U.S. economist who foresaw 2008 housing collapse issues dire warning on Vancouver real estate
Renowned author of The Bubble and Beyond calls for dramatic property tax shift as election kicks off with housing a top issue, according to polls.
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Economist Michael Hudson has some good news and some bad news when it comes to Vancouver's — and increasingly, B.C.'s — housing crisis.
The good news, in his view: we're not seeing the symptoms of a real estate bubble about to burst, as he foretold ahead of the 2008 U.S. housing market collapse that sent the global economy careening.
The bad news, however: our cities could become completely vacant and unlivable, the former Wall Street economist and author of The Bubble and Beyond told Metro ahead of a talk Tuesday evening at Vancouver's Rio Theatre.
"It’s not a bubble," Hudson said in an interview Tuesday. "If money from U.S. real estate funds and Chinese funds all come in with 100 per cent no mortgages, they’ll take the loss.
"The risk is of making Vancouver too expensive for people working in Vancouver to live in, pricing Vancouverans out of the market. It’s like the curse of oil for oil countries — the prices go so high that they can’t afford to live there anymore."
Once housing costs for average families exceed their ability to pay for them from their incomes, he explained, people won't be able to afford the very goods and services and industries that employ them in the first place.
"They will not be able to buy what they produce," he argued. "If people can’t afford goods and services, this can’t last: pretty soon the industries are going to leave, restaurants will close down, stores will leave."
The academic, who is also a distinguished Research Professor of Economics at the University of Missouri, is to headline an event organized by the BC Government & Service Employees' Union (BCGEU).
Hudson is speaking about The Real Estate Crisis in Vancouver on Tuesday, 5:30 p.m. at the Rio Theatre (1660 East Broadway Ave.).