this post was submitted on 29 May 2024
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Trudeau says housing needs to retain its value (www.theglobeandmail.com)
submitted 5 months ago by [email protected] to c/[email protected]
67 comments fedilink hide all child comments
 

In case anyone still wants to somehow debate whether the Liberals will deliver affordable housing.

“Housing needs to retain its value,” Mr. Trudeau told The Globe and Mail’s City Space podcast. “It’s a huge part of people’s potential for retirement and future nest egg.”

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[–] [email protected] 1 points 5 months ago (1 children)

Fair argument, but in principle lots of taxation is about redistributing wealth to those who need it, and it doesn't have to result in debt for future generations.

[–] [email protected] 9 points 5 months ago* (last edited 5 months ago) (1 children)

It eventually will be. If something yields a guaranteed return, the cost to buy that thing increases exponentially. The math is very simple and no amount of politicking can hide it.

Edit: let's use the classic investing "rule of 72" to illustrate (multiplying the rate of return and number of years to double your capital will total 72). Assuming an annual increase in house value of 5%, which is way below what is happening in Canada right now, the value of a house will double every 14.4 years. Every 29 years (roughly a generation nowadays) the price will quadruple. Grandkids would pay sixteen times more for their grandparents' house than the grandparents did.

[–] [email protected] 4 points 5 months ago (1 children)

That makes sense. The cost of housing is rising faster than pretty much anything else, so it's inevitable that any well intentioned scheme to help first time buyers will ultimately become completely unaffordable unless something else changes. Thanks! Such schemes exist in my country, so I'm curious now to look up some of the reasoning behind those schemes and see how they argue around or attempt to compensate for this.

[–] [email protected] 5 points 5 months ago* (last edited 5 months ago)

These schemes are very appealing to politicians because they get to have their cake and eat it too, at least for a short time. Their solution will work for a few years and they get to please both the homeowners and homebuyers. They will no longer be in politics by the time housing has doubled or quadrupled in cost, so someone else will take the blame and they can live their comfortable retirement telling everybody that back in their day, they successfully fixed the problem, but contemporary politicians aren't as smart or skilled as they are.