August 27, 2021 – A lot of people dream of owning a home in the city, but they can’t afford to buy one because of the insane housing price worldwide. Affordable housing is a hope that is dangled in front of voters every election throughout the world with No positive outcome and we THE SHEEP fall for it every time. But is it just the government’s fault or are we as a society part of the problem?
According to the housing affordability report from the National Bank of Canada, you need to have an annual income of $125,000 CAD or more to be able to afford a decent home in Toronto, Canada. A study by HSH.com found this number in the San Francisco Bay Area to be $198,978 USD. In Sydney, you need $160,000 a year before taxes to afford a decent home.
A Global Issue
Toronto, along with other major cities in North America, is facing a major reduction in affordable houses as there’s a huge rise in population. In Vancouver and Toronto, this has been widely publicized for years now, but many other Canadian cities are also facing the affordability squeeze in 2021.
This is not just a Canadian issue but a worldwide concern. San Francisco, USA, San Jose, USA, Melbourne, Australia, Auckland, New Zealand, Sydney, Australia, Hong Kong, China all saw a dramatic increase in Real Estate prices despite COVID and job losses.
Why haven’t we been able to solve this?
This week all the major political parties in Canada announced reforms to tackle the affordability crisis but the real question is not what those reforms are; but does the government want house prices to fall?
What happens if the pricing of real estate drops? An economic meltdown and people will struggle. People will lose most if not all their net worth and the government will lose the next election. Also, Government’s tax revenue is dependent on the prices of houses. If the taxes go down, all levels of government suffer due to the impact on their bottom line.
Next, let’s look at the builders: Do they want to solve this issue?
If the housing prices go down a lot of construction and investments in new development projects will stop. This will contribute to more issues of supply than currently, we have in the market.
Do homeowners want to solve this?
Let’s say, you are a homeowner and you’re in the market to sell that house, and suddenly because of some economic measure that the government implemented, the market value of your house drops down to half of what it is worth today, You or the Sellers will lose big time. You don’t want that.
Do buyers want to solve this?
Let’s say you’re a buyer who’s waiting for the right time to come, so you can buy these houses at rock bottom prices when the market crashes. You have saved up some money to be able to afford this house. Once the prices come down and the market crashes what happens with those crashes? An economic crisis could result in loss of your job, financial chaos, tighter lending practices eventually resulting in you not qualifying for a mortgage or you may be in a poor financial situation yourself. Most probably you won’t qualify for a home at that time either. Why would you want that to happen?
So, who wants the affordability housing crisis to be solved? No ONE! That’s my point.
All forms of governments come up with a lot of solutions when elections are near, Promises Made and Promises Broken is a common theme, but all these remedies are short-term band-aid fixes that have all been tried, tested, and failed around the world many times.
We need permanent solutions that fix the problem at the source and at a global level.
Here are the top 5 solutions to solve the housing affordability crisis, that is if anyone is looking to solve it…
- Fast, Efficient & Accessible Transit: A spider web transit system throughout multiple cities including suburbs that is super-fast and efficient. Do this now and do it fast. Privatize for a short term where private companies can invest in infrastructure costs and make money from the project for 10-15 years and then the ownership gets transferred to the public. This will eliminate the requirement to live in the city and save the environment from millions of cars being on the road.
- Outsource Construction: Create affordable housing on crown lands with 100-year leases using prefab homes made in China. We have outsourced everything else to keep pricing low, why not construction? This will give people access to affordable housing quickly. A person is currently spending 30-50% of their income on housing. By outsourcing, we will drop average spending per family by hundreds of thousands of dollars. Affordable housing can reduce a person’s work hours by 20-30% to maintain the same lifestyle. Think about having 3-day work weeks because you can afford it.
- Remove Regulatory Construction Red Tapes: Remove retapes from the current construction industry that is bottlenecking and creating this insane shortage of homes in major cities around the world. We need to make sure that we deregulate the construction industry as it is over-regulated. Intensification should be a priority and public blocking developments should be limited to extreme reasons. Zonings should be amended to allow for more construction and there should be an incentive for builders to build subsidized housing for low-income families.
- Luxury Rental Housing in Cities: Create Luxury Rentals so people want to live in them This will eliminate many buyers from the market dropping the demand in the market. At this point, we as a society are moving towards a rent focused market. Hence, luxury rental apartment buildings should be the focus of the next decade so people who can’t afford to buy still have access to quality rentals.
- Round Table Initiative of great minds worldwide to come up with solutions to combat global population sustainability with a focus on housing. For example, get all the student architects around the world to compete for prizes. As students, they have not yet been corrupted by limiting mindsets of the industry and they can come up with innovative cost-effective ways to combat this problem. Let them fight this as if we were being invaded by aliens.
Video Link: https://www.youtube.com/embed/aNg8_OxtC0Y
About the Author
Adnan Feroz is a Toronto-based Serial Entrepreneur heading multiple businesses in Accounting, Coaching, Construction, E-commerce, Film Production, Marketing, and Real Estate. He is also an Award-winning Real Estate Agent, a Motivational Speaker, a YouTuber, an International Best-selling Author, and a Podcaster.
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