Most real estate markets have some sort of cycle. In Alberta, house prices seem to be tied to world oil prices. Places like Vancouver used to have a seven-year cycle that was pretty reliable. Prices would bottom out and languish in the cellar for a year or more and then they would start to go up, slowly at first but then increasing steadily until the market got so overheated that the bubble burst and, in about a year or so, they'd get to the bottom again. The world being what it is, the bottom of one cycle would usually be a good bit higher than the bottom of the previous cycle. Life goes on.
I had many occassions to dwell on the true value of a home, meaning the usual mix of blue and white collar housing, entry level product in particular.
For many young Canadians, far too many, that first house is a make it or break it venture. If they catch the market at the right point and their jobs remain secure and their health remains good and neither of them gets sent to prison and any of a thousand other perils are avoided or fended off, they might just get "established" and on the road to a conventionally secure future.
But the first time homebuying market is fraught with perils such as unstable housing prices, interest rate fluctuations, speculators gaming the market, physical or emotional disability - any of which can transform that dream, starter home into a running nightmare that can readily strip away a decade's worth of opportunity and promise.
I know from seeing it too many times over and over and over again that the economic shitstorm that's coming our way will destroy too many otherwise good marriages. It will take down too many otherwise good, decent, hardworking and contributing members of society. Most of them will eventually bounce back, most but not all. Some simply fall between the cracks and, as often as not, they're the type of people who could never imagine that happening to them, at least not before it happens.
I'm no social scientist, just a layman with a bagful of experiences of other peoples' misfortunes. Those experiences have shattered a lot of popular misconceptions I once embraced and they've honed a rough understanding of what happens to good people and what we need to do to at least try to keep them from falling through the cracks.
What I have seen convinces me that we, as a society, as a people, need to dampen vagary and speculation in the housing market to the greatest extent possible. I read many years ago that some Scandinavian countries had decided that the key to providing citizens with decent, affordable and dependable housing required measures that deterred those who would treat the housing stock as a speculative commodity.
The basic idea is that housing stock is for people who need to purchase housing. That means applying tax disincentives that drive speculators, "flippers" out of the market entirely. Tax away speculative profit in the resale market (you can't drive builders and developers out of the market, that's self-defeating). Housing stocks, restricted to those buyers who actually want to live in those houses, will find a stable, moderate and true market value. Because housing becomes traded predominantly on the strength of its accommodation value, it becomes tied to a much more stable yardstick that is, in turn, tied to actual wages and affordability.
I realize this sounds socialist as hell and it probably is. I'm also sure that, to those who haven't experienced the real fallout of rapidly fluctuating, speculative housing booms and busts, this might sound abhorrent and inexplicable. It's only when you've seen the full measure of the social damage the existing system inflicts that market moderation even begins to make sense and then it becomes compelling.
I have no self-interest in this debate, no axe to grind. I am, thankfully, well past that. Yet I believe that we have so much to gain from removing housing from the gamut of speculative commodities and so very little to lose in consequence.
I'm reminded of the argument of an Ontario cabinet minister (premier possibly) on the banning of pitbulls. He pointed out the thousands of breeds of dogs available to fanciers and that the ban applied to just one of them. It made the objections sound pretty insignificant from that perspective.
Does anyone believe that, if we drove speculation out of the housing market, we'd suddenly find ourselves short of commodities available for speculation? That's utter nonsense.
Another blogger noted today that Stephen Harper has gone from acknowledging a "technical recession" to accepting the possibility of a full-blown depression in just a few weeks. In capitals throughout the Western world, leaders are suddenly talking seriously about "New Deal" style capital spending programmes. You don't go through these things without a sharp rethinking of society and social values. What better opportunity to begin putting our minds to this whole business of affordable, stable housing?