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Downtown investors raise rents to pay the mortgage

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Canadian Realestate Magazine | 17 Nov 2014, 01:59 PM Agree 0
Investor greed and inflated prices were named by CREW readers as the top reasons that many of Canada’s urban centres often have higher rents than mortgage payments.
  • Hal | 17 Nov 2014, 03:35 PM Agree 0
    Anyone who says that "landlord greed" is the problem simply doesn't understand supply and demand economics. The landlords charge what the market will bear. Walmart charges what the market will bear. So does everyone else. Greed has nothing to do with it.
  • Barbara Buote - Mortgage Agent | 17 Nov 2014, 04:02 PM Agree 0
    Let's face it, the Bill B20 legislation changed the game completely with particular attention to the reduction
    of amortizations from 30 & 35 years to 25 years for insured mortgages.

    This alone has eliminated many first time buyers (and others) an opportunity to escape the very expensive rental
    markets and may exclude them for many years to come. While the government's argument for making these changes
    was to avoid what went on "down south", the truth is that mortgage delinquencies in Canada are well below 1%.
    Very little is ever written in mainstream media as to the current and potential longterm effect of limiting the ability
    of our young people to purchase a home, which may be for some, the only opportunity to create some form of
    personal wealth.

    35 & 40 year amortizations were the norm after World War II when the National Housing Act was established as a
    means to provide affordable housing for returning veterans and their families. It obviously worked well for that
    generation as they were able to accumulate sizeable wealth by their later years.

    What does the future hold for this generation? Why are we not speaking out and addressing this issue?
    • primus | 23 Nov 2014, 10:24 AM Agree 0
      My parents bought their first home in 1958, four years after the NHA was passed. The only mortgage available then was direct lending by CMHC over 25 years. There were no 40 year mortgages until the 1970's. Those mortgages were then collateralized and sold to insurance companies as 25 year investments.
  • Jason Clements | 18 Nov 2014, 01:39 PM Agree 0
    Of course any property investor would look to at at least break even.

    There's more to property ownership than just the mortgage payment, so rent (whether downtown or not) would have to be higher to also include property taxes, utilities (if included in rent) and maintenance.

    If only the mortgage is covered there's no extra money for upkeep and repairs of the property. And then the property becomes rundown and the owner becomes a slumlord for not maintaining the property.

    Owning a rental property is just like any other business and the owner wants to be able to make a buck.

    Starbucks more than covers their costs and if you don't like their high prices you buy your coffee someplace else. As the article says, it's the rule of supply and demand. If people don't want to pay the high price of rent downtown then they just look for a place in a cheaper neighbourhood.
  • | 21 Nov 2014, 08:14 PM Agree 0
    government also plays a role in causing the rent increase. Health officers interpret the Act the way that they made landlords to replace old walls with new ones, spend unnecessary money to satisfy their requests, make landlord clean up tenants' mess, make landlord renovates their property exist what is required, a lot of time unreasonably, they treat landlords like " Maid service "... All these costs are passed to the tenants.
    Government also ignores that tenants are black mailing landlords by call Health Officers and City Officers .
    If Government stands up for the landlord as well , that will help , as that will encourage more landlords to invest in rentals, and the supply and demand will balance.
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