Housing is an important issue today and will probably remain so for the foreseeable future. Governments would have to implement land policies and create incentives. I would gear those incentives towards providing housing options by supporting the rental market. Creating options where the market has not provided can restore balance.

At the core of government policy is solving one of society’s challenges, housing. Adequate housing is essential to protect the health and safety of individuals. It’s a simple right for all inhabitants. The approach taken in Canada, did not achieve its goals and failed to address a growing housing crisis.

In this article, we will discuss how governments implement programs in housing to create artificial economic expansion. We will also talk about the impact our society on our decisions and how it’s adding to the current housing crisis. The discussion will cover considerations for home buyers and what they should consider when making a decision.

We use home ownership as a source of economic growth

Governments use home ownership and the housing sector as a source of economic growth. They do this by implementing policies that promote home ownership. These policies include all from incentives to relax rules around qualifying for a mortgage. Some of these policies financially trap owners and cannot provide sustainable and long-term economic growth and fix the housing mess.

A home is not a source of economic gain because it does not provide output or production of any good or service. We should make investments in living options for all Canadians, not just those seeking ownership. Owning a single home has turned into a societal norm. As a result, builders and potential buyers do not favor other housing choices.

To promote economic growth for the long-haul, we need investments in productive capital and infrastructure. This includes investing in roads, railways, factories, and research labs. We should also invest in Canada’s approximately $100 billion infrastructure deficit, creating another source of economic growth for both the short and the long term. Reliable infrastructure enables an economy to function at its full capacity.

Social norms, habits, and constructs boost the demand for home ownership

Home ownership is not just a social construct, but also an expensive social practice. Many occupations depend on it; lawyers, mortgage agents, financial planners, banks, tellers, and real estate agents. The list goes on. Advocates of ownership claim that buying is always better than renting. This is a common misconception. Ownership comes with other costs other than mortgage payments that this claim ignores. Like Upton Sinclair said, “It is difficult to get a man to understand something when his salary depends on his not understanding it.

There are other hidden and indirect costs of premature home home ownership. This includes costs like labor immobility and the opportunity cost of capital. Owning a housing can lead you to lose your labor versatility when you are looking at job opportunities outside your area. Also, the equity you build in a house could be invested elsewhere for a higher return, if available. The latter is what we refer to as the opportunity cost of capital.

So what does this all mean to you?

If you are facing the dilemma of whether to rent or buy, some , try this rent vs. buy calculator first. This is a simple tool that can help you make a sound decision. This calculation takes into consideration a variety of factors that should be part of the math when considering to purchase a home.

Home ownership is not for everybody. As with any other major financial decision, we must assess it adequately. Renting is fine, as long as we are saving and investing for the future.

Conclusion

Housing is an important issue today and will probably remain so for the foreseeable future. Governments would have to implement land policies and create incentives. I would gear those incentives towards providing housing options by supporting the rental market. Creating options where the market has not provided can restore balance.

Economic growth should be sourced from sustainably, where an impact has a lasting effect on our quality of life. Finally, buying a home is a big decision and requires careful financial consideration and planning. However, making rational decisions can be difficult under social pressure so we must be aware so we don’t surrender to it.