Canada’s apartment building owners are happy Because of the Federal Governments Dedication To Home Ownership – September 12, 2019,
Well, if you listen to most politicians all over Canada, they may sound like they’re for the poor, however, their policies actually help the rich. Competition brings prices down, incentives push prices up. The Canadian Federal Governments have been focused on maintaining and making real estate prices higher, to the point now that the Federal Government has gotten into the Downpayment loan business.
Understanding the new First-Time Home Buyers Incentive | globalnews.ca
This, of course, is an indicator to developers or the people who build housing in the Private Sector not to build rentals, but instead to build Condos and homes. Because the government via CMHC is now involved in the Down payment and mortgage insurance portions of the process, this obviously makes the pool of potential homebuyers larger, which of course always the seller of the house or condo to charge a higher price. Now, even in the rental market, the government can’t tell the owner of a private business what to charge their tenants because if the government did tell apartment building owners what they could charge in rents, no private builder would build here.
So in the real estate market what you get are sellers of real estate charging as much as they can to the buyer, this, of course, makes real estate prices higher and creates an environment where there’s no incentive for rental apartment builders to build. When you build rental housing in the residential market you’re obligated to abide by the rental control laws, meaning as an owner of rentals, you make your money on the initial rental price you charge.
CMHC reports annual pace of housing starts climbed 1.9 per cent in August | TheCanadianPress
This is, of course, the reason why the Federal Government via CMHC shouldn’t have gotten into housing in the first place. At the very least CMHC should have been a Provincial Crown Corporation because essentially the Provinces are at war with the Federal government. The Federal government is incentivizing Home and condo construction whereas provinces are trying to tackle rental housing. It’s a silly mess that Justin Trudeau, Andrew Scheer, Jagmet Singh, and Elizabeth May will make worse. Being honest I’ve heard nothing from Maxime Bernier about the CMHC situation.
CMHC is a touchy subject for most people because they’re funded with Government supported Mortgage-Backed Securities and if CMHC is privatized or made a provincial Crown Corporation the risk of the housing market correcting increases very quickly.
Liberals promise to expand program for first-time homebuyers | CBC
Canada has a relatively stable banking sector, which is why, if the CMHC continues to rise, the cost of living in Canada is eventually going to become unbearable. This situation, after all, was completely avoidable, but the real problem facing Canada will be jobs, because unlike America where if one State becomes too expensive Americans simply move to a State with a lower cost of living, Canada’s real estate and rental problem is a nationwide problem. Sure Toronto and Vancouver are ridiculously expensive but even small towns are expensive in Canada and in most instances, Canadians who need jobs can’t move to a small town because that small town is typically over-regulated and not friendly to business, meaning it will be hard for even a low-skilled worker to find desired employment.
Humans typically gravitate to the places where they have an abundance of choice or options. Rental prices decrease when there’s an abundance of rentals, when skilled workers can’t get ahead, they typically start to look around for better career opportunity and this, of course, is why a lot of skilled workers in Canada are leaving Canada for countries like America.
This is of course what causes brain-drains. Sure if you’re a low skilled-worker you take whatever job you can get, but when you’re a skilled worker, you have options. Canada has decided to bring in a lot of low skilled workers who are moving to larger cities to find work, do you see the rental and housing disaster the government created yet? You should because it appears to me that almost every politician is dedicated to making the cost of living higher.
Three reasons Canada’s apartment building owners are happy | vancouversun.com
Interesting times ahead!