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So... remind me again who is forcing him at gunpoint to rent at a loss?
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Jan 17, 2014 22:51
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Ahhh, an appeal to sympathy from renters about the high cost of their landlords mortgage payments. What a novel idea.
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Jan 17, 2014 22:54
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Arabidopsis posted:So... remind me again who is forcing him at gunpoint to rent at a loss? The free market.
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Jan 17, 2014 22:56
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What's going to happen is that no one is going to rent for that price a lot of people think they deserve or need because rents generally reflect local incomes and supply/demand. They are hosed. And as more people get desperate and start renting their unaffordable investments out demand is only going to go down, driving rents down or at least keeping them static.
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Jan 17, 2014 23:00
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I don't get it, is he just a moron? Or is there something funnier there?
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Jan 17, 2014 23:03
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I think speculators are starting to learn the meaning of revenue.
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Jan 17, 2014 23:12
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I assume there's no rent control or condo fee control in BC?
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Jan 17, 2014 23:15
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You see this sort of thinking a lot in 2nd hand stores. "Well I paid $300 for this and it's still new so I should get $300!" Sorry the actual market value for one of those new is only $175. "But _I_ paid $300 so in order to break even I need to sell for that much, it's only fair" Sorry sir the going rate for those 2nd hand in that condition is only about 150, no one will pay more than that. "BUT I PAID $300 THIS IS OUTRAGEOUS!!!!" A lot of INVESTMENT PROPERTY types seem to think this way. They will simply charge the rent they "need" to charge to make a profit, anything less is unfair to them and the very idea that there's actually a market for what they are selling (rental housing) and maximum prices people are willing to bay baffles and angers them.
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Jan 17, 2014 23:16
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The problem isn't just that rents have outpaced inflation, it's that wages have absolutely not kept up. As an anecdotal example, in 1998 my mother rented a 3 bedroom house in the interior for $550 a month, we were on social assistance at the time. Adjusted for inflation, that rent is about $769 today (though it would rent for closer to $1500 due to the bubble). Guess what hasn't adjusted for inflation? Yeah, social assistance payments have actually dropped since 2001. You can apply the same metric to minimum wage, in 1974 the BC minimum wage was $2.50. Adjusted for inflation that's $11.50: BC minimum wage has decreased by $1.25 over the past 40 years.  If rents were pegged to inflation a huge number of people couldn't afford them in BC, when they're outpacing inflation as they currently are is it any wonder homelessness is on the rise? Rime fucked around with this message at 03:33 on Jan 20, 2014 |
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Jan 17, 2014 23:21
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Rime posted:The problem isn't just that rents have outpaced inflation, it's that wages have absolutely not kept up. I've never quite worked out why we don't tie more things to inflation. It strikes me as frankly uncontroversial that if we're going to have a minimum wage at all, maintaining constancy of its purchasing power through time seems a natural thing to want to do. fake edit: yes, yes, I know -  corporations! - but why wasn't it put in place by the original implementors of minimum-wage who surely could've foreseen the wisdom of that?
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Jan 17, 2014 23:44
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Dreylad posted:I assume there's no rent control or condo fee control in BC? Condo fees are as large/small as the owners of the strata want them to be. Rent is controlled in that you are only allowed to increase someone's rent by some small amount (I want to say 2-3%) a year. You can ask whatever you want from a new renter, and a renter can tell you to shove your >$800 Comox Valley rent where the sun doesn't shine. Presumably this has already happened to that landlord.
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Jan 18, 2014 02:07
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Baronjutter posted:You see this sort of thinking a lot in 2nd hand stores. Yeah I know a guy who has let his house stand vacant since 2010 because he's listing it at something like $45,000 above the market value to break even on his initial investment. He doesn't want to rent it out and get some money back because he's retired and not in town to keep an eye on things, and he doesn't want to sell it at a loss to get out from under the mortgage payments / property taxes / whatever else. If the market does crash, I figure he'll go to his grave still waiting for the price to get back up to the level he paid back in 2008.
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Jan 18, 2014 03:55
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Well, my (Vancouver) buyer planned to rent the condo out for several years. This is basically the math. Let's assume a 5-year fixed mortgage on $300k at a rate of 3.3% amortized over 25 years, which is the best I can find in 5 seconds of googling, a 50k downpayment (questionable), and ignore the opportunity cost of the $50k (i.e., this math probably underestimates the cost to the buyer). Monthly costs: Monthly Mortgage payment: $1466 Strata fees: about $200 Property taxes: about $100 Monthly cash flow: Probable rent: $1450 (this might be hard to get, but not unreasonable -- $1400 would probably be more realistic) Not included: repairs, insurance, assessments, amount of time sitting un-rented, cost of employing a property rental company if you want to make your life easier, etc. So basically in the best case scenario the new landlord is probably going to be losing $300 per month. In reality, when you factor in everything, the landlord will probably be losing at least $500 per month. Better hope your condo appreciates by at least $6k per year indefinitely!
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Jan 18, 2014 06:00
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A five-year fixed mortgage means that the interest rate is fixed for five years? If the amortization is 25 years, what happens after five years?
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Jan 18, 2014 16:17
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PhilippAchtel posted:A five-year fixed mortgage means that the interest rate is fixed for five years? If the amortization is 25 years, what happens after five years?
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Jan 18, 2014 16:23
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Is a 30 year fixed rate mortgage not an option? Aren't they the standard in the US? Furthermore, how can you forecast "my payments will be X for 25 years" if the mortgage becomes variable after five years? I'm realizing how little I know about mortgages.
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Jan 18, 2014 16:26
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PhilippAchtel posted:Is a 30 year fixed rate mortgage not an option? Aren't they the standard in the US?
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Jan 18, 2014 16:35
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PhilippAchtel posted:Is a 30 year fixed rate mortgage not an option? Aren't they the standard in the US? You can't get 30 year fixed rate mortgages in Canada. Essentially all we have are 5 year fixed rate and 5 year variable rate mortgages with 25 year amortization. Thus the insanity of this market.
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Jan 18, 2014 16:52
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Cultural Imperial posted:You can't get 30 year fixed rate mortgages in Canada. Essentially all we have are 5 year fixed rate and 5 year variable rate mortgages with 25 year amortization. This situation should make Canadian purchasers more cautious, not less.
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Jan 18, 2014 16:54
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Cultural Imperial posted:You can't get 30 year fixed rate mortgages in Canada. Essentially all we have are 5 year fixed rate and 5 year variable rate mortgages with 25 year amortization. What the gently caress? So as a prospective home buyer I need a reasonable sense of what interest rates will do over the next 20 years?
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Jan 18, 2014 17:05
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Mort posted:What the gently caress? So as a prospective home buyer I need a reasonable sense of what interest rates will do over the next 20 years? Don't make the mistake of assuming the average buyer treats this a rational financial decision. They're not mentally equipped to do so even if the thought did occur to them - most people are innumerate. It's an emotional one. To the extent that it is financial, it is in imagining the future riches that will inevitably result from their wisdom in placing a one-way bet.
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Jan 18, 2014 17:11
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Mort posted:What the gently caress? So as a prospective home buyer I need a reasonable sense of what interest rates will do over the next 20 years? The 30 year fixed mortgage only exists in the US because the government sponsors the hell out of them by insuring all the risk. One of the reasons no real changes have been made in Freddie Mac and Fannie Mae is that the National Association of realtors portends the apocalypse if the 30 year fixed rate mortgage is modified in any way.
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Jan 18, 2014 17:27
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Shifty Pony posted:The 30 year fixed mortgage only exists in the US because the government sponsors the hell out of them by insuring all the risk. One of the reasons no real changes have been made in Freddie Mac and Fannie Mae is that the National Association of realtors portends the apocalypse if the 30 year fixed rate mortgage is modified in any way. Yeah the US is a pretty great case study for what happens when the public sector is used to underwrite private sector debt. Another subtle influence of the US government is how due to making flood insurance much cheaper people don't care about building new subdivisions in high flood risk areas. The CMHC is a similar story since it was originally intended as state housing program to help vets get housing after WWII but later on warped into the US system in which it indirectly props up the whole private sector home debtorship system.
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Jan 18, 2014 17:36
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That varies so incredibly much from place to place it isn't funny. Many municipalities won't allow building in flood zones so instead the developers just go riiiiight outside the limits and build there. In the US Fannie Mae and Freddie Mac currently insure 90% of loans issued. Then you have the FHA which has vastly expanded in scope as well. All to enable things like the "boom" going on in my current city with median sales prices hitting 4.5x median household income in an area where property taxes alone on that median price will be ~10% median household income.
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Jan 18, 2014 18:18
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Shifty Pony posted:That varies so incredibly much from place to place it isn't funny. Many municipalities won't allow building in flood zones so instead the developers just go riiiiight outside the limits and build there. It's somewhat amusing how both the CMHC and Freddie Mac had the idealistic goal of making housing affordable via subsidizing home ownership. However due to bubble mechanics and also big financial levitations taking advantage of the situation it had the opposite effect.
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Jan 18, 2014 18:22
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Cmhc blog post http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/01/cmhc-reserves-revisited.html
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Jan 18, 2014 18:27
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etalian posted:It's somewhat amusing how both the CMHC and Freddie Mac had the idealistic goal of making housing affordable via subsidizing home ownership. When you subsidize something, you get more demand for it than you would have gotten sans-subsidy. It's really not complicated, yet governments at all levels everywhere continue to act as though that axiom of humanity doesn't apply.
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Jan 18, 2014 18:39
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Lexicon posted:When you subsidize something, you get more demand for it than you would have gotten sans-subsidy. It's really not complicated, yet governments at all levels everywhere continue to act as though that axiom of humanity doesn't apply. LemonDrizzle fucked around with this message at 19:22 on Jan 18, 2014 |
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Jan 18, 2014 19:12
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Cultural Imperial posted:Cmhc blog post lol That's if I'm reading this right. Which I probably am not. Because I don't understand these financial statements very well. Which is why blogs have comments.
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Jan 18, 2014 19:32
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LemonDrizzle posted:Does that really apply to housing given that shelter is a fundamental human need? My desire for comfortable accommodation is not modulated by its price... Shelter != home ownership. You get more home ownership as a percentage of all shelter when you subsidize it, just as you get more corn consumption as a percentage of all food intake when you subsidize people to buy it.
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Jan 18, 2014 19:34
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Ben Rabidoux tweeted out a link to a hilarious sagecondos.ca video on how to get rich investing in condos. @BenRabidoux's Tweet: https://twitter.com/BenRabidoux/status/424638571513794560 namaste friends fucked around with this message at 22:28 on Jan 18, 2014 |
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Jan 18, 2014 22:05
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Cultural Imperial posted:Ben Rabidoux tweeted out a link to a hilarious sagecondos.ca video on how to get rich investing in condos. ha ha Rental condo in a college town is a recession proof investment https://www.youtube.com/watch?v=owswcmoBHM8
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Jan 19, 2014 00:17
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Time to poo poo on that video until they disable comments. EDIT: My wife went to UW and the thought of any student paying 800 a month to split a condo is almost as hilarious as the thought of the condo being worth close to half a million in 5 years.
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Jan 19, 2014 01:03
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Rime posted:The problem isn't just that rents have outpaced inflation, it's that wages have absolutely not kept up. I think the graph you're looking for is this one: 
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Jan 19, 2014 01:19
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EvilJoven posted:Time to poo poo on that video until they disable comments. Almost 20 years ago, 800/month was what you paid to live in the mcgill ghetto (on rachel). For a 4 bedroom. edit: Compared to today's rates in Montreal, that's actually not an unreasonable increase.
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Jan 19, 2014 01:27
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etalian posted:ha ha the canadian housing market is literally based on childrens doodles and arbitrary made up numbers i have to say this is the most honest condo advertisement i've seen
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Jan 19, 2014 01:29
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EvilJoven posted:Time to poo poo on that video until they disable comments. It's really hard to pick my favorite premise from the video. I liked the point about the gold mine condo being recession proof since in a economy implosion you would have piles of people going back to school.
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Jan 19, 2014 01:31
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Cultural Imperial posted:Almost 20 years ago, 800/month was what you paid to live in the mcgill ghetto (on rachel). For a 4 bedroom. Yes it is. It's also hilarious considering Waterloo's largest employer is blackberry, a company that is regularily laying off thousands of people every month. The Waterloo real estate market can't go anywhere but up! Choo choo, all aboard the millionaire train!
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Jan 19, 2014 01:36
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RBC posted:Yes it is. it has many rich students
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Jan 19, 2014 01:41
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EvilJoven posted:Time to poo poo on that video until they disable comments. haha no kidding, I was at UW myself about 10 years ago and for most of my time there I rented a house with four other guys, paying about $400/mo each. That was about average, I think the most anyone would seriously consider paying for rent at the time was maybe $500/mo, and in the summer a lot of people were looking for cheap sublets closer to $300. Granted that was 10 years ago but I doubt that the average is much higher these days, especially given that students are paying more tuition now too. $800/mo is ludicrous to expect students to pay, heck I'm employed as a postdoc right now and I would have to think about paying that much for a one-bedroom, let alone to split a place with someone else.
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Jan 19, 2014 02:16
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