the people of B.C not opted for such extreme rent controls, but I can almost guarantee that a large chunk of Leftist British Colombia will vote for more government intervention to fix a system the free market would have cured a long time ago. Now, one of the main problems in the Canadian housing market is CMHC. Foreigners owning B.C homes is one thing, the rental market is something else. One of the main reasons Canada is in this conundrum revolves around the Bank of Canada dropping interest rates to when the price of oil crashed.
Poloz, in my opinion, should go down as one of the worst Bank of Canada governors of all time, both he and Harper helped create this mess, something former finance minister Jim Flaherty spoke out against and well, when Trudeau’s Liberals took over they accelerated the problem with deficit spending which in time is either going to cause a collapse or eventually cause the Canadian economy to come to a screeching halt. The article below that comes from Global News makes this situation seem like it’s nothing more than a Cyclical event, that happens every once in a while, but the truth is the people of British Colombia voted for this. You can’t expect the government to fix a problem the free market would have solved years ago.
B.C. tenants to see the highest rent increase in 15 years
The real problem in the rental markets is that the government has created a problem that doesn’t allow these land barons to go bankrupt, in Vancouver and Toronto there’s a lack of demand for the housing being built. Being that the Canadian dollar has been artificially lowered it’s allowed foreign countries like China to buy up the property Canadians are demanding for cheap. This wouldn’t be happening if the Canadian dollar was where it was supposed to be, this wouldn’t be happening if the real estate market in Canada wasn’t so regulated. Regulations are created for security, once you regulate the financial components to the real estate market what you’re actually doing is securing foreign capital in Canada with taxpayer dollars.
What this means is if there are 10 houses and 7 of them are owned by residents of Canada and the other 3 are owned by foreign investors? Guess who else investment is secured by the Canadian taxpayers? The foreign investors of course, because you see if there’s an economic crash all participants crash together, furthermore when a crash occurs the foreign capital also flees with the market correction and of course that money leaving is going to still be compensated. While all of this is happening however what you get is a government-created housing crisis.
It’s important to note that when developers build a condo as an example, they’re building knowing that majority of the units have been sold already, so in most instances the condo’s being built won’t reflect the actual demands of the market, it will reflect the demands of the real estate investor, who will be shrinking the supply and passing his/her mortgage costs onto the consumers/renters.
Now, the real question should be, why isn’t B.C building rental units to meet the demands of the B.C population? Well, that’s simple real estate investors via the CMHC have been incentivized to build condos instead of rental housing. Adding to this disaster are rental controls, so if you’re going to build rental units the first thing as a developer you’re going to look at is rental controls, because if you build a building you want to know you that you can raise rents in the event a disaster happens. In a rental controlled environment, a landlord can’t raise rents for upgrades. If you know anything about condo’s you’ll know about maintenance fees and you’ll also know that maintenance fees have the option of raising to fix unforeseen costs.
Maintenance fees, in reality, are nothing more than rents, without major responsibilities. when your city is filled with condos, what you’ll get is a lot of real estate investors that will base their rental prices on the mortgages they have, of course, they’ll be looking at the going rate for the area etc. But ultimately they’re driven by profit, and the as people’s options for rentals decrease these real estate investors have more power to raise their rents, adding to the problem are the added government interventions in the B.C real estate scheme. Now it’s important to understand that the below statement is Government created scheme. Please read:
B.C. rent hikes are based on a long-standing formula, which allows rent to climb by two per cent plus inflation. The Consumer Price Index for B.C. showed inflation at 2.5 per cent up to the month of July.
Why does B.C have this stupid policy? Because they often vote Leftist, the NDP and the Liberals believe in intervening in the free market, Leftists believe in picking winners and losers, they’re also known for revisiting what caused a problem in the first place, because in a Leftists mind that would be considered regressive and therefore not smart, plus according to the Leftists the free market is evil. So this is B.C’s problem and it’s only a matter of time before Canada ends up like Venezuela. Personally, I think one of the worse things that could happen to Canada is if we win this trade war with Trump because of course Canadians will assume that the government knows best and they’ll continue with these crazy diabolical schemes that are really silly when you think about.
Interesting times ahead.