Snoooooooooooooooze

“You’re poorer than you think“?! Even the headline is old news. I’ve been on this house price grind for eighteen years (eighteen years?), but at least I’m trying out new ideas.

Our population is declining. Urban rents are falling. Demand is dropping. New supply is stalled…apparently because no one wants to leverage their entire life for 5% of an expensive asset that depends on government intervention for any further appreciation.

Aside from the very real problem of homelessness, we do not have a “housing crisis”.

We have a house price crisis.

Government policies, primarily federal ones such as the principal residence exemption, CMHC programs, and OSFI rules, have encouraged excessive investment in residential real estate. By responding to the government’s irresponsible incentives, Canadians have invested too much (of their money and their self-worth) in their houses, undermined our productivity, and ultimately put the national economy in jeopardy. Now, as population, prices, and demand falter, our governments are trying to disguise developer bailouts as…something else and expecting that we will all just forget about it before Parliament resumes.

Instead of a bunch of tiny condos or pre-fab homes no one wants, Canada needs to build a better financial infrastructure (e.g. reference prices, futures contracts, house price ETFs, and maybe even some prediction markets) to counteract the terrible – but apparently sacrosanct – federal policies that created this mess.

Solving the house price crisis should be a real project of national interest. Instead, our politicians and pundits are more concerned with signalling how much they care and ultimately with maintaining their status in the status quo.

Nørrebro, Copenhagen, Denmark