this post was submitted on 10 Oct 2023
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Just a reminder that when given the choice of building afforable housing or paying a fine, every single developer in Montreal elected to pay a fine.
Developers. Can. Not. Be. Counted. On. To. Fix. The. Housing. Crisis.
How does the saying go? Something like For the rich, fines are just part of the cost of doing business
If the fine is less than the profit then itβs the cost of doing business
If the fine is tax-deductible, it's even better!
Where's the logic in that?
Houses are like cars. When you build an expensive house (or car) for someone who is rich, they leave a lower-cost used home (or car) behind, available to be filled by someone who is not so well off. The more 'unaffordable' homes you build, the more affordable homes come onto the market when the people leave their old home to move into the new home.
But the fine means that developers have to limit themselves to only the most profitable houses, which means the still pretty profitable houses, but not attractive enough once the fine is paid, go by the wayside. And, therefore, fewer affordable homes come onto the market.
Was council trying to make housing even less accessible?
Ah yes, trickle down house-enomics.
Not enough people say this, fuck Regan!
Regan? What? Are you struggling to spell (Will) Rogers? It is he who coined 'trickle down economics' β as a joke β and it was in reference to Hoover. Regan enters the picture nowhere. He has no connection to trickle down, housing in Montreal, or anything to do with Canada at all.
Characterized by who? Trickle down economics isn't an actual thing, just a joke that made fun of Hoover's engineering background making him familiar with water tricking down, but not realizing that money 'trickles up'.
Trickle down economics was not a joke to Reagan (publicly anyway). His plan called for massive tax cuts to the rich so their growth would "trickle down" to everyone else through more jobs from business expansion.
A remarkably stupid idea that has only worked out for the rich...
Assumption here: rich people buying houses only own cheap houses
Reality: rich people are entering the market (via immigration or coming of age) without a house or already have expensive houses.
More supply at the high end mainly affects pricing at the high end, more supply at the low end mainly affects pricing at the low end.
That is ultimately the same situation. If you don't build them an 'unaffordable' house then they will outbid the poor for what otherwise would have been an affordable house, taking the affordable house away from someone of lesser means. These rich people are not going to go without a house.
It remains that fining developers for building houses is not going to incentivize developers to build more houses. Council recognized that the only way to get more affordable housing on the market is to build new houses, but then disincentivized the activity for some reason. It is like they wanted to make housing less accessible.
I'm not saying a fine will work, I'm saying that building houses for just the richest with the idea it will lift up the poor won't work, the assumptions behind it are unrealistic.
As houses trickle down the market many get rented out instead of sold, or just owned as a secondary property. I know a guy with a house in NYC and SF and he flies between them, I know other people who have their house and their pad for when they're working in Toronto.
If you only increase supply for the rich, it only marginally increases supply at the bottom, and by less than you've built.
If you only built houses for the poor you'd help more people, because the classes aren't evenly split, they're exponentially divided. But building only for one market is foolish.
Affordable housing only increases the supply for the rich. After all, if they are affordable, they are especially affordable for those who are rich. The only way to break out of that is to construct so many homes that the rich no longer want any more. Policies to scare developers away from building homes does not get you there.
Yes, of course! If we just build luxury housing for the rich, the rich will just vacate their current luxury housing (for the rich), which will open it up for someone else! Who will be able to afford luxury housing (for the rich).
This is the thinking of someone who's never struggled to pay a bill in their life.
Except they hang on to the lower cost used home and rent it out at extortionate prices to help pay for the expensive house.