CBC Article blames AirBnB for a problem created by CMHC – May 1, 2019
So, we’re clear, AirBnB similar to the Uber was created in response to over regulations by GOVERNMENTS all over the world and easy lending, which has resulted in overvalued real estate prices worldwide. Uber has been happening since taxis became regulated by the government, the problem was that technology at the time didn’t allow Uber to make its presence felt, but for old guys like me, we all know that the government sticking its nose into the taxicab industry raised cab prices and created a monopoly that only a hand full of people volunteered to pay for. Uber met market demands, as does Airbnb. Airbnb in Canada is actually a creation of CMHC, who is funding Condo development via insuring mortgage loans. Airbnb would be a lot harder if instead of empty condos there where empty Rental units? Rental housing typically is more regulated than individuals who rent out a condo they ‘own’.
The reason why Airbnb has a leg to stand on is because of the condo boom, which wouldn’t be possible without low-interest rates, which thus attracts foreign and domestic buyers to finance housing and condo projects at inflated prices. Why weren’t all these condos being built in the 1990s? The answer, fewer people qualified for mortgages, therefore speculative investors had to take on more risk, which obviously equates to housing being built based on actual domestic, residential, consumer demand, which means the quality is usually better. Has anyone ever seriously considered visiting some of these shoebox condos for sale in Canada? China has a billion people, and I’ve seen larger and better-built properties in their larger cities than I’ve seen here in Canada.
It’s a mockery what’s happening to Canada’s real estate industry, and because it’s getting increasingly closer to a crisis, people want to point to the private sector as the entity to blame. I’ve seen this happen over and over again where people are blaming Airbnb for a CMHC and Bank of Canada problem. The Canadian voter has decided that lower interest rates to protect our housing market is the better way to go, so in order to meet that demand more and more cranes are going up in the sky to meet the demands of real estate speculators.
Now, because the CMHC and the BoC created and are still maintaining this disaster, and because nobody in their right mind would purchase these crappy houses and condos at inflated prices, the entity that makes the most sense for the real estate investor and speculation communities is to use the Airbnb APP to get their mortgages, taxes and strata fees paid.
Now, it’s important to realize that we’re at a tipping point, sure we can import foreigners here stupid enough to purchase these inflated properties, but wages aren’t keeping up with housing prices and because of Canada’s extremely high cost of living I’m unsure of the amount of skilled labor Canada will be able to attract as their bottom lines will be compromised by Canada’s high taxation rate along with Canada’s extremely high cost of living.
So, I get it, the powers that be want to protect the CMHC from blame, because make no mistake about it, CMHC has evolved into probably the most powerful Crown Corporation in Canada. CMHC benefits from an inflated housing market, I think people forget that the higher the price for a house, the more expensive the mortgage insurance will be. But with that said I talk with people, and a large segment of the Canadian population love CMHC and don’t want to see it stripped of its Crown Corporation status, so instead lobby groups are pushing to regulate Airbnb just like Uber. It’s at this point where some people understand the Bitcoin phenomena. Because so many people around the world use Uber and Airbnb, it becomes more of a challenge to overly regulate them. The thinking behind bitcoin was the more people that use it, the harder it will be to stop its ascension.
Sometimes I’m not sure if people like David Wachsmuth The McGill University professor who seems to point at Airbnb as the problem are lobby groups for real estate elites or if they’re misguided Leftists that don’t understand the correlation between easier qualification for a mortgage and inadequate residential housing for lower wage earners. I want to make something clear here, Canada has enough housing to house everybody in this country, the problem with housing in every city revolves around development not meeting the demand of residential purchasers of real estate.
Real estate, in reality, should be left to sophisticated purchasers, Canada has opened the real estate flood gates to idiots. A housing development project gets financed by purchasers, when the government steps in and says, don’t worry if you don’t qualify with the bank, call us and we’ll assist you in qualification, you inadvertently create a pyramid scheme, in which everybody is rushing to qualify while they still can. Now, if you look at most places in Canada, real estate, as well as rental and lease prices, aren’t reflective of the residential or commercial markets.
A similar phenom happened with Smart Phones, do you know why a smartphone that costs about $100USD to build will sell for $1500+ dollars? Because people will go into debt to purchase it, dummy!
Do you know why car prices are so expensive? Because someone came up with the bright idea of AUTO LOANS!
a loan means I’ll pay the full price at a later date, therefore the price valuations accounting for risk are based on borrower being able to qualify, based on the downpayment, which also equates to less quality, because now more buyers exist where they otherwise wouldn’t, furthermore a whole new brokerage and loan industry is created, which of course, creates its own lobby groups and viola price inflations everywhere.
This is a huge contributor to debt levels increasing. Now, oddly enough, Airbnb, is basically a temporary home, in many instances for people vacationing to Canada? I don’t even see how you can blame them for anything. The people who should be concerned with Airbnb are Hotels and motels because that’s where Airbnb provides an alternative. If Airbnb is competing or is competitive in Canada’s rental markets, doesn’t that signify a problem with inflated rental prices? and umm what entity is subsidizing real estate speculators? CMHC and BoC right?
Interesting times ahead
