Housing crisis may well be on the horizon
The ever-growing cost of housing in the Lower Mainland has the potential to lead to a real crisis — depending on how a number of factors play out, and in what order.
Many relatively recent homeowners have taken on massive amounts of debt to buy homes. They can afford to do so, but only on certain conditions. One is that interest rates stay low. Another is that they don’t lose their jobs, or have their income reduced. In many cases, a third condition is that they have tenants in one or more suites, who pay their rent regularly, and the suites do not remain vacant for long periods of time.
It is obvious that this kind of home ownership is somewhat tenuous. In the past, people have had high mortgages, relative to their incomes, and faced the possibility of rising interest rates. What they didn’t have to deal with at the same time was being landlords.
Homeowners with one suite can usually juggle all these things. But when they have two or more suites, it gets much trickier. There are also the issues of inter-personal conflict which are inevitable when many very different people live in the same home.
Another problem caused by high housing costs is the lack of ability to deal with other rising costs. Many people in Langley have been hit hard this year by gas prices, which have risen sharply, and by the full tolls on the Port Mann Bridge. They need to use their vehicles and cross the bridge to go to work and get paid, but the costs of doing so have risen sharply.
Then there is the issue of a lack of savings. Younger people often don’t give a lot of thought to pensions and retirement, which is probably logical, but it is good to save a little bit — just in case of emergency. If it’s possible to set some aside for children’s education and retirement, that is great, but it isn’t easy.
A good number of people are coming out of each month with negative balances — they are spending more than they are bringing in and need to cut back on expenses. In some cases, they manage to do so, while in others, they look for ways to make a little extra.
Some choose to buy gas and shop across the border for savings, which is understandable — but this reduces jobs and taxation revenue locally. It also prevents businesses from giving back to the community as much as they would like to.
I’ve heard in recent weeks about several major events that have had great difficulty in finding local sponsors. Many businesses simply don’t have the money, because their own customers are cutting back and they need to keep a close eye on their spending.
It would be unfair to blame all of these things on the rising cost of housing. People have freedom to make many choices, and it is often other spending that leads to financial problems.
However, a continual increase in the price of housing is unsustainable when most people see little in the way of wage increases and the costs of many things, from gas to BC Hydro bills, just keep rising.
It’s not a crisis yet, and hopefully it won’t be, but ever-rising costs simply must be brought under control.