Baby, we got a bubble!?

[LMVDR]

The whole 'rents are skyrocketing' narrative is a giant lie and a red herring used by the gutless politicians to placate the angry masses.

Are rents up overall? Yes. Are they up 20% year over year across the whole GTA rental market spectrum, incl pre-1991 buildings? Not even close. My guess is the number is under 10% and even so good for the landlords! They took risk and are being rewarded. And just look at the spillover benefits to bedroom communities and cities of the booming GTA housing market. Hamilton, KW, Guelph and even London are seeing a resurgent in demand. That's how open markets function. Ironically the strength has slowly begun to kickstart actual new rental construction which would have a moderating impact on rents if the cowards in office didn't interfere and potentially reverse that trend.

But media pick up on the odd anecdotal experience of a downtowner who says her contracted rent climb from $1600 a month to an asking renewal price of $2500 a month and then invent a rental crisis! If they looked at the stats they'd notice that YOY rents in downtown Toronto were actually down in March! Maybe said downtowner could look farther afield for a new place or heaven forbid move into a building without a concierge! Did anyone think that because the condo rental market is compromised mostly of mom & pops that perhaps they underpriced their units at the time the initial lease was signed? Or maybe the landlord's maintenance fees jumped $300 per month over the lease period as is common in new buildings.

There's nothing a single digit sitting government about to booted from power loves more than a crisis to boost its popularity.

 

[nrb]

Most rentals in the city were built when the government provided huge incentives to developers to build them. They stopped building them when the government stopped giving away money to them. 2 or 3 new rental developments in a city with hundreds of developments a year is hardly a trend.

 

[TheKingEast]

The whole 'rents are skyrocketing' narrative is a giant lie and a red herring used by the gutless politicians to placate the angry masses.

Are rents up overall? Yes. Are they up 20% year over year across the whole GTA rental market spectrum, incl pre-1991 buildings? Not even close. My guess is the number is under 10% and even so good for the landlords! They took risk and are being rewarded. And just look at the spillover benefits to bedroom communities and cities of the booming GTA housing market. Hamilton, KW, Guelph and even London are seeing a resurgent in demand. That's how open markets function. Ironically the strength has slowly begun to kickstart actual new rental construction which would have a moderating impact on rents if the cowards in office didn't interfere and potentially reverse that trend.

But media pick up on the odd anecdotal experience of a downtowner who says her contracted rent climb from $1600 a month to an asking renewal price of $2500 a month and then invent a rental crisis! If they looked at the stats they'd notice that YOY rents in downtown Toronto were actually down in March! Maybe said downtowner could look farther afield for a new place or heaven forbid move into a building without a concierge! Did anyone think that because the condo rental market is compromised mostly of mom & pops that perhaps they underpriced their units at the time the initial lease was signed? Or maybe the landlord's maintenance fees jumped $300 per month over the lease period as is common in new buildings.

There's nothing a single digit sitting government about to booted from power loves more than a crisis to boost its popularity.

Of course it is. I raise the rent every 2 years and it's no more than $50. The sky high rents are for landlords who are trying to get rid of their tenants. There's no way a landlord that wants to keep a tenant is going to double the rent.

See how easy it is to make a story out of nothing?

 

[TheKingEast]

So no actual data has been supplied? Where does the 15% number come from? Should it really be lower or higher? This is my problem, a bunch of people cry, the government throws some shit at the wall and comes up with this. Where is the data? And why aren't people holding them accountable for this mess.?

 

[ponyboy]

I've been a small time landlord for 15 years (I have a triplex), and I feel that honest and fair landlords like me are treated badly by tenants and the government. Landlords are vilified as greedy by renters who have no idea of the costs. For many years rents were pretty flat because the market couldn't bear greater rates. Tenants complain about a 1.5% rental increase, which is below inflation. We try to keep good tenants and wish the others would go away. A reasonable compromise would be to allow annual rent increases of inflation +2%. This way, below market rents could catch up to the market average, but slowly so not to shock longterm tenants. Good tenants would get a smaller increase. The policy with such low caps and difficulties of going above cap make the landlord business unappealing. Money will flow to other areas of the economy with greater yield possibilities than purpose-built rentals.

 

[Admiral Beez]

Most rentals in the city were built when the government provided huge incentives to developers to build them.

That was the era of government-encouraged blockbusting and the likes of St. Jamestown. I'd rather not return to those days.

https://books.google.ca/books?id=x4...=onepage&q=st. jamestown blockbusting&f=false

 

[Eug]

I've been a small time landlord for 15 years (I have a triplex), and I feel that honest and fair landlords like me are treated badly by tenants and the government. Landlords are vilified as greedy by renters who have no idea of the costs. For many years rents were pretty flat because the market couldn't bear greater rates. Tenants complain about a 1.5% rental increase, which is below inflation. We try to keep good tenants and wish the others would go away. A reasonable compromise would be to allow annual rent increases of inflation +2%. This way, below market rents could catch up to the market average, but slowly so not to shock longterm tenants. Good tenants would get a smaller increase. The policy with such low caps and difficulties of going above cap make the landlord business unappealing. Money will flow to other areas of the economy with greater yield possibilities than purpose-built rentals.

Inflation plus 2% discourages upgrades for example.

 

[TheKingEast]

Also, the rental cap is nonsense. Will they decide to put a cap on maintenance fee jumps or special assessments? I feel this is all just reactionary crap without much investigation and much actual thought.

In a climate where builders are allowed to pass costs down to purchasers, a landlord has to just eat it? Rise in maintenance fees, rise in property tax. Then the capital gains tax you pay after you sell the property. This isn't going to really help rents remain affordable. I see rents going up between tenants. I also will raise rent yearly. Something I never did.

Nothing to address the shortage of rentals or housing. Government runs from the heavy lifting once again.

 

[Admiral Beez]

Also, the rental cap is nonsense. Will they decide to put a cap on maintenance fee jumps or special assessments? I feel this is all just reactionary crap without much investigation and much actual thought.

If the few idiot landlords covered in the media hadn't doubled their rents, then there would be no knee jerk reaction from an equally idiotic government.

What did Urbancorp think the tenants were going to do with this letter? If I'm on the board or GM of Urbancorp I would be royally pissed at my people for having no forethought of possible public outrage.

https://twitter.com/MarkCarcGlobal/...ws/3355767/toronto-rent-doubles-rent-control/

 

[TheKingEast]

If the few idiot landlords covered in the media hadn't doubled their rents, then there would be no knee jerk reaction from an equally idiotic government.

What did Urbancorp think the tenants were going to do with this letter? If I'm on the board or GM of Urbancorp I would be royally pissed at my people for having no forethought of possible public outrage.

https://twitter.com/MarkCarcGlobal/status/849295404961288193/photo/1?ref_src=twsrc^tfw&ref_url=http://globalnews.ca/news/3355767/toronto-rent-doubles-rent-control/

Urbancorp is just a mess all the way around. Yes, if the few idiots didn't double rents, there would be no outrage and thus no government intervention. But jeez, this really scares me if the government is making these kinds of knee jerk decisions, then maybe we're in some deep doodoo.

This will only drive rents higher.

 

[narduch]

Remember though the Liberals will do anything to retain power. We saw that with the gas plants already. We just saw it with the hydro rates. And that is why they are trying to cool the housing market.

I'd assume that if the PC got into power that the rent control would be out the window.

 

[Admiral Beez]

I'd assume that if the PC got into power that the rent control would be out the window.

All governments are the same, twisting to appear to GAS about whatever outrages the public at the moment.

 

[motime]

These solutions are just bandage solutions. They do not really accomplish much. The whole idea is to weaken the public outcry in the short term while also appeasing the other side. It is absolutely true that locals have been increasingly priced out of the GTA housing market for some time. When wages stay relatively the same over an extended period of time and local housing appreciates out of sight then you obviously have a serious problem. In a functioning democratic society housing should be affordable for local workers. There is nothing free about the free market, especially the housing market, almost every single industry that appreciates like crazy does so on the back of government insurance policies. The free market real estate enthusiasts are probably thanking the government behind the scenes for these latest measures because they would much rather avoid something more radical (or something that actually works).

 

[Admiral Beez]

In a functioning democratic society housing should be affordable for local workers.

That's only possible if the government owns or has control over the price, like milk where prices are controlled by government, if there's a surplus or shortage of supply, price is unaffected. Sounds more Maoist than democratic to me.

 

[ponyboy]

This recent NYT article illustrated some of the special advantages of the real estate industry in the U.S. (e.g. interest deduction, expensing capital expenditures, like-kind exchange provisions)

https://www.nytimes.com/2017/04/22/business/trump-tax-real-estate.html

A couple quotes-
“There’s probably no special interest that’s more favoured by the existing tax code than real estate,” said Steven M. Rosenthal, a real estate tax lawyer and senior fellow at the centrist Urban-Brookings Tax Policy Center. “It’s really hard to take that industry on.”

"Although the corporate tax code has allowed interest payments to be deducted since it was enacted in 1913, a growing number of economists and tax experts have called for abolishing the deduction, as does the House Republican tax plan, “A Better Way,” on grounds that it distorts capital markets by favoring debt over stock. (Dividend payments are not deductible.)"

How does Canada differ? Is there any political will to end the no-cap gains provision on primary residences in Canada? What other things does the Canadian tax and public policy do to distort the prices of real estate?