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This aspect of the housing bubble could hinder economic recovery

4/7/2021

 
There is a quote from a Toronto Star article this past weekend on the housing bubble which is worth noting:
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I don’t know how many people who would have ended up in the STEM field are instead flipping houses. It’s so lucrative right now you can’t blame them, but I don’t know if, from a longer term perspective, that enhances productivity in our country.
We must improve productivity so that our economy can handle the costs of the pandemic, for example so we don't have too much inflation without economic growth, and so that governments can service the debt they have incurred and continue to pay for the things society needs.

This quote is worrisome because it suggests that people who could be innovating and contributing to economic growth are instead getting involved in the housing market. I believe the same could be said for financial resources. In my experience with small start-up companies, the amount of extra capital which would make a significant difference is comparable to what you'd put into buying a house. If the housing market is so lucrative, why would you consider investing in a risky start-up company that takes extra effort to understand?

​We were dealing with the human and social cost of the housing crisis before the pandemic. The post-pandemic economic recovery must include actions to solve the housing crisis.

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