B.C. Liberals' home-buyer plan short-term gain for long-term pain
(Gerry Kahrmann/Postmedia File Photo)
“I hate it. To be very clear, I think it’s really bad economics.”
Premier Christy Clark’s home-buyers plan is short-term gain for the B.C. Liberal Party and long-term pain for both those who borrow money from the government, taxpayers and the entire B.C. housing market.
But for Clark this is all about getting re-elected next May. Who cares if some first-time home buyers can’t make their mortgage payments and lose their houses down the road?
What’s it to her if housing prices go up for everyone because the B.C. government plan will reduce already limited supply?
As flimflams go, this one is impressively slippery – and a lucrative Christmas present to the B.C. Liberals’ biggest donors – the real estate industry. It’s like giving money to Scrooge instead of Tiny Tim.
The government will spend $130 million taxpayer dollars to lend – interest-free – money to 42,000 first-time home buyers to get into the tight housing market.
But like every good scam, there’s a catch – and it’s a doozy.
The interest-free part of the loan of up to $37,500 only lasts five of the 25-year term. After that, its market interest rate plus 0.5% for 20 years.
That might mean you effectively just borrowed money from a payday loan company with outrageous interest rates, because who knows what they’ll will be in five years, let alone 20?
And by suddenly adding new home buyers, supply shrinks dramatically, so prices go up!
Brilliant plan! It goes against everything the federal government, economists and experts say.
You might also question Clark’s priorities after 13 people died Thursday from fentanyl overdoses, yet her government still hasn’t banned pill presses, as the B.C. NDP proposed this summer.
But the home-buyer plan is about getting re-elected; fentanyl isn’t.
And when the only people praising your scheme are those whose names and faces you see on lawns with a “For Sale” sign, it’s kind of obvious whose palms are being greased.
But if Clark’s home-buyer plan fails to do anything but put more money in developers’ pockets while jacking up market prices, voters could be looking for a different kind of house party than the B.C. Liberals in May 2017.