Be Careful What You Wish For!

Our Federal & Provincial Governments seem to be sensitive to the public need to create a climate where housing is "more affordable". However, one might question their motives, and especially their solutions. Even if we choose to ignore the fact that their recent policies may just be politically trying to appeal to their bases, it is only reasonable to conclude what their real intended goals are.

If the intention is to make housing "more affordable", there are only four ways that this can reasonably be done;

1. Give consumers a large income lift at work...thus providing for more disposable net income.
2. Reduce the tax payable by consumers...thus providing for more disposable net income.
3. Dramatically reduce interest rates...thus providing for more disposable net income.
4. Institute numerous new tax laws and new stiff mortgage qualification standards which will effectively criplle the ability of consumers to either enter the market, or move up in the market. As fewer and fewer sales result, many Sellers may feel a real sense of urgency for the first time in a long time. Seller anxiety will lead to a shift to a true "Buyers" market and this can definately lead to a significant price correction overall. 

Obviously the first three options are not in play, in fact, in most cases, they are going the other way. It seems that the powers that be have decided that option "4" is the best route. We'll see how that wisdom works over the next couple of months and years!