The Damage Caused By CMHC and the BoC: Working-Class People Have Fewer Options For Housing Higher Rent Prices and Broke Landlords – October 14, 2021,
In my opinion, the Canada Mortgage and Housing Corporation(CMHC) shouldn’t be Federal, if people want it, it should be a provincial crown corporation ONLY. Why I say this is because the CMHC’s main job is to protect its investors from loss. If you’re waiting for a housing crash, you might find yourself waiting a long time, because the CMHC makes sure there’s a floor on the housing market, meaning that one could expect the debasement of the Canadian dollar before a housing market crash happens.
The Bank of Canada(BoC) whether directly or indirectly assists the CMHC with keeping housing prices artificially inflated. When America’s housing market crashed, the Canadian housing market did not crash that’s because Canada had regulations in place to prevent what happened in the United States from happening in Canada. Canada didn’t have NINJA loans or teaser rate loans, yet, Canada, dropped interest rates anyway?
Why did the Bank of Canada lower interest rates? Because the Canadian economy is heavily dependent on U.S consumers. The U.S is our largest trading partner without them, the Canadian economy as designed today would have to undergo major changes. The U.S dollar is often propped up by other countries, to subsidize their government.
If the Canadian and U.S dollar were to be on parity, Canada couldn’t compete with the U.S for one reason only our cost of living is ridiculously high. Not only is our cost of living high, but we also impose taxes and regulations on imports from the U.S to protect many of our companies, who otherwise wouldn’t have the ability to compete, based on our current regulatory environment.
I bring this up because this fuels the housing crisis that’s brewing in Canada, I personally see a lot of malinvestment in the Canadian housing market. The demand for housing in Canada is being fueled by speculators, not by the people who need housing. Whether you like it or not Rental controls exist in many provinces and municipalities The CMHC makes building rental housing a silly idea for real estate developers/investors, who can avoid all of the provincial and municipal regulations by building condos.
Conservative federal candidate to become Prime Minister Erin O’Toole addressed this when running for Prime Minister, but it’s unlikely most people understood what he was talking about, because as an example if you’re a renter you might not even know what CMHC is or how it’s helping to fuel higher rent prices.
In a market economy housing is based on demand, and in a market economy, there’s no agreement that interest rates should be left at zero indefinitely. But to be fair to the activists, in a market economy rents can rise to whatever the landlord deems fit. How consumers combat landlords raising rates and potentially kicking people out of their properties is by landlords having competition.
If as an example rental Apartment housing was built where highrise condos exist today, there would be no housing shortage and landlords would be competing for tenants. If interest rates were normalized, mortgage payments would be a lot higher, which means that buying and holding a condo for price appreciation would be a dumb idea.
In today’s housing market buying and holding a condo for price appreciation is a genius idea, especially if you can get a tenant to even pay a portion of your rent and maintenance fees. So this is what a lot of people are doing, they’re using tenants to discount their mortgage, strata, and energy payments, and then once their properties rise in value they sell, often kicking the tenant out.
Now, if those condos were rental apartments, no idiot would pay rent on a property they don’t own or live in, meaning that landlords would be competing. Now, by competing I should also point out that, if a person is very destructive to their rental unit and that person is evicted, we as a society need to stop making these people appear to be victims.
This is one of the reasons you’ll see arguments brewing between landlords and tenants because the government knows there are more votes by siding with the tenants, the landlords are stuck getting blamed for higher costs that are the result of damages caused by their tenants. This is why politics for me is annoying because politics creates so many unnecessary problems.
How lying politicians get exposed is when people are able to explain situations for what they are as opposed to what the public imagines them to be, because a politician pushes a narrative that they believe will get them elected. All that aside this article is written because working-class people are going to find themselves poorer if rental prices continue to climb higher.
The truth is if things continue the way they are now, rental prices will continue to climb higher because buying a house is getting more expensive and wages aren’t rising as fast as asset prices. This housing problem in Canada has an easy fix, first, sell the CMHC, next NORMALIZE interest rates. If you’re saying this won’t happen, I tend to agree, but if it doesn’t happen there will come a time in which the problems I outlined in this article accelerate.
City of Toronto, housing activists demand eviction data from Ontario Landlord Tenant Board | cbc.ca
Interesting times ahead!