Housing: The New Tulip Mania?
As usual, the article made me wonder if the current get-rich-quick scheme will go the way of the tulip market.
Prices soon rose steeply as people began to see the flowers as a good investment opportunity, to the point that some people would trade almost everything they had to obtain a single bulb.
The bulb burst
Hundreds of years later and with the benefit of education and experience, financial experts found a new investment that could not possibly fail: housing. After all, everyone needed a place to live, and even the lowliest homeowner was likely to jump at the chance of eventually making a large profit.
Housing market may fade like the flower
Then came three major societal and economic shifts that even now threaten to bring down the entire housing sector.
First, the job market began to stagnate due to factors such as globalization and the delayed retirement of many high-paid workers, and many people have now found themselves unable to afford a house without taking on a large amount of debt.
Third was a major demographic change which somehow managed to escape to the fringes of most people’s consciousness: the growth of singleness and of people living alone.
By 2011, the number of one-person households had surpassed the numbers of two-parent families, according to Statistics Canada, meaning that many more people than ever before are trying to manage with a single income.
The next hot investment: Cars? Gold?
One of the problems with the situation is the entirely speculative nature of the whole housing market, which seems to depend heavily on factors beyond anyone’s control. What will happen to all of the great real estate investment schemes if the next generation decides to put money into cars or gold bullion instead of into houses?
Hot housing market has high cost
No one will die from a lack of tulips, but people die every year from a lack of shelter. The implications of unaffordable housing are difficult to reconcile with any society that wants to be compassionate.
Massive homes in the suburbs have become status symbols, while investment in affordable housing has been erratic at best, leaving low-income people to scramble for the few available homes that they can afford.
Perhaps the time has come to return to that radically simple idea.