Tuesday, December 20, 2016

New BC program for first time house buyers is a very good policy decision.

I firmly am convinced that the new BC government for first time house buyers is very good for BC economically and the single best thing that can be done for millennials

Last week the BC government announced a program for first time house buyers in BC in which they can get a no interest matching loan to cover up to 5% or $37,500 of price of the house as a down payment.   I personally think the program is an interesting way to make house ownership an option for millennials.   People opposed to the BC Liberals have come up with a number of reasons this program is a bad idea but I am not convinced of any of them.    
News Release

A major problem in buying the first house at the moment is coming up with the 10% down payment.   Saving the money to manage to get to $50,000 down payment for a $500,000 house will take a young couple a long time because there is not a lot of spare money around to save at that point in their lives.   If they can put aside $5,000 a year it will take them 10 years to get a down payment together.  It is long enough to discourage people from ever trying to get in the housing market, ten years at age 28 is longer than the adult life they have lived.  The government no interest loan changes the money you need to save from $50,000 to $25,000 and that time frame drops to five years.   A five year time frame is one that people can think about in their 20s.

Repayment of the loan starts in five years at which point in almost all cases the ability to cover the repayment is much more manageable, that $25,000 becomes a $104 a month payment.   Remember there has been no interest on this loan but the value of the house has probably risen*.

The program limits support for houses priced up to $750,000 but that is much too expensive for almost all first time house buyers to afford.  A much more realistic price is $500,000 which means a monthly mortgage payment of about $2300 with a 10% down payment.   Most people making use of this program will be using a lot less than the maximum they are in theory allowed to access.  

In the Lower Mainland this means almost all the purchases will be of condos and townhomes and this is a part of the Metro Vancouver real estate market that has not risen unsustainably over the last 18 months.

Making it possible for a lot of younger people to buy houses is good for the BC economy.  A crash in the Metro Vancouver real estate market would cause a major recession in the province.  We need the market to cool and come down but if it falls too fast the whole economy goes down.  .Well timing government intervention like this program should be able to soften or even stop a recession caused by the crash of house prices.   The fall of house prices in the US were the primary reason for the Great Recession.

All residential real estate markets need a constant and steady influx of first time 30 year olds buying.  This has not been happening in Metro Vancouver or Greater Victoria.  Saving the down payment takes too long.   This program will in the short term speed up the decision for many to enter the market.   These new buyers replace people downsizing, moving away or dying..   If the people leaving the market are not replaced there will be to many houses on the market and not enough buyers.   It may sound insane to many people at the moment but the market in Vancouver is already showing signs of not enough first time house buyers.

The biggest complaint I have heard is that the influx of new buyers could be inflationary but in this case that is not likely happen because the market is teetering on a rapid decline,  The short term large influx of new buyers will cushion the market for the next year or two and help stave off a recession.

As a program it actually costs the government very little.   The only cost is administration and the interest lost.   This program will not require new government taxation to pay for it.   This is not a grant but a loan and secured against the house, there is almost no capital risk to the government.    It is a clever way to turn a small cost to government into a huge economic benefit.

 The timing of the program is close to prefect for the larger macro economic needs.

For the millennials, this is a chance to do what previous generations have done and have a significant capital asset.   Delaying getting into the housing market from about 30 to close to 40 will create a whole generation of people who do not have access to the financial resources other generations have had.   Borrowing against the value of a home has many important roles in people's lives.

An example, most people that start up a new business at age around 40 use their primary residence as the security to get the financing they need.  If many fewer people have houses they own there are many fewer people that can be entrepreneurs, we can not afford that as a society.

Another example, a house functions as a family social safety net.   It provides a source of financial resources if things go wrong.   For many families it is a effectively an insurance policy against the unknown.

House ownership creates a stronger middle class.   Everyone talks about supporting the middle class, this program will help large numbers of people aged 25 to 40 get into the middle class.   I know people this age that had resigned themselves to never being able to own a house that are now calculating when they could buy with this program.   It works well for my kids because over the next five to fifteen years they will start to own houses and this is not something anyone expected`

This program is one of the only serious government programs that moves wealth from the older generations to the millennials.   Simple generational fairness alone should be a reason to support this program.

From the political side this is a very smart move the government.   The single big target demographic in this coming election are the millennials.  Trudeau won the federal election only because of them and no knows how they will act in the BC election,  I think this policy will move a large number of them over to supporting the government.  What is good for a winning election does not have to be at odds with good policy.

All in all I think this is program is not only a very good idea but it truly bold and innovative   I do not expect it to be perfect but it can be altered as glitches are seen.  I can not think of the last time government has decided to start this large a new program

* I bought a house at age 33 and in the next seven years it lost 55% of its value.  At 51 I am unlikely to ever own a house again

Wednesday, November 16, 2016

Leadnow is using Trump to fundraise

These are two fundraising emails from Leadnow:
Dear Bernard,

Donald Trump was elected President of the Unites States of America last night.
It’s hard to find the words to express how many of us are feeling today: sadness, anger, rage, frustration, fear.Fear about what Trump’s election means for the world. Fear for our friends down south - especially the minority communities whose dignity, rights, and safety are threatened the most. Fear about the worst parts of Trump’s politics getting a mandate from the most powerful country in the world.
If you’re feeling that way too, you’re not alone.
The Brexit vote and Trump’s election both call on us to take a long, hard look at the institutions that are failing so many people. When we look, we can see a hunger for change in the face of uncaring elites. We can also see loud voices stoking racism for crass political gain. These same currents are getting stronger in Canada. This morning one of the most high profile Conservative leadership contenders sent an email congratulating Trump and committing to “bring his message to Canada.”1 We’ll talk about that more in the coming days.
For now, the point is that politics is changing around the world, but Trump’s politics aren’t the change that most of us hope for. He will keep doing what he always does: lie constantly, attack entire communities, and break important promises.
There is another kind of politics that is growing around the world: a politics that sees the crises we face, and places its faith in the collective action of many people, not the strong arm tactics of one man.
Trump’s election means new fears and new uncertainties that can only be countered by reaching out, digging deep, and finding new hope.
Today we feel hope when we think about you - all of the times members of the Leadnow community have shown up together, dreamed together, and fought together to turn our shared values into a lived reality for families and communities from coast to coast to coast.
We don’t need to have all the answers today. Today is a day to process how we’re feeling, and find people to connect with. In the next few days we’ll reach out with next steps to counter the worst parts of Trumps politics before they get stronger in Canada.
As one of our American friends has said: "We are going to fight. We are going to get through this, come what may. Today we despair, tomorrow we organize.”
With hope and respect,
Brittany, on behalf of the Leadnow.ca team
Sources:
  1. Kellie Leitch latches on to trump’s victory, http://www.macleans.ca/politics/ottawa/kellie-leitch-latches-on-to-trump-victory/
This is the second one
 Dear Bernard,Here’s our take on Trump: he’s a dangerous fraud who is going to betray the people who voted for him, while stoking racism and hurting minorities. Do you agree? Disagree? And what do you think we should do about a powerful politician who wants to bring his tactics to Canada?Civil rights groups in the US are reporting a surge in racist acts since Trump’s election - graffiti, vandalism, street harassment and intimidation inspired by Trump’s race-baiting tactics.[1]We’ve seen this story before: cynical politicians position themselves as outsiders to tap into people’s legitimate economic insecurity and then point the finger at elites and minorities. You can already see that Trump’s being insincere about taking on elites. He’s appointed the head of the establishment Republicans to be his chief of staff in Washington.[2] But while Trump won’t really take on elites, he will do real harm to minority groups.Unfortunately, these ugly trends don’t stop at the border. Earlier today a man was filmed saying “Go Trump!” while hurling racist insults at another man on a Toronto streetcar, and a woman who runs a Jewish prayer centre in Ottawa woke up to find a swastika spray-painted on the front door of her home. [3-4]It’s going to get worse: Conservative leadership candidate Kellie Leitch is promising to use the same race-baiting tactics that defined Trump’s campaign. Now, Leitch is pulling ahead in the Conservative leadership race.[5]What do you think? We want to know what you think about Trump’s election, and if you think Leadnow should stand up to Kellie Leitch’s race-baiting tactics. Will you take our 2-minute survey?Take the survey nowIn the last week we’ve received hundreds of emails from Leadnow members sharing their feelings about the election. Many of you are feeling sadness, anger, rage, frustration, and fear, and we want you to know you’re not alone. The Brexit vote in the UK, and now Trump’s election, both call on us to take a long, hard look at the institutions that are clearly failing so many people. Around the world, people have had enough of the status quo. When we look, we can see a real hunger for change in the face of uncaring elites. But we can also see loud voices stoking racism for crass political gain.We need to come together, and decide what’s next. Time and again, we’ve seen that US politics influences the political debate here in Canada -- and we’re seeing it again now, with Kellie Leitch’s Trump-style race-baiting in the Conservative leadership contest.Let us know what you think about the US election, and how Leadnow should respond to Trump-style politics in Canada.http://www.surveygizmo.com/s3/3181588/Your-feelings-about-the-U-S-election-and-what-s-next?email=snassillahie@gmail.comWe’re in this together,Jolan, Britt, Jamie, Matthew and Amara on behalf of the entire Leadnow.ca team[1] Racist incidents are up since Donal Trumps election (Time). http://time.com/4569129/racist-anti-semitic-incidents-donald-trump/[2] Donal Trump picks Reince Priebus as Chief of Staff and Stephen Bannon and Strategiest (New York Times). http://www.nytimes.com/2016/11/14/us/politics/reince-priebus-chief-of-staff-donald-trump.html[3] Ottawa woman wakes up to find anti-Semetic graffiti spray-painted on her home (CBC). http://www.cbc.ca/news/canada/ottawa/rabbi-ottawa-racist-graffiti-1.3851350[4] Video shows man hurling racist insults, threats on Toronto streetcar (CBC). http://www.cbc.ca/news/canada/toronto/toronto-streetcar-incident-1.3851108 [5] “Throwing out the elites”: Why Donald Trump’s victory could upend the Conservative leadership race (National Post). http://news.nationalpost.com/news/canada/canadian-politics/trumps-message-of-throwing-out-the-elites-needs-to-be-delivered-in-canada-says-kellie-leitch

Monday, November 14, 2016

Confessions of a Failed Election Prognosticator

PEI had a Plebiscite on Electoral Reform but will anything happen?

Yes I was at the BC Liberal Convention - it was well run and good for me to be there

I am back with the BC Liberals again.  I joined them the first time in late 1999 when a friend ask me to run his nomination campaign in the Yale Lillooet riding.   I went to the 2016 convention and I have a number of personal and political observations.

The Political
  • This convention was bigger than past BC Liberal ones I went to
  • The age of the people at the convention was much younger than I had expected.   At 51 I often still feel young at political events.   At the BC Liberal convention I felt old for the first time.   The representation of millennials was significant
  • This is not Gordon Campbell's Liberals.  In the past no serious man would have gone to the convention in anything but a suit.   I arrived in a suit on Friday and I felt overdressed   It was also a much more grass roots feeling event than in the past.   
  • The Liberals are better organized than I have ever seen them, frankly better organized than any BC party I have ever seen.   The convention theme was "Team" and it was very much how the event felt.
  • The convention was very well organized and the details well though out
  • The convention was a very positive event.   People were happy and even energetic.   
  • I have never seen as many or as well attended hospitality suites as I did on Friday night


  The Personal
  • As you may or may not know I am suffering from severe clinical depression.  And I went to the convention with some anxiety about how I would do because I tend to dislike crowds of people when I do not know a lot of them.   I did not need to worry.
  • In general the event was very welcoming for me.  Within in 10 minutes of being there I had run into five people I had not seen in years.   Over the weekend connected with a lot more people than I had expected.
  • The very positive atmosphere at the event was very good for me.   No one was talking negatively around me and that helped my mood.  It made me realize I need to not engage with negativity when it comes to politics and simply ignore the angry people online
  • The most important thing for me was that I got a lot of positive validation from the people at the convention.   I had a number of people that I really did not know come up to me and ask me how I was doing, how was the depression, how was I after the fire at the old house and more.   I several MLAs and one MP seek me out to meet me in person.  
  • Once again dissenting opinions are ok with the BC Liberals if you are expressing yourself rationally   I liked that I could talk to people I disagreed with on issues and feel like we could both hear it each other and find points of commonality