![[BCMP Newsfeed]](/.inc/img/bcmp.newsfeed.01.gif)
BC Cannabis News
Medicinal Marijuana
Canadian Marijuana Party
Marc Emery News
Reply to comment
Affordability crisis in Vancouver needs innovative, realistic solutions
Submitted by jacob on Tue, 08/19/2008 - 14:27
The inflation rate for housing has vastly outpaced the inflation rate for wages, especially at the low end in British Columbia. Many simply blame the increasing population of the city, but given the number of new condos and homes coming on the market, can this possibly be the case?In reality, the price of housing is being driven up, as are so many things, by people looking to make a quick buck.Investors, from Canada and overseas, purchase real-estate in Canada because over the long term, property trends higher than the stock market, meaning that a home is a massive investment. Allow me to explain:
Let's assume we have an investor who has $100,000 and good credit. That investor uses his $100,000 as a down payment on a $500,000 condo. The investor then rents the condo out for the monthly mortgage payment to someone who can't afford to buy a condo of their own. 25 years go by, and the mortgage on the condo has been completely paid off. The investor decides to sell the condo for $1.2 Million, an appreciation on the condo of about 5% per year (on the low side for real-estate).
Here is the real trick, the investor only spent $100,000 as his initial investment, using rent to pay the rest. After that 25 years, the investor has $1,200,000, a return on investment of 1100%, or 44%/year.
The renter spent around $800,000 in rent over that period, and has absolutely nothing to show for it.
In reality, an investor could buy a condo, never rent it out, sell it 25 years later and still make a modest profit.
In Vancouver, 60% of new condos are sold for rentals according to real-estate statistics, an unknown number are sold simply to sit empty, anecdotal evidence suggests this number is high.
Canada is one of the safest places in the world to invest, which is why money is pouring in from around the world to invest in our real-estate market, it is a safe place to park lots of money. This drive for safe investments is creating massive upwards pressure on the price of housing, with investors spending residents almost completely (60/40) out of the market.
Unfortunately, this investment is destabilizing our society. When a person owns a home, they are paying for something they can sell when they retire. When a person is renting, they have no such investment. Since both are paying roughly the same amount per month for housing, the renter, already poorer, would have to save their rent over again just to retire.
What happens when we have a generation of renters retiring? Will our society no longer allow for retirement? Will retirees end up on the streets? Or will government have to spend billions supporting them? All of these options undermine the very stability our society enjoys, the very stability our parents and grandparents worked so hard to achieve. The very stability investors are seeking.
In short, the money the vast majority of people rely on for their retirement is being taken from them by those who already have lots of money. Government and society will end up paying for this in the end, meaning that we have a system which ultimately is transferring billions of taxpayer and low to middle income dollars to the wealthy.
The BC Marijuana Party believes that our society can only function if people are able to take care of themselves, able to save for their retirement, able to maintain the level of stability our society depends on. There is a famous saying in political science, which translates to "No middle-class, no democracy" (or capitalism). For the preservation of our society and in keeping with our goal of a free society, middle-class Canadians must be able to afford their own home.
In the short term, until a natural level of rent-to-owner ration is re-established, the BCMP calls for the immediate implementation of the following measures:
1) Home-ownership in urban areas be limited to individuals who live in Canada 183 days or more each calendar year (averaged over a 2 year period)
2) An Escalating property tax structure for individuals owning more than 1 residence in a given urban area (eg Metro Vancouver) with each additional residence seeing an increase of 50% over the previous residence. (2nd residence 150% tax, 3rd, 200% tax, etc)
3) Introduction of a Bond-Driven fund to purchase real-estate defaulted on by low and middle income earners and resell it at market value, preventing a housing market crash. This will give an alternate avenue for investor dollars.
4) Introduction of a windfall tax on the banking sector to offset the risk to government of the federal reserve system, use funds generated to increase mortgage-insurance, lowering credit requirements to allow middle income individuals to qualify for mortgages.
5) Reinstate the BC Affordable Housing program to begin construction of affordable housing in depressed areas such as the Vancouver Downtown Eastside.
![[Support BCMP]](/.inc/img/support.bcmp.01.gif)
