This is heartening news. Is makes me proud of Canadians. We have a history of sharing and doing what is fair to all generations. Sometime we loose sight of that in all the noise.
I love the first two comments on this post! Two different, but both valid, sentiments. I agree @Glen Brown that it's worth cutting through noise and divineness to remind people that we can actually find a lot of agreement on solutions... or at least steps towards them. Of course, when push comes to shove, we also need these people to stand up and advocate/vote for measures that turn sentiments like stalling home prices into concrete solutions - even if they won't benefit. At the same time, @MustardClementine is right that some Canadians have an appetite for even bolder action. Given the harm experienced by today's younger generations, and that will be inherited by generations to come, this isn't surprising. And it's not all that different from the scale of change that some of today's boomers were fighting for in their youth, on civil rights, or gender equality. It's important to make room for and listen to these perspectives, and affirm the grief, anger, and fear motivating them.
Hello, this is Kareem from Generation Squeeze - thanks for your comment!
I enjoyed reading your article - as a younger millenial, the experiences you described resonated deeply with me.
I agree that a drop in prices would certainly be the quickest way to help restore affordability. Additionally, it would perhaps help to break the widespread belief that real estate is a foolproof investment that will keep appreciating forever, freeing up supply for first time homebuyers by reducing demand from investors.
But a ruinous crash is a dangeous thing to wish for, isn't it? Some older owners would only lose equity, but other more recent purchasers would end up with underwater mortgages, and perhaps face the loss of their home and financial ruin. Let's not forget how bad 2008 was in the US and around the world.
I think this reflects a (very understandable, and very Canadian :) bias towards believing being less bold is inherently less dangerous.
But it's exactly this assumption that allowed us to continue on this trajectory for so long, leaving a more acute reset like a crash now likely the least bad option, for society in general (even if not ideal for certain groups).
Inherent to that is that I acknowledge this would not be the best option for older owners, or recent purchasers - but just because those are easier metrics to point to does not make their being underwater necessarily more catastrophic.
A lot of the harms inherent to letting this get so bad, and failing to fix it now (fast), may be more nebulous but no less ruinous (possibly even more so).
Essentially, I think your stance is too reasonable for a situation we've allowed to persist for so long that it's unreasonable (although I do respect it, and your efforts at Generation Squeeze in general).
Our time for moderation has just passed the rubicon, and something that will fix things faster is needed.
I completely agree with you that "A lot of the harms inherent to letting this get so bad, and failing to fix it now (fast), may be more nebulous but no less ruinous".
If we let the current levels of unaffordability persists, many future generations of Canadians will pay the price. You mentioned that a more substantial decrease in prices that hurts the older owners and recent purchasers is the least bad opton. This was my view too when I joined GS. I also beleived that calling for stalling prices so that wages can catch up was too soft.
But what I've come to realize is that we need to be realistic about what we are advocating for. Even if a sunstantial drop in house prices is a better solution, we can't walk into polictical offices calling for this. No politician would ever put forth a policy with this goal in mind, becasue their constituents, many of whom are homeowners don't want it.
I hope you can see that our stance is not a product of Canadian tentativeness, but instead, practicality.
I agree that no politician would ever put forward a policy with this goal in mind - honestly, I doubt they would even really commit to a stall - which is why I believe meaningful change will only happen if something completely out of their control (like a huge, runaway crash) forces action. It will only be when things have well and truly stopped working that someone might seriously consider better ways to proceed (and, as I conceded in my piece - they still might not).
I suppose we also agree that no politician is actually committed enough to the people they represent to pursue a better solution. Given this lack of serious commitment, how would they ensure that prices stall long enough, and wages rise enough, to ever actually make things affordable? Even if they were truly dedicated to this less dramatic fix - without any dramatic intervention - how long do we think it would take? How long should people be expected to wait? I don't think it's actually practical or sustainable to make prices just a little less hideously unaffordable over a very long time period.
Additionally, I do not see a scenario in which even a stall would not eventually lead to a big crash, anyway. People are so overleveraged and overreliant on their investments increasing in value at a rapid clip, that if that stops happening, it will probably cause a massive unloading of assets, which will cause a crash.
It goes back to what I said in my article about ripping the bandaid off quickly, rather than dealing with a slow and agonizing bleed-out.
In a sense, I am appealing more to steadfastness in rate decisions than to confidence in political decisions.
You know, I agree with most of what you say here...but I'm not sure that changes the best course of action for Generation Squeeze. Let's say it is better to rip the bandaid off quickly, rather than dealing with a slow and agonizing bleed-out, how you think we should change our approach?
It's not really about changing your course of action, but rather not being tepid in how you present your case.
Especially if you agree that it's very unlikely any politician will seriously commit to even very measured reform right now, why not focus more on countering popular narratives (which I know you already do - I'm just wondering, why not go for broke on this)?
Markets are largely mood, after all - convince more people that house prices really need to come down significantly, and they're likely to. Like Tinkerbell, it dies when people stop believing in it.
Once/if a price correction humbles those politicians who weren't proactive - then it's time to push for stronger policy reforms, to prevent another bubble.
Maybe I'm saying prioritize changing things from the bottom up, if you share my skepticism about someone at the top fixing it.
This is heartening news. Is makes me proud of Canadians. We have a history of sharing and doing what is fair to all generations. Sometime we loose sight of that in all the noise.
I love the first two comments on this post! Two different, but both valid, sentiments. I agree @Glen Brown that it's worth cutting through noise and divineness to remind people that we can actually find a lot of agreement on solutions... or at least steps towards them. Of course, when push comes to shove, we also need these people to stand up and advocate/vote for measures that turn sentiments like stalling home prices into concrete solutions - even if they won't benefit. At the same time, @MustardClementine is right that some Canadians have an appetite for even bolder action. Given the harm experienced by today's younger generations, and that will be inherited by generations to come, this isn't surprising. And it's not all that different from the scale of change that some of today's boomers were fighting for in their youth, on civil rights, or gender equality. It's important to make room for and listen to these perspectives, and affirm the grief, anger, and fear motivating them.
I'll go further, I think we actually need a massive, ruinous crash to have any hope of resetting fairness.
We’ve Let Our Housing Crisis Get So Bad, a Crash Is Now Our Least Bad Option https://mustardclementine.substack.com/p/weve-let-our-housing-crisis-get-so
Hello, this is Kareem from Generation Squeeze - thanks for your comment!
I enjoyed reading your article - as a younger millenial, the experiences you described resonated deeply with me.
I agree that a drop in prices would certainly be the quickest way to help restore affordability. Additionally, it would perhaps help to break the widespread belief that real estate is a foolproof investment that will keep appreciating forever, freeing up supply for first time homebuyers by reducing demand from investors.
But a ruinous crash is a dangeous thing to wish for, isn't it? Some older owners would only lose equity, but other more recent purchasers would end up with underwater mortgages, and perhaps face the loss of their home and financial ruin. Let's not forget how bad 2008 was in the US and around the world.
This is why we think that "our primary goal should be that home prices stall for many years ahead – or even continue to fall moderately". - https://www.gensqueeze.ca/straddling_the_gap_2022_housing_affordability
Does our stance seem like a reasonable one to you?
I think this reflects a (very understandable, and very Canadian :) bias towards believing being less bold is inherently less dangerous.
But it's exactly this assumption that allowed us to continue on this trajectory for so long, leaving a more acute reset like a crash now likely the least bad option, for society in general (even if not ideal for certain groups).
Inherent to that is that I acknowledge this would not be the best option for older owners, or recent purchasers - but just because those are easier metrics to point to does not make their being underwater necessarily more catastrophic.
A lot of the harms inherent to letting this get so bad, and failing to fix it now (fast), may be more nebulous but no less ruinous (possibly even more so).
Essentially, I think your stance is too reasonable for a situation we've allowed to persist for so long that it's unreasonable (although I do respect it, and your efforts at Generation Squeeze in general).
Our time for moderation has just passed the rubicon, and something that will fix things faster is needed.
Otherwise, where do we go, from here? https://mustardclementine.substack.com/p/if-no-one-new-believes-hard-work
I completely agree with you that "A lot of the harms inherent to letting this get so bad, and failing to fix it now (fast), may be more nebulous but no less ruinous".
If we let the current levels of unaffordability persists, many future generations of Canadians will pay the price. You mentioned that a more substantial decrease in prices that hurts the older owners and recent purchasers is the least bad opton. This was my view too when I joined GS. I also beleived that calling for stalling prices so that wages can catch up was too soft.
But what I've come to realize is that we need to be realistic about what we are advocating for. Even if a sunstantial drop in house prices is a better solution, we can't walk into polictical offices calling for this. No politician would ever put forth a policy with this goal in mind, becasue their constituents, many of whom are homeowners don't want it.
I hope you can see that our stance is not a product of Canadian tentativeness, but instead, practicality.
I agree that no politician would ever put forward a policy with this goal in mind - honestly, I doubt they would even really commit to a stall - which is why I believe meaningful change will only happen if something completely out of their control (like a huge, runaway crash) forces action. It will only be when things have well and truly stopped working that someone might seriously consider better ways to proceed (and, as I conceded in my piece - they still might not).
I suppose we also agree that no politician is actually committed enough to the people they represent to pursue a better solution. Given this lack of serious commitment, how would they ensure that prices stall long enough, and wages rise enough, to ever actually make things affordable? Even if they were truly dedicated to this less dramatic fix - without any dramatic intervention - how long do we think it would take? How long should people be expected to wait? I don't think it's actually practical or sustainable to make prices just a little less hideously unaffordable over a very long time period.
Additionally, I do not see a scenario in which even a stall would not eventually lead to a big crash, anyway. People are so overleveraged and overreliant on their investments increasing in value at a rapid clip, that if that stops happening, it will probably cause a massive unloading of assets, which will cause a crash.
It goes back to what I said in my article about ripping the bandaid off quickly, rather than dealing with a slow and agonizing bleed-out.
In a sense, I am appealing more to steadfastness in rate decisions than to confidence in political decisions.
You know, I agree with most of what you say here...but I'm not sure that changes the best course of action for Generation Squeeze. Let's say it is better to rip the bandaid off quickly, rather than dealing with a slow and agonizing bleed-out, how you think we should change our approach?
It's not really about changing your course of action, but rather not being tepid in how you present your case.
Especially if you agree that it's very unlikely any politician will seriously commit to even very measured reform right now, why not focus more on countering popular narratives (which I know you already do - I'm just wondering, why not go for broke on this)?
Markets are largely mood, after all - convince more people that house prices really need to come down significantly, and they're likely to. Like Tinkerbell, it dies when people stop believing in it.
Once/if a price correction humbles those politicians who weren't proactive - then it's time to push for stronger policy reforms, to prevent another bubble.
Maybe I'm saying prioritize changing things from the bottom up, if you share my skepticism about someone at the top fixing it.