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Carney and Eby announce $3.2B developer subsidy; plan to buy unsold B.C. condos (web.archive.org)

submitted 11 hours ago* (last edited 11 hours ago) by No_Eponym@lemmy.ca to c/britishcolumbia@lemmy.ca

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Through Build Canada Homes and BC Housing, the senior governments will "convert more than 2,200 vacant condo units in priority growth areas into affordable homes," the Prime Minister's Office said in a statement.

So, they are going to buy more than half of the current absorbed condo market in the Vancouver CMA?! Average cost of these unabsorbed condos is $2.2M. That's a 4.48 billion dollar bailout to developers, or double the cost of the new skytrain routes! All paid for with YOUR taxes. This is insane!

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[–] wampus@lemmy.ca 1 points 9 hours ago* (last edited 9 hours ago) (1 children)

History proves otherwise. Housing prices can come down significantly, and developers can go under, without it destroying the whole system.

What you generally need for that to happen, is high unemployment (leading to foreclosures), or developers going bankrupt on unsold, but constructed, condo stock piles (again, leading to foreclosures and forced sales).

You saw the start of it in Vancouver, with housing prices coming down the past few years -- and with developers finding increasingly 'creative' ways to bundle and sell their unsold stockpiles. Bailing out those developers just keeps housing unaffordable.

Like here, think of it this way: when you buy a home, you need 20% down payment these days. That means your property value could go down by as much as ~15% and the bank won't care. If you're in a forced sale position, the bank just needs to recoop its loan value -- so even on a new loan, they'd potentially accept 15% below market value if there were no other bids. All that can happen, with the bank/financial system being kept whole. So you "could" see real estate bagholders get fucked out of up to 15% yoy losses, basically, and the system would be fine.

[–] iocase@lemmy.zip 1 points 9 hours ago* (last edited 9 hours ago)

Maybe you misunderstand what I meant by my comment. Im not supporting bailouts for developers or homeowners... Let them fail.

My concern is how something like a quarter of our GDP is involved in real estate development or speculation. Vancouver is overvalued by a factor of 3X as well, so prices would need to drop for more than a decade to slowly bring those prices back down to being affordable without subletting your single family home into a triple family home to afford the mortgage or causing complete chaos in the property market.

It's financially irresponsible to do anything productive with your money like own a business or invest locally... You buy real estate or invest in the US stock market. It's hollowed out our economy to just speculation since that's the most profitable... Every coffee shop, bar, bistro .etc that you like was financially irresponsible to spend money on. The owner would have made more money and profited more from spending that on NVIDIA or an apartment building.

What happens when prices continuously go down for an economy built entirely on prices being high? I can't even speculate on all of the ways shit breaks when that happens.