Comment 34088

By Borrelli (registered) | Posted September 24, 2009 at 10:21:56

"$18.6 million for 100 units works out to $186,000 per unit. At current downtown property values, that money could be used to buy a hundred four-bedroom houses and give them to people. Alternately, the $18.6 million could provide a 20 percent discount on the purchase price of approximately 500 homes."

Good analysis Ryan. Your starting to sound like an economist!

Many people (including myself) propose that investments in social welfare follow the course of reasoning you outlined above.

Yeah, 'cept that's fallacious reasoning. Not that it's a bad idea in principle, but it assumes a bunch of things that a government buyer can't control, like sufficient stock of well-priced four-bedroom houses in well-serviced locations, and also that unit quality standards are up to snuff (which given the state of many cheap, 4bdrm downtown homes, is unlikely).

The Realtors Association of Hamilton-Burlington reported sales of approximately 1,100 units in Hamilton AND Burlington AND Grimsby in August 09. Across the year there is an average of about 1,000 sales per month in those areas. You're talking about trying to find 100 decent-quality 4 bdrm units at ~$160k each (which very conservatively assumes you'll spend only ~$25k upgrading each unit).

A quick check of suggests there are currently less than 80 listings for 4bdrm units in the lower-city area between Dundurn and Kennilworth, under $160k. Okay economists, how long do you think it will take for the average price of those units to go through the roof with government starts buying them up?

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