🚀 go-pugleaf

>Anil Upadhyay (akupadhy@undergrad.math.uwaterloo.ca) wrote:

>: The government has set a price ceiling.  The quantity of rental 
>: accommodations supplied at this price is not what the market pressures 
>: say it should be.  Price usually tends to a point called the market 
>: equilibrium where the quanity demanded and supplied are equal at a 
>: certain price (set by the marketplace not the government).  The price 
>: ceiling is significantly below what the market equilibrium should be.

Boy, we're glad you're a mathematician, and not in housing policy. If
you can name a country where the private market delivers housing at an
affordable price (usually pegged at 30% of tenant incomes) let's hear
it. But don't waste too much time, there isn't one!

The private market delivers housing way in excess of what tenants can
afford. That's why private builders build detached homes and condos.
They don't build "affordable" housing because there's no profit in it.
(Any developer will tell you this....)

And decontroling rents won't change that.

>: Now, people who would normally buy homes when the price is at equilibrium 
>: are not doing so.  Why?  Because its cheaper to rent!!!  So there is more 
>: quantity demanded at this low artificial price than there is available to be 
>: supplied.  So who makes up for this SIGNIFICANT shortfall?  Who else?  
>: The government who set the price ceiling in the first place.  It is known as 
>: government housing.  

>: In my neighbourhood alone (in Toronto) there were three government subsidized 
>: housing project built in the last five years!!!  I know many of the tenants 
>: and they are very much able to purchase a house but it is cheaper to rent 
>: at controlled prices.  

Sorry, grasshopper. You have it backwards. It was the *public* who
insisted that non-profit housing and co-operatives include people with
moderate incomes. They were tired of large, all low-income projects
(and with very good reason). In co-ops, where between 50% and 75% of
units are subsidized, those paying market rents have a direct economic
interest in keeping costs down. That's why co-ops have 19% lower
operating costs than non-profits, and 71% lower operating costs than
"government housing" (which, by the way, hasn't been built in this
province for nearly 30 years....). Those stats are from CMHC.

All the evidence, by the way, says that when people can afford to move
out of non-profits or co-ops and purchase a home, almost all do. Some
people prefer to live in co-ops (or work in co-ops, etc). Since they
are paying market rents, I hope you have no problem with that.

>: Think about it for a second before calling them cheaters of the system.  
>: They are paying what is affordable to them.  If prices were to go to 
>: market equilibrium this signifcant number of the tenant base would 
>: realized that it is not worth renting and would purchase homes like they 
>: should.

Sorry bub, you need to do some homework here: they *do* pay market
rents. All the provincial co-op and non-profit program social housing
developments. Every one, no exceptions.

>: It should not be the governments place to interfere with the natural 
>: tendancies of the marketplace.  Doing so is very costly to the taxpayers 
>: in that sense.  The job of the government is to run the province not supply 
>: housing.

Interesting point. See if you can find a government, in any country
except Canada, that doesn't have housing support programs. Again,
don't look for too long. There isn't one.

>: My proposal would be to eliminate rent controls and offer direct 
>: subsidies to those who NEED it.  These subsidiies should be be the 
>: difference between what the market equilibrium is what the price would be 
>: under rent controls.

Did you know that shelter allowances are already running at $2.5
billion/year, and have quintupled in the past five years? That's four
times as much as co-op and non-profit programs cost. Also, in co-op
and non-profit programs, new housing gets built, and dollars are
accounted for every year. 

Only the landlords who would benefit think that shelter allowances are
a good deal. Even the Muldoon government said they were "too
expensive". 

Here's the landlord pitch: decontrol rents, so we can charge what we
want. To make sure there are still folks around to pay it, raise
shelter allowances. Net effect: more billions of taxpayers dollars
shoveled into our pockets....

(All this, by the way, is not NEWS, grasshopper. You could looked it
up yourself....)

>: Hope I made myself clear and address your concerns.

Made it clear you need a trip to the library, grasshopper, to bone up
on housing. We're confident you're a better computer scientist
(couldn't be worse, actually....)

nick


Nick Sidor
nsidor@magi.com