final pear essay

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Mohawk College *

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1050

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Economics

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Feb 20, 2024

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Uploaded by AdmiralQuetzal1570

Colmar, P. (2023, September 14). Opinion: Canada’s housing bubble: “sliding down the slippery slope of hope.” The Globe and Mail. https://www.theglobeandmail.com/business/commentary/article-canadas-housing-bubble- sliding-down-the-slippery-slope-of-hope/ Reconnecting the housing market to the Labour Market: Foreign ownership ... (n.d.). https://www.utpjournals.press/doi/full/10.3138/cpp.2019-009 Housing Market in Canada Reflection Throughout writing this CPE essay on the housing market in Canada, I have educated myself with a more in-depth opinion on how equity and efficiency affects housing and the prices. I learned how scarcity has a major impact in the gap between the supply and demand and how it really affects the affordability of homes. After reading and doing more in-depth research on Adomaits podcasts and book, I have a better understanding of why she thinks so strongly of economics and how powerful and impactful it is in our everyday lives. The guest speakers she brought into each of her podcasts allowed me to think more about the reality of pricing not just in housing, as well as how much these individuals use productivity, supply and demand, and the complications of inelastic and elastic parts of demand. Overall, I believe the housing market is continuing to crash due to the resources and facts I have provided below. It is difficult to understand the whys of all these issues and only wishing you could help in any way possible. Final copy The Canadian housing market has been an intense challenge and discussion in the past decade. Canada is the second largest country in the world and has heavily been impacted by high interest rates, supply shortages, immigration and population growth Although Canada maintains a diverse and dynamic housing landscape with availability to jobs and opportunities, it undergoes many negative factors in the market due to several economic issues. Throughout this essay, the equity and efficiency of the Canadian housing market will be investigated to explore the impact on one’s happiness through the chapters in CPE, scholarly sources and pieces from Evelyn J. Adomaits’s very own podcasts. Initially, housing prices were manageable before 2007. However, the financial crisis of 2008, as reported by the BBC in January 2009, triggered a 15.3 percent decrease in U.S. housing prices. Due to this, the Canadian consumer price inflation remained quiet up until recently, meaning there was a drive for tight monetary policy during this time. Chapter eight also highlights that Inelastic supply is a main contributor to the rising housing prices. This makes it extremely challenging as well for new homebuyers and low-

Colmar, P. (2023, September 14). Opinion: Canada’s housing bubble: “sliding down the slippery slope of hope.” The Globe and Mail. https://www.theglobeandmail.com/business/commentary/article-canadas-housing-bubble- sliding-down-the-slippery-slope-of-hope/ Reconnecting the housing market to the Labour Market: Foreign ownership ... (n.d.). https://www.utpjournals.press/doi/full/10.3138/cpp.2019-009 income individuals to even access the housing market. “Money acts as grease for the wheels that turn the real economy” says Adomait. With this, we can understand that the grease is a good thing, but when the housing market crashes, it’s hard to keep up for many Canadians. Furthermore, housing prices are significantly affected by immigration and population growth in Canada. Studies suggest that for every one percent increase in population, housing prices rise by three percent. With the influx of new Canadians, the housing market faces the potential of a more severe crash in the coming years, particularly when mortgage rates increase. In the podcast of chapter eight: Market Forces a Beautiful Kind, covers more about mortgages and the negative pay rate on them. “Fourteen or fifteen percent of Canadian mortgages are not being paid” says Evan Sudal. For example, Toronto and Vancouver have had the biggest impact with the housing market recently. According to UTP journals, most citizens will pay a high amount of income tax to own a home and those with foreign income can potentially move around this. Resulting in social services that aid Canadians can be captured by an international elite for the unpretentious cost of property taxes. Furthermore, we can examine the supply factors on the evolution in the housing market and the impact supply and demand has on the prices and affordability. The construction and development play a crucial role in the housing supply. The building of houses simply cannot keep up with the amount of people entering Canada and with this, Canadian developers are building less houses and the bank of Canada had risen the interest rates. In chapter four of the CPE book, it states that if you really want something (to own a house) you’re going to have to pay for it. There is no question about the work and money involved with attempting to own a house. In this day and age, it is impossible, and nobody has the money for it. The effects of housing prices can also impact the construction prices. Many companies face extreme pressure to processes and more cost-effective building methods. This is a major issue that also affects jobs and major cities in Canada. Stated by Adomait, “individuals are spending more time surviving than thriving”. This exemplifies the market we live in. Typically, in these circumstances, when people become unemployed it leads to a reduced housing demand. In chapter eight it is noted of the importance of adding supply to the housing market can reduce the costs. In addition, inelastic supply will contribute to the prices of houses rising. This makes it extremely difficult for low incomes.

Colmar, P. (2023, September 14). Opinion: Canada’s housing bubble: “sliding down the slippery slope of hope.” The Globe and Mail. https://www.theglobeandmail.com/business/commentary/article-canadas-housing-bubble- sliding-down-the-slippery-slope-of-hope/ Reconnecting the housing market to the Labour Market: Foreign ownership ... (n.d.). https://www.utpjournals.press/doi/full/10.3138/cpp.2019-009 In contrast to supply issues, scarcity further elevates housing prices, exacerbating the unaffordability for many Canadians. According to the Canada Mortgage and Housing Corporation (CMHC), 3.5 million units are needed to restore home affordability. The increasing gap between the supply and demand worsens the affordability crisis. In chapter one of CPE, Adomait says “Once something is scarce, it is no longer free for the taking” this proves that the imbalance between the start-up of housing and housing supply has developed this shortage in areas like high-demand urban centres. In chapter four of CPE, Adomait emphasizes the importance of productivity and how it is a major factor to a growing economy. A growing economy is able to produce more goods and services while maintaining the same amount of work being put in. Ai copy The Canadian housing market has undergone significant challenges and discussions over the past decade, marked by the vastness of the country, high interest rates, supply shortages, immigration, and population growth. Despite a diverse and dynamic housing landscape with ample job opportunities, the market faces numerous negative factors due to various economic issues. This essay explores the equity and efficiency of the Canadian housing market, examining its impact on individual happiness through insights from CPE chapters, scholarly sources, and podcasts by Evelyn J. Adomaits. Pricing Dynamics Initially, housing prices were manageable before 2007. However, the financial crisis of 2008, as reported by the BBC in January 2009, triggered a 15.3 percent decrease in U.S. housing prices. This downturn, coupled with inelastic supply, led to challenges for new homebuyers and low-income individuals in accessing the housing market. Adomaits emphasizes the role of money in the real economy, highlighting its positive effect as grease, but acknowledging the difficulty many Canadians face when the housing market crashes. Impact of Population Growth

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Colmar, P. (2023, September 14). Opinion: Canada’s housing bubble: “sliding down the slippery slope of hope.” The Globe and Mail. https://www.theglobeandmail.com/business/commentary/article-canadas-housing-bubble- sliding-down-the-slippery-slope-of-hope/ Reconnecting the housing market to the Labour Market: Foreign ownership ... (n.d.). https://www.utpjournals.press/doi/full/10.3138/cpp.2019-009 Furthermore, housing prices are significantly affected by immigration and population growth in Canada. Studies suggest that for every one percent increase in population, housing prices rise by three percent. With the influx of new Canadians, the housing market faces the potential of a more severe crash in the coming years, particularly when mortgage rates increase. Podcasts, such as Chapter Eight's "Market Forces a Beautiful Kind," delve into the negative impacts of mortgages, revealing that a substantial percentage of Canadian mortgages go unpaid. The housing markets in cities like Toronto and Vancouver are particularly affected, and the international elite can exploit property taxes to the detriment of social services available to Canadians. Supply and Demand Dynamics Examining the supply factors in the housing market reveals the critical role of construction and development. However, the construction of houses struggles to keep pace with the growing population, exacerbated by the Bank of Canada's interest rate hikes. Chapter four of CPE underscores the inevitable costs associated with homeownership, and the impossibility for many in the current economic landscape. Housing prices' effects extend to construction costs, putting pressure on companies to adopt more cost- effective building methods, affecting jobs and major cities in Canada. Adomaits emphasizes the importance of adding supply to the housing market to reduce costs and addresses the challenge of inelastic supply contributing to rising house prices, making it particularly difficult for low-income individuals. Scarcity in the Housing Market In contrast to supply issues, scarcity further elevates housing prices, exacerbating the unaffordability for many Canadians. According to the Canada Mortgage and Housing Corporation (CMHC), 3.5 million units are needed to restore home affordability. This scarcity, especially in high-demand urban centers, emphasizes Adomaits's point that once something becomes scarce, it is no longer freely accessible. Productivity's Role in the Economy

Colmar, P. (2023, September 14). Opinion: Canada’s housing bubble: “sliding down the slippery slope of hope.” The Globe and Mail. https://www.theglobeandmail.com/business/commentary/article-canadas-housing-bubble- sliding-down-the-slippery-slope-of-hope/ Reconnecting the housing market to the Labour Market: Foreign ownership ... (n.d.). https://www.utpjournals.press/doi/full/10.3138/cpp.2019-009 Chapter four of CPE emphasizes the importance of productivity in a growing economy. Increased productivity enables the production of more goods and services with the same amount of effort. Adomaits stresses that a thriving economy is closely tied to productivity, indicating its crucial role in the overall economic landscape. initial copy The Canadian housing market has been an intense challenge and discussion in the past decade. Canada is the second largest country in the world and has heavily been impacted by high interest rates, supply shortages, immigration and population growth Although Canada maintains a diverse and dynamic housing landscape with availability to jobs and opportunities, it undergoes many negative factors in the market due to several economic issues. Throughout this essay, the equity and efficiency of the Canadian housing market will be investigated to explore the impact on one’s happiness through the chapters in CPE, scholarly sources and pieces from Evelyn J. Adomaits’s very own podcasts. Pricing Initially, pricing of houses before 2007 were manageable. However according to chapter eight CPE, an article published in January 2009, the BBC reported that U.S. housing prices were down 15.3 percent in December 2008 when compared with prices in December 2007. Due to this, the Canadian consumer price inflation remained quiet up until recently, meaning there was a drive for tight monetary policy during this time. Chapter eight also highlights that Inelastic supply is a main contributor to the rising housing prices. This makes it extremely challenging as well for new homebuyers and low-income individuals to even access the housing market. “Money acts as grease for the wheels that turn the real economy” says Adomait. With this, we can understand that the grease is a good thing, but when the housing market crashes, it’s hard to keep up for many Canadians. Population growth Moreover, the pricing of housing is also well affected by immigration and population growth in Canada. It is stated that for every one percent of population growth, prices of houses go up by three percent. With the number of new Canadians entering, the housing market will eventually crash even more than it

Colmar, P. (2023, September 14). Opinion: Canada’s housing bubble: “sliding down the slippery slope of hope.” The Globe and Mail. https://www.theglobeandmail.com/business/commentary/article-canadas-housing-bubble- sliding-down-the-slippery-slope-of-hope/ Reconnecting the housing market to the Labour Market: Foreign ownership ... (n.d.). https://www.utpjournals.press/doi/full/10.3138/cpp.2019-009 already has within the next few years. This also happens when the mortgage rates rise, it becomes difficult to buy because the demand for houses decreases substantially. In the podcast of chapter eight: Market Forces a Beautiful Kind, covers more about mortgages and the negative pay rate on them. “Fourteen or fifteen percent of Canadian mortgages are not being paid” says Evan Sudal. For example, Toronto and Vancouver have had the biggest impact with the housing market recently. According to UTP journals, most citizens will pay a high amount of income tax to own a home and those with foreign income can potentially move around this. Resulting in social services that aid Canadians can be captured by an international elite for the unpretentious cost of property taxes. Supply, and inelasticity of demand Furthermore, we can examine the supply factors on the evolution in the housing market and the impact supply and demand has on the prices and affordability. The construction and development play a crucial role in the housing supply. The building of houses simply cannot keep up with the amount of people entering Canada and with this, Canadian developers are building less houses and the bank of Canada had risen the interest rates. In chapter four of the CPE book, it states that if you really want something (to own a house) you’re going to have to pay for it. There is no question about the work and money involved with attempting to own a house. In this day and age, it is impossible, and nobody has the money for it. The effects of housing prices can also impact the construction prices. Many companies face extreme pressure to processes and more cost-effective building methods. This is a major issue that also affects jobs and major cities in Canada. Stated by Adomait, “individuals are spending more time surviving than thriving”. This exemplifies the market we live in. Typically, in these circumstances, when people become unemployed it leads to a reduced housing demand. In chapter eight it is noted of the importance of adding supply to the housing market can reduce the costs. In addition, inelastic supply will contribute to the prices of houses rising. This makes it extremely difficult for low incomes. Scarcity in the housing market In contrast to supply, the scarcity can raise the housing prices which makes owning a home even more unaffordable for many Canadians. According to CMHC, Canada needs 3.5 million units in order to restore the affordability of homes. The increasing gap between the supply and demand worsens the affordability crisis. In chapter one of CPE, Adomait says “Once something is scarce, it is no longer free

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