this post was submitted on 31 Mar 2025
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Carney unveils signature housing plan he says will double pace of home building in Canada (www.cbc.ca)
submitted 4 weeks ago by [email protected] to c/[email protected]
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[–] [email protected] 11 points 4 weeks ago (1 children)

Not directly, but the response is in there. Corps can buy up the houses (and easily if there's no restriction on direct sales, which would be stupid). But they'll be paying the mortgage and taxes whether they've got renters or not.

Once demand cools, they'll start having to rent more competitively, and be among the first to start selling holdings that don't rent lest they lose money on the resale after competitors flooded the market.

In my area, prudent property management businesses are already priced out by barely-wealthy individuals speculating on unbounded appreciation. On the assumption of that return -- and not understanding the commitment, costs, and risks -- they overbid for their chance to join the capital class, managing rental property as a side gig. They'll be the first to fall, because they're already just treading water or even running a deficit until either the mortgage is paid or some property incident renders them insolvent.

[–] [email protected] 1 points 4 weeks ago (2 children)

Thanks for breaking it down. But I think reducing the cost of housing would just increase margins and enlarge wiggle room enough for these mistakes to happen without too much trouble.

The just treading individual investor will lose money in the short term but the prudent investor can wait for new cheaper housing to make the math work out.

Lowering the cost of housing will also mean more individual landlord wannabees will be able to enter the market. You can't time the market but with the Government telling what is going to happen, smart people will wait on their capital. That capital is what I fear. I would like the PM to force that investment into productive businesses as opposed to Real Estate. So Real Estate belongs to the occupier. Furthermore I'd like to pay my own mortgage, not my landlord's. But we'll see what happens.

[–] [email protected] 3 points 4 weeks ago

While I'm pretty much just guessing that closing the supply gap will on its own force the market to compete rather than pad their margins, the obvious additional step would be having the public developer sell only to individuals/families that own no other property. Even if it isn't feasible to mandate the same for secondary sales, that would still sap rental demand. Plenty of young people (and older generations stuck in a poverty cycle or unable to map a retirement) would choose home ownership over the chance to flip a starter home for profit and then keep renting or gamble on upsizing while forces conspire to cool the market.

I can't recall for sure, but I think at some point Carney specifically mentioned developing small starter homes. That'll sap demand for the larger, more expensive homes that previously had no alternatives, and be a very inefficient property to manage. (Individuals will still speculate if allowed, and their financial blunders would likely add some downward pressure as well, though not as much as reducing rental demand.)

Overall, there certainly are some counterbalancing forces that would prevent housing prices from going down significantly, and I suspect that's also intended or at least included in projections. Carney is still a true blue neoliberal, and he's not looking to upset the asset holding class. I'd wager his target is continued appreciation but at a rate near or below general inflation.

I think you bring up a good point about capital holding back to buy a dip. The answer to that is probably enticing those dollars into other investments around further extraction, new manufacturing, and (maybe) R&D. The last one probably won't draw that much private interest though -- it's too high a risk when the economy isn't booming overall.

[–] [email protected] 1 points 4 weeks ago

I should have also mentioned: this past year Toronto finally reaped a boost in housing completions thanks to investments early in the last federal administration. Just? that has already driven down rents by something like 5-7.5%, to a 30-month low. (Of course that's at the same time housing starts are also at an all time low. 😑)