The Real Estate Divide

Canadians have always been proud of our capitalist society with a strong middle class.  As we gain wealth nationally we’ve improved the standard of living of all our income bands.  We’ve avoided the great divide between the rich and the poor that exists south of the boarder.  The new economy however threatens all of that.

Our elected officials are governing us as if we all have the same net worth and the same debt.  Specifically they are focused on the average amount of consumer debt.  The worry is that if we’re too highly leveraged we won’t be able to pay our loans in the event of job loss or rising rates.

The government’s solution is to make it harder to borrow money.  Tightening mortgage rules 4 times in 4 years is beginning to make an impact from a macroeconomic perspective.  The problem is that we don’t all make the same income, nor have the same net worth and debt.

Tighter mortgage rules are having a major impact on first time home buyers and lower income earners.  They have no impact on our higher income earners.  These higher income earners can capitalize on record low interest rates and leverage their investments to grow their wealth, while our lower income earners no longer qualify to own a home.

It’s time for our government to stop treating us all the same.  Taking home ownership out of reach of first time buyers is not the right answer.

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