Essay on The Reasons For The Rise Of Housing Prices

Essay on The Reasons For The Rise Of Housing Prices

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Large cities such as Ottawa and Toronto are becoming increasingly gentrified, and in this transformation, there is a growing gap between rich and poor areas, and the availability of affordable housing eroding for those with lower income. The real estate boom has raised both housing prices and rents, and increased the inequality gap between the wealthy and the working poor. This housing boom has also shut lower income buyers out of the home market, despite record low interest rates. Unfortunately, the housing boom has also resulted in rising rents for tenants. This short essay will discuss the forces and factors that are causing this change, examine the current state of the situation, and suggest some possible actions that governments can undertake to reduce this problem. I will begin by introducing this social problem. I will proceed to discuss the reasons for the rise in housing prices. This will include a discussion of foreign investment into housing, a lack of detached homes, and a shortage of rental housing being built. I will proceed to discuss the social implications of this problem, and finally, I will provide a conclusion and some recommendations as to how to solve the problem.
Rising Prices and Foreign Investment
Real estate prices have skyrocketed in the past decade. Cities such as Toronto are averaging double digit a year growth in housing prices (Carrick, 2013). Detached houses in Toronto are now well over half a million dollars on average (Carrick, 2013). There are several reasons for this large and hefty increase in prices. There is a shortage of detached homes and that is pushing up prices. Additionally, there has been a large increase in buying of Canadian properties by foreign investors, and that has been pus...

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...ums. An increase in the quantity of affordable rental housing would help lower rental rates and benefit the poor class. I suggest that the above incentives and grants be financed by an increase in property tax for owners of detached homes. Investors (both Canadian and foreign) who own several Canadian properties should be subject to higher still property taxes. To prevent the landlords from simply passing the higher cost of property taxes onto the tenants, rent controls will need to be implemented, which cap rental rates. Landlords should be given financial incentives to provide more rental housing, even though the rental rates will be capped with a rate ceiling depending on the size of the space. This has been successfully in cities such as New York. I feel that these implementations will go a long way towards making the Canadian housing situation fairer for all.

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