# BC inadvertently causing housing prices escalation



## carverman (Nov 8, 2010)

Just heard on the media news today..BC is providing interest free deferred loans to home buyers with delayed repayment for 5 years.

good plan? What do people think?

Premier Christy Clark said Thursday the government will provide *25-year loans for down payments to a maximum of $37,500* on funds matched by buyers



> The program that starts next month applies to homes with a *maximum value of $750,000* and the *interest-free portion of the loan will last for the first five years*, with the repayment schedule at current interest rates over the remaining 20 years





> Premier Clark said *she does not believe providing interest-free and payment-free loans will drive up prices.*
> “Our analysis tells us that it won't because everybody who is going to be eligible for this program will have to have been accepted for a mortgage already.”





> *The plan will be paid for by property-transfer tax revenues*, a 15-per-cent foreign homebuyers' tax and a* luxury tax on homes priced at over $2 million,* Clark said. B.C. is forecasting a budget surplus of more than $2 billion, due largely to property revenues.


http://bc.ctvnews.ca/b-c-offers-5-y...-payment-loans-to-first-time-buyers-1.3205016


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## heyjude (May 16, 2009)

I can see the intent. Make it easier for locals to get into the lower end of the property market in Vancouver, while simultaneously making it more onerous for foreign buyers to gobble up high end properties (the 15% tax). The risks are that first time buyers will take on more debt than they can sustain long term (after all, historically low interest rates have nowhere to go but up), and that demand will drive prices up at the lower end of the market.


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## MrMatt (Dec 21, 2011)

They're forgetting the law of supply and demand.
There is a large demand and small supply, prices will go up.

Handing money to people will only allow them to bid up prices even higher.

To solve this situation, they need to add more supply, or cut demand. Handing out money doesn't impact either, it just makes it easier to bid up prices even HIGHER.

Increase supply, figure out how to build more housing, despite the geographic limitations.
Cut demand,
normally high costs would take care of this, but the government seems unwilling to let prices get high enough
Making it MORE affordable is only going to increase demand, which will make the sitaution worse.
why do people want to live in this area so desperately that they're willing to pay these prices?

I'm sorry to break it to everyone, but really some people just won't own property in Vancouver or Toronto (or a lot of other areas).
There isn't enough, so what's left gets bid up. 

I personally chose to live outside a major center because of affordability, sure I make less than I would there, and I get fewer services, but I can afford it.


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## AltaRed (Jun 8, 2009)

This is all about 'easing the anger' of current 'greedy' homeowners looking to make a buck flipping their properties and buying votes from 'first time' homebuyers in the Spring election to come. The BC Libs have been burning their political capital with their 'foreign buyer's tax' program and their ambivalance towards the KM pipeline project. The wretched and dangerous NDP need to be held off somehow for the sake of BC economic prosperity.


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## drivingcanada (Dec 15, 2016)

This is just Christy Clark trying to appeal to a broader range of people prior to election time. As with the implementation of the 15% foreign buyer tax, it seems little thought was put into the repercussions of this new loan. As others have mentioned already, this can only result in prices being bid higher in a market with limited supply.


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## mordko (Jan 23, 2016)

Like others have said, this is move economically and mathematically illiterate and is driven by nothing except politics. People will take on more debt which they will start paying the interest on 5 years later. That worked out so well when the government did this in the US.


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## Just a Guy (Mar 27, 2012)

The government always makes poorly thought out decisions which usually results in the opposite of what they intend. For example, any time the government offers "rebates", the companies involved usually raise their rates to increase profits. The general population don't realize this happens, and think they're "saving" money while the companies increase their profits. The economy is stimulated, everyone is happy...

Except the tax payer paid for the "savings", which they didn't actually get and prices rise making it harder to get by. His usually results in higher taxes to help pay for things...a vicious circle.


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## AltaRed (Jun 8, 2009)

If it helps re-elect the Liberals next Spring, the cost to me as a taxpayer is worth every penny, err, I mean nickel..


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## Pluto (Sep 12, 2013)

Its just politics. 
Blame foreign buyers for unafordability, even though it is really scant supply, slam the foreign buyers with a tax, then provide assistance to first time buyers, all the while, ignore the supply issue. 
Apparently there is an election coming up so this gives incumbents ammunition to get re-elected.


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## AltaRed (Jun 8, 2009)

Pluto said:


> Apparently there is an election coming up so this gives incumbents ammunition to get re-elected.


That is what I just said, right? Tust me, we do not want the NDP elected in this province after having nearly destroyed its economy twice before.


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## Mechanic (Oct 29, 2013)

AltaRed said:


> That is what I just said, right? Tust me, we do not want the NDP elected in this province after having nearly destroyed its economy twice before.


Alberta is getting a taste of the NDP's effect on the economy right now


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## Karen (Jul 24, 2010)

AltaRed said:


> If it helps re-elect the Liberals next Spring, the cost to me as a taxpayer is worth every penny, err, I mean nickel..


I couldn't agree more, AltaRed...any party but the NDP!


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## indexxx (Oct 31, 2011)

Yup- wish that was in effect two years ago when I bought my first condo- or that it was retroactive to the past five years...


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