There’s a battle brewing in BC politics over the Rising House Prices in Vancouver.
It caught my attention because to a lesser extent, it’s also playing out here in the Greater Toronto Area.
On one side there’s the socialist left, making a political issue out of an economic one in an obvious attempt to win votes, by making unrealistic promises to make homes more ‘affordable’. It’s the tried and true formula of saying whatever it takes to win votes, with no real plan to follow through. Very similar to the unethical real estate agent.
On the other side there’s a more pragmatic approach, the idea of letting demand determine home prices. I know that doesn’t sound exciting, but that is really the only option that exists. We live in a free market society where we have something called ‘property rights‘. It’s part of what makes Canada such a desirable destination for immigrants and foreign investors.
While foreign investment in Vancouver and Toronto does play a part in rising home prices, it should be noted that there are some positive impacts from this, including the growth of more affordable outlying areas.
As the core of a city gets too expensive, economics dictate people will move to more affordable markets. As more population relocates, businesses will move to where the labour is, and also where real estate is more affordable. This has been happening for the past 15 years in the GTA, with cities such as Hamilton, Waterloo Region, Barrie all seeing explosive growth as a result of people moving outwards in the search of more affordable homes. In turn these communities are growing and thriving, making them popular destinations.
My personal view on the matter is this, since I can’t control the price of homes, there’s no use whining and complaining.
Do I wish homes were cheaper? Sure. But here’s the problem with that. If homes in Vancouver or Toronto suddenly dropped in price without any other extenuating factors such as raising interest rates or an economic collapse (which is what the complainers out there want) then you would have millions of people rushing to buy these ‘affordable’ homes and through competition would push the prices back up.
So when people complain about rising house prices, what they really want are prices more affordable for them and no one else, which is impossible.
And let’s pretend for a second house prices do fall due to raising interest rates or some other factor. I will argue that the people wining and complaining won’t act anyway, because the cost of borrowing will go up making the month to month costs exactly the same or worse. It’s a no win situation.
Aside from creating a socialist economy where the government determines who can and can’t buy a home, you can’t ignore reality. Real Estate will always be dictated by supply and demand. Instead of complaining about it, my advice is to find an affordable area that has future growth potential and invest there. You’ll be doing your part to grow our great country and grow your equity!
