The Manufacturing of the Housing Crisis

Why are rents and home prices so damn high anyway?

Let’s answer by investigating this like a crime, and reword the question as follows: Whom does the skyrocketing of property values benefit? There are of course only two groups which indeed benefit from this: real estate owners, and governments—especially municipal governments, whose main source of revenue is proportional to property valuation. Then considering who can change the situation either way, only the latter can truly be blamed for this.

Let’s be blunt: governments care primarily about maximising taxation revenue, often to the detriment of every other variable, and will use the most dishonest means to do it. Not convinced? Have a look at BC’s speculation and vacancy tax, which was touted as a solution to the crisis. To put it simply, it doesn’t work. But even more telling is the bureaucracy’s predatory attitude, going as far as hitting on any family unit owning two homes with maximum prejudice, even if both homes are occupied, leaving the victims with limited recourse beyond reaching out to the media. The goal obviously wasn’t to fix anything, but to wring more money out of the taxpayer.

Also, the primary reason rent goes up this high is that governments have made it purposefully easy for tenants to be wrongfully evicted; in other words, authorities eagerly enable landlords to evict tenants. Remember: these rules exist only for the purpose of penalising honest and weak people. Then we get more shelters and more social housing, which is just the government’s way of downsizing poorer people’s apartments. So next time politicians pat themselves on the back announcing the building of more shoeboxes, treat the initiative with all the cynicism it deserves.

The only way out of this quandary starts with protecting poor tenants from eviction. Even beyond rental assistance and a moratorium on evicting the poor, there should be automatic review of every eviction, reasonable means for the wrongfully evicted to seek redress, and better training by front line workers to help them navigate the system. Otherwise the housing bubble will keep driving people to poverty, homelessness, drugs, and criminality. And that is the optimal path toward civil society’s collapse.