We have a housing crisis. Who’s to blame?
If you listen to Pierre Poilievre, the Conservative leader, it is Prime Minister Trudeau. After all, he is the country’s leader. Why isn’t he out there, hammer in hand, putting up more houses? Instead, he’s trying to run the country.
If you listen to the Liberals, they are working on it. Dumping billions of dollars into a market that has no capacity or will for the sort of housing needed to address the crisis.
If you listen to coffee shop conversations, it is the people who can’t afford a house. If they just got good paying jobs and were willing to be in debt for their entire adult life, they would be fine. And they would have an asset that would continually increase in value so they would have a nest egg they could sell to support their retirement.
If you listen to youth – university students, young workers, members of the gig economy – the hope and dream of one day owning their own home is gone. When considering house prices and wages, they think there is no way they will be able to afford a house.
The reality is the housing crisis is a complex, multifaceted problem which cannot be blamed on any politician or political party, should not be blamed on developers, and is not the fault of people trying to find somewhere to live.
It is no one’s fault and saying it is doesn’t make it true.
Our basic economic model – the heart of western democratic capitalism – is that investment requires some form of return. That is, if you invest $100 in an enterprise, you expect to get more than $100 back. Seems to be perfectly reasonable.
But it is what drives inflation. Each level, from farm to dinner plate, increases the cost of food. Every step, from raw material to smartphone, adds costs because of a return on investment.
With respect to housing, new homes must cover the costs of materials and then some. Why would someone build a house otherwise? Without a return-on-investment, that is a losing proposition.
Over the past few decades, governments – which don’t need to make a profit – have gotten out of the housing business.
So, we have a crisis.
Todd Whitcombe is a chemistry professor at UNBC.
