this post was submitted on 28 Aug 2023
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Do you get a return on investment directly in merely owning a car? No, of course not. People still buy cars. (To avoid confusion: cars open other economic opportunities, but just sitting on a car by itself is not an investment.)
On the other hand, if cars did become an investment, people would hoard cars and they would be less affordable for people who actually use cars productively. High real estate prices are similarly hurting the economy.
Great analogy with cars, I'm definitely going to steal that one.
Cars and homes are two totally different things. Why even compare the two?
Also, some people do buy cars to resell at a profit. The vintage and classic car industry is one example of that.
Houses are an investment because they sit on land that increases in value over time. Some people don't even profit from the sale of their house, but from the sale of the land.
What is the argument, then?
Stats Canada makes it clear that rental housing is affordable for those making less than the median income (25% of expenses spent on housing), and that most mortgage holders are not spending more than 30% of their household income on housing.
By definition, it's all affordable if you aren't making well below the median income for an individual (which is $32,000 after tax).
Can we use more low-cost housing? Absolutely.
I've never argued against that, but I think people need to understand the definition of affordable housing and what that actually means.
When you profit off of merely sitting on land, you are essentially leaching off of society. Economists call this “economic rent”, which is a kind of theft where a person gains from the productive activity of others, without producing anything of value themselves. This is why the nickname for a land tax is “the perfect tax”. You didn’t “produce” anything from the increase in real estate price. Like a car, your house structure itself is actually a depreciating asset and is worth less every year.
This is different from a productive investment like a share in a company, because a company can use that money to invest in useful capital, like factories or workers. This is why Canada’s obsession with real estate “investment” is causing the economy to contract in terms of GDP-per-capita.
Your last few paragraphs denying that there is a housing affordability crisis in Canada is completely and ridiculously outside the mainstream. Literally no expert agrees with you.
I'm not arguing for "sitting on land", and this never came up in any of these threads, so I'm not sure where you're going with that.
Land, whether you use it or not, is subject to tax, so it's not "theft".
Two different forms of investment.
I quite literally quoted what Stats Canada data says, and that's being applied to the universal definition of "affordable housing". Experts can disagree with the stats all they like, but it's not "me" who came up with them.
If you don’t profit from sitting on land, then real estate is not a profitable investment. Prices should be flat. Still lots of reasons to own your own home, but leaching the productivity of others isn’t one of them. If you think that is good, then we’re in agreement?
Your personal interpretation of Stats Canada is like personally interpreting Ivermectin studies. Every expert across the political and economic spectrum, from left to right, thinks that there is a housing affordability crisis. It’s scary that people like you, who deny that there is even a problem, exist.
Explain.
Land has value, and sometimes it goes down, but it usually goes up. Whether you are actively using the land is completely irrelevant because someone will pay you to make use of it.
I don't think that people should be allowed to hoard large amounts of land for the purpose of selling it later on, so there should be regulations put in place to prevent this.
But calling a farmer who isn't actually using their land and who wants to sell it at a profit to some developer "leaching" seems harsh.
That's unfair. I'm going by the universal definition of "affordable housing" set by these experts, while using Stats Canada data to illustrate that the majority of Canadians can afford housing (rental).
You can disagree or claim that I deny there's a problem, but perhaps we are using different criteria here.
What definition of "affordable housing" are you going by, and what data are you using to support the idea that Canadians can't afford housing?
I find that the biggest challenge to discussing affordable housing is that some people have wildly different ideas of what that means.