“benevolent meddling is harder than it looks” – Heidi Moore
The Grand Atlantic condo development serves as a concern. Our leadership seemed so desperate to deliver on promises of “affordable” housing that they may have overextended themselves. While the intentions were well meaning, have we thrown money at a problem best solved by policy changes?
Housing has undoubtedly been a huge problem and it’s understandable that we’d want to do something about it. Ideally our aim could have been to gather statistics and study trends in the overall market such that we could effectively time when to introduce policy to gently simulate or restrain the market according to market cycles. Some of this was covered previously as we embarked on analysis of the problem and concluded that zoning restrictions and a lack of planning contributed. We roughly estimated the supply problems, identified problems with policy and lending practices and questioned if we’re in a housing bubble. Much of this could have caused one to reevaluate the need to stimulate the market with supply, especially as we watched for and identified signs of the bubble bursting. Unfortunately much of this analysis seemingly went unnoticed and may well not have been done elsewhere where it was most needed.
One large concern is that beyond a perceived lack of analysis it seems like there is all too often an inclination to throw money at a problem.
Explaining the arrangement with the developer, Major Dill said: “BHC will purchase the condos from the developer and then resell to pre-approved buyers.
This is something that has jumped out about this project since day one. Government has effectively absolved the developer of financial risk on the project. Now a bunch of condos are ready and none have been sold. It isn’t yet clear that we’re at the bottom of our downturn, policy hasn’t been changed to soften it and banks have swung their lending practices so heavily to the conservative side that most if not all potential demand has dried up. There is no question intentions were well meaning but ultimately benevolent meddling hasn’t seemed to yield the kind of results most would hope for.
Ideally speaking careful regulation of policy can and should have been used to adjust things and to let the market react accordingly in order to address our problems. Unfortunately policy hasn’t changed and we’ve poorly timed the launch of even more supply. This glut of supply will likely add pressure to a declining market and make things even more precarious. While certainly we’d like to shift the housing market in favor of being more affordable, stability is also a factor, especially as we face many who may struggle under oversized mortgages and an inability to sell their homes. Most sadly if all of these homes don’t sell this could be yet another case that government could end up unnecessarily overspending and increasing our debt burden.
It’s another sad case where it’s clear the intentions were well meaning but the results may well leave much to be desired. It is hoped that our government will conduct a full review of our current housing situation, perform the necessary analysis and take a deep look at all housing policy to determine how best to stabilize the market using sound and prudent regulation in this time of instability.