this post was submitted on 12 Aug 2023
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It seems to me that increasing supply alone is not going to cut it. Are there not a bunch of financial groups with nearly bottomless wallets that enable them to afford to buy up any amount of property to rent or flip at any price they want, even if it means some properties sit on the market empty for a long time? This government policy seems analogous to having people with $100 dollars sitting at a no-limit poker table with a bunch of billionaires who can afford to endlessly put you all in on every bet, so they always bet more than you have and then the government comes in and says they will allow for more games to be played. Wouldn’t the policy be pointless if you don’t also limit the number of games the wealthy players can play?
Supply and demand control prices. Period. Adding supply will only fail to control prices if demand keeps rising. And if buyer demand keeps rising to keep up with prices? It would suck, but there's actually a silver lining to that: Rent goes down then.
Remember, now that we're punishing vacant units, every investment unit must be rented out. So as the investors make a mad dash to build and buy our endlessly-rising housing units, more and more inventory gets dumped onto the rental market.
Now, there's obvious downsides to this story, I'm not going to pretend the "own nothing and be happy" end is ideal. But it's better than the "own nothing and live in a fucking tent" ending.
No, market failures exist. It’s not all supply and demand. The cartoon economic world of libertarians is not reality.
That said, we do have a supply problem. Vacancy is essentially zero in Canadian cities, and that’s not true in more affordable housing markets like the US or Japan.
Huh? Supply and demand is an observation of human behaviour. Market failure is equally observable through the supply and demand lens. It too is ultimately human behaviour.