What’s worse, is to watch governments now rush to “fix” the mistakes that they are solely responsible for by punishing people - retroactively changing the rules - and costing average folk their savings. I refer to Canada specifically which made it so challenging to build housing for 40 years that we have a massive scarcity and housing crisis that is being “fixed” by taxing / fining people for having a second home.
I don't see the issue with this? The profits in Canadian real estate are not on the back of some new found resource. It's entirely an effective wealth redistribution from have-nots to haves.
If you have property, the vast amount of value in it is strictly from the fact that it is artificially scarce. To get into the "haves" you have to pay an artificial tax in the form of a grossly inflated price.
Consider the incentives the government has created here.
You can't build new housing, or it's extremely expensive because it's limited to specific lots and then you have to buy out whatever happens to be there even if they don't want to sell, and destroy a 5 story building in order to build a 10 story building, doubling costs while halving the increase in housing. Housing is thereby expensive.
So you tax people who own housing. Well, that doesn't lower rents, because there are still the same number of people who need somewhere to live but now fewer people to invest in new construction because it's less profitable with more of the money going to taxes, so that lowers supply even more and rents increase to cover the new taxes.
This an undersupply problem. You don't fix it by taxing suppliers.
Every time I go looking for statistics to back this argument, I come away underwhelmed. In most cases I see little change in the ratio of dwellings to households over the past few decades.
Take a look at the first figure (HM1.1.1) in the following document - particularly those for the US, Canada, Australia, and NZ (all countries with prominent housing issues).
https://www.oecd.org/els/family/HM1-1-Housing-stock-and-cons...
On the other hand, I think there is a strong argument to be made for increasing underutilisation of housing (more second homes, short term rentals, etc).
The same, in my opinion, with inflation. Inflation has been caused by government monetary policy being too loose for three decades and effectively neutering its anti-competition authorities, but now they are getting tough on grocers as if the grocers are both the sole cause of the problem (false!) and that they made the problem in a vacuum (false!).
I have historically been extremely liberal, voting Liberal or NDP (even more liberal than the Liberals for those outside Canada) my whole life. The last few years of seeing our Liberal government fumble the ball so badly and point at everyone but the government itself (left and right governments of the current and past!) has made me realize the truth of the Reagan quote “government isn’t the solution to your problems, it is the source of your problems”.
Hayek’s Nobel speech on the pretence of knowledge is as accurate as ever.
Tight zoning is the primary driver of real estate value, because it further increases the scarcity of land. It makes small homes worth absolutely insane values.
Further, though eliminating cheap loans will limit the amount that people can pay for the real estate, it also reduces the ability of people to pay, so every person is back to the same place with scarcity. So though eliminating loans may change the face value of the cost of housing, in real terms, eliminating loans does nothing for ordinary's people ability to obtain housing where they want it. Only increasing supply by removing overly restrictive zoning will actually improve the material conditions for people.
All that said, we should definitely eliminate financial products in the US like the 30 year fixed rate mortgage, a government creation that does inflate prices, while reducing the ability of people to move. But we should get rid of it primarily because it reduces the ability of people to move by trapping them into the home they were in when mortgage rates were low.
IANAdeveloper… if a developer is otherwise within code/zoning, SCOTUS is probably correct. If they’re asking for zoning changes, there should be room for negotiation on nearby improvements.
The problem is that in many areas (of Canada at least), zoning bylaws are horribly outdated and inconsistent with municipal priorities. But municipalities don’t have an incentive to change them because if they allow things to be done “as of right” with modern zoning, they can’t shake down developers to fund their pet projects. So everything is a negotiation, which again adds uncertainty and cost.
Governments need to get out of the way and let developers build, or accept that they are the source of the housing scarcity.
