Except that the housing shortages are vastly exacerbated by greedy landlords buying up the housing supply.
It’s literally like we have a water shortage and instead of just taking what they need, landlords decided well fuck you guys I have more my money so I’ll buy your water before you can and lease it back to you at a profit.
The “greed” goes all the way up to financial and monetary policies that influence the price of housing. It would not be that hard to tank the real estate market and make it essentially worthless to investors for anything other than being a fucking roof over your head. It is for the benefit of investors and property owners that prices are allowed to soar and it is a consequence of intentional decisions from the ruling class, who benefit from this situation.
I truly don’t understand the greedy landlords restrict supply thesis.
Why isn’t this a phenomenon we see everywhere? Why is it only the last few years? Haven’t landlords always been greedy? Why is housing currently cheaper in Calgary or Edmonton than Vancouver?
These are all very simply explained using principles of supply and demand. It’s now illegal to build apartments in 80% of the land in our largest cities, of course there’s a housing shortage.
Yes that is why the literal textbook definition for a drain on the economy is a “rent-seeker” as in a rent seeking landlord. When you buy an assett and then just lease it back to people for profit, you are a leach that makes things more expensive while providing no value to anyone.
Like I said, in the 70s the Ontario Liberals dropped the price of houses by 30% just by taxing landlords and getting some of them out of the market, and that’s before the ballooning of landlords and investment properties in the past 50 years.
To add to this “simple supply and demand” is not simple at all. The X curve model that everyone has seen is a purposefully oversimplified model made to get across an extreme oversimplification of the relationship.
When you buy an assett and then just lease it back to people for profit, you are a leach that makes things more expensive while providing no value to anyone.
I don’t understand this view. A person buys a house and wants to rent it out. Are they supposed to take a loss on the property just to make a cheap home for someone who is renting? Are you (collectively, not you specifically) expecting that rental properties must be some altruistic lower than buying cost thing for renters at the expense of owners?
For context, I own a house. I rented it out for a while and am intimately aware of how much it costs to actually be a responsible landlord.
I don’t understand this view. A person buys a house and wants to rent it out. Are they supposed to take a loss on the property just to make a cheap home for someone who is renting?
Oh wow, a landlord who doesn’t understand the concept of breaking even, i.e. not profiting off those poorer than you. What a surprise!
If you’re renting out your own personal home while you rent a different home there’s no real issue, but if you’re buying an investment property, renting it out at a profit, and not keeping it as nice as you keep your own home, then you’re just being a rent seeking leach that’s providing no value to society. You’re just enriching yourself on the backs of people poorer than you. It’s literally the same thing as Nestle buying up drinking water rights and then selling the people back their bottled water at a profit.
Everyone who rants and raves about landlords seems to totally misunderstand just how goddamned expensive it is to be a landlord. As the property owner you are responsible for:
The mortgage
Property taxes
Sewer, garbage, water
Appliance maintenance (any breakdown will be expensive)
Exterior maintenance (rain gutter cleaning, power washing driveways, etc.)
Duct and dryer vent cleaning
Fence and all exterior care, maintenance
Optional property manager at about 8-10% of the monthly rent… valuable if you’re not nearby
With all that you get nailed on your income taxes. You can claim only mortgage interest, property management fees, and maintenance expenses against the rental income. The balance of the rent collected is treated as income and you’re taxed on that income… so you have to factor that in as well.
I bought my property at a decent (local) price before the prices skyrocketed during the pandemic. My mortgage is at a reasonable interest rate (I didn’t mortgage when interest rates were super low). To rent out my property (2500 sq ft 3 bedroom with top of the line appliances and finish) and simply break even over all expenses and have a zero gain/loss at the end of the year I’d have to rent my property at about $3400/month.
When I did rent it out I made the conscious choice to rent it out much lower and eat the loss each month. It sucked… but I was able to keep my house while i was working elsewhere, and eventually move back in once I was back in BC (I rented a different property until my tenants gave notice they were leaving).
Your example of a landlord renting a property for profit while not taking care of the property… well yeah that happens everywhere in the world. Some people suck. Those landlords are not the majority in my experience. They stand out because they are shitty people and you and I notice them.
Equity gain only really counts if you’re flipping properties. If you’re an owner and landlord you’re typically not flipping said property… you’re renting it and sitting on that property for as long as you can. Any equity gain is not a guarantee… the local prices go up… and down. You can’t base your income and expenses on an imagined future value and eat the losses year-on-year and actually survive financially… unless maybe you’re a corporation owning multiple properties and can absorb losses. Individual owner/landlords can’t… just can’t reasonably be expected to eat losses on their properties. They must at a minimum break even… and saying that “oh you can sell your property and get equity gains” is myopic at best. If you insisted on that way of owning and renting, ALL property would be owned by the super rich or corporations… and people like myself who own one home that they rent out will never do so because they can’t afford to do so while entertaining 10 or 20 years of eating losses on a rental.
I don’t understand why the ability to sell is myopic. The way I see it, a rental property works the same way as any investment. It’s a thing you own that has value and that can be sold for that value. Think stocks for example. When you buy stocks, the amount you spend in buying them isn’t a loss. You’re simply putting money into savings. You don’t need to “flip stocks” (i.e. day trade) for it to make sense to account for the value of the stocks themselves. You hold it long term in the form of stocks until you need that money and you cash out.
If you can’t afford that, then it just means you can’t afford to save money. The solution is definitely not to only allow large corporations to own rentals, nor is it to allow you and I to exploit someone less well off in the name of equality. The solution we should be looking for is something that would allow anyone contributing to our society to have the choice to either own or rent their home.
We have just gone through a period of historically cheap debt. It became possible for landlords to leverage their existing properties to obtain new ones at a rate that was extremely uncommonly high. There has been a massive leap in wealth disparity.
Why can’t the renter afford to buy a home? It only costs at most $100,000 to build a house in material and labour costs. That’s a downpayment of a $10,000 and mortgage payments would be less than $1000, far far lower than the prospect of paying rent for years while you save for a $100,000 downpayment.
But guess what, the price of housing isn’t just material and labour plus the competition of people who need homes, it’s also filled with landlords who are buying up the supply to make money renting the houses back.
Like I said, it’s literally a limited resource and instead of making sure everyone can afford a basic necessity of survival, landlords use their existing greater money to outbid actual first time home buyers, drive up the cost of housing, and then lease it back to renters who “can’t afford a home”.
Umm did you read the link you sent or do the math provided?
They cite at the low end a cost of $120/square foot, with small houses being around ~1000 square feet that’s $120,000, a completely reasonable mortgage for most middle and lower class people to afford and pretty much exactly in line with my ballpark gut guess.
It only costs at most $100,000 to build a house in material and labour costs.
Where? Seriously… where? Keeping in context and looking at building costs in BC (since Mr. Singh’s house is in Burnaby)… the materials cost to build a 2000 sqft house is more like 3 to 5 times what you guessed. Just the foundation and excavation costs can easily hit $60,000 - $75,000. Add to that the lumber for the flooring alone which can easily exceed $30,000. Just those two things and you’re over your $100,000 guesstimate. And you haven’t accounted for permits, surveying, connections to city utils. The real cost of materials in a home in BC is more like $500,000… to START. Plus you have contractor fees that can easily hit 20% of your materials cost… if not more.
I own a house in BC that we built in 2019… I saw the materials cost… and the costs have gone up a LOT since then. You are way off on your cost of building materials estimate.
Building costs on average range from $120-$260 / square foot in Canada. A small sized starter home is not 2000ft but 1000, which puts us firmly in the $100-200k range, not the $600k they actually sell for at minimum. And this isn’t getting into the fact that once a home is built it will typically be good for many many owners.
That’s still not accounting for foundation costs… contractor rates… and so on. Even with a 1000 sqft home, you’re still going to find youreslef pushing over $200,000 in materials and other costs… then there’s the land value. Lumber costs will make you cry… the wood you use in construction is bloody expensive nowadays. I don’t think that you can honestly get away with $120/sqft…
But taking your price of say… .$200k (I picked the upper end because I think you’re low and using reference data that several years old) in materials cost… add in surveying, foundation, building permits, licenses, services, and the one big expense you’re missing… land to build on… and you’re not going to have a house built (even if you do almost all the work yourself) for $200k.
Yes, I am explaining how landlords are a problematic aspect of the system, I believe you were busy implying that they’re not, would you like to get back to it?
Except that the housing shortages are vastly exacerbated by greedy landlords buying up the housing supply.
It’s literally like we have a water shortage and instead of just taking what they need, landlords decided well fuck you guys I have more my money so I’ll buy your water before you can and lease it back to you at a profit.
The “greed” goes all the way up to financial and monetary policies that influence the price of housing. It would not be that hard to tank the real estate market and make it essentially worthless to investors for anything other than being a fucking roof over your head. It is for the benefit of investors and property owners that prices are allowed to soar and it is a consequence of intentional decisions from the ruling class, who benefit from this situation.
I truly don’t understand the greedy landlords restrict supply thesis.
Why isn’t this a phenomenon we see everywhere? Why is it only the last few years? Haven’t landlords always been greedy? Why is housing currently cheaper in Calgary or Edmonton than Vancouver?
These are all very simply explained using principles of supply and demand. It’s now illegal to build apartments in 80% of the land in our largest cities, of course there’s a housing shortage.
It is.
It’s not.
Yes that is why the literal textbook definition for a drain on the economy is a “rent-seeker” as in a rent seeking landlord. When you buy an assett and then just lease it back to people for profit, you are a leach that makes things more expensive while providing no value to anyone.
Like I said, in the 70s the Ontario Liberals dropped the price of houses by 30% just by taxing landlords and getting some of them out of the market, and that’s before the ballooning of landlords and investment properties in the past 50 years.
To add to this “simple supply and demand” is not simple at all. The X curve model that everyone has seen is a purposefully oversimplified model made to get across an extreme oversimplification of the relationship.
I don’t understand this view. A person buys a house and wants to rent it out. Are they supposed to take a loss on the property just to make a cheap home for someone who is renting? Are you (collectively, not you specifically) expecting that rental properties must be some altruistic lower than buying cost thing for renters at the expense of owners?
For context, I own a house. I rented it out for a while and am intimately aware of how much it costs to actually be a responsible landlord.
Oh wow, a landlord who doesn’t understand the concept of breaking even, i.e. not profiting off those poorer than you. What a surprise!
If you’re renting out your own personal home while you rent a different home there’s no real issue, but if you’re buying an investment property, renting it out at a profit, and not keeping it as nice as you keep your own home, then you’re just being a rent seeking leach that’s providing no value to society. You’re just enriching yourself on the backs of people poorer than you. It’s literally the same thing as Nestle buying up drinking water rights and then selling the people back their bottled water at a profit.
Everyone who rants and raves about landlords seems to totally misunderstand just how goddamned expensive it is to be a landlord. As the property owner you are responsible for:
With all that you get nailed on your income taxes. You can claim only mortgage interest, property management fees, and maintenance expenses against the rental income. The balance of the rent collected is treated as income and you’re taxed on that income… so you have to factor that in as well.
I bought my property at a decent (local) price before the prices skyrocketed during the pandemic. My mortgage is at a reasonable interest rate (I didn’t mortgage when interest rates were super low). To rent out my property (2500 sq ft 3 bedroom with top of the line appliances and finish) and simply break even over all expenses and have a zero gain/loss at the end of the year I’d have to rent my property at about $3400/month.
When I did rent it out I made the conscious choice to rent it out much lower and eat the loss each month. It sucked… but I was able to keep my house while i was working elsewhere, and eventually move back in once I was back in BC (I rented a different property until my tenants gave notice they were leaving).
Your example of a landlord renting a property for profit while not taking care of the property… well yeah that happens everywhere in the world. Some people suck. Those landlords are not the majority in my experience. They stand out because they are shitty people and you and I notice them.
Does this math account for the equity gain from the value of the property?
Equity gain only really counts if you’re flipping properties. If you’re an owner and landlord you’re typically not flipping said property… you’re renting it and sitting on that property for as long as you can. Any equity gain is not a guarantee… the local prices go up… and down. You can’t base your income and expenses on an imagined future value and eat the losses year-on-year and actually survive financially… unless maybe you’re a corporation owning multiple properties and can absorb losses. Individual owner/landlords can’t… just can’t reasonably be expected to eat losses on their properties. They must at a minimum break even… and saying that “oh you can sell your property and get equity gains” is myopic at best. If you insisted on that way of owning and renting, ALL property would be owned by the super rich or corporations… and people like myself who own one home that they rent out will never do so because they can’t afford to do so while entertaining 10 or 20 years of eating losses on a rental.
I don’t understand why the ability to sell is myopic. The way I see it, a rental property works the same way as any investment. It’s a thing you own that has value and that can be sold for that value. Think stocks for example. When you buy stocks, the amount you spend in buying them isn’t a loss. You’re simply putting money into savings. You don’t need to “flip stocks” (i.e. day trade) for it to make sense to account for the value of the stocks themselves. You hold it long term in the form of stocks until you need that money and you cash out.
If you can’t afford that, then it just means you can’t afford to save money. The solution is definitely not to only allow large corporations to own rentals, nor is it to allow you and I to exploit someone less well off in the name of equality. The solution we should be looking for is something that would allow anyone contributing to our society to have the choice to either own or rent their home.
We have just gone through a period of historically cheap debt. It became possible for landlords to leverage their existing properties to obtain new ones at a rate that was extremely uncommonly high. There has been a massive leap in wealth disparity.
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Why can’t the renter afford to buy a home? It only costs at most $100,000 to build a house in material and labour costs. That’s a downpayment of a $10,000 and mortgage payments would be less than $1000, far far lower than the prospect of paying rent for years while you save for a $100,000 downpayment.
But guess what, the price of housing isn’t just material and labour plus the competition of people who need homes, it’s also filled with landlords who are buying up the supply to make money renting the houses back.
Like I said, it’s literally a limited resource and instead of making sure everyone can afford a basic necessity of survival, landlords use their existing greater money to outbid actual first time home buyers, drive up the cost of housing, and then lease it back to renters who “can’t afford a home”.
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Umm did you read the link you sent or do the math provided?
They cite at the low end a cost of $120/square foot, with small houses being around ~1000 square feet that’s $120,000, a completely reasonable mortgage for most middle and lower class people to afford and pretty much exactly in line with my ballpark gut guess.
Where? Seriously… where? Keeping in context and looking at building costs in BC (since Mr. Singh’s house is in Burnaby)… the materials cost to build a 2000 sqft house is more like 3 to 5 times what you guessed. Just the foundation and excavation costs can easily hit $60,000 - $75,000. Add to that the lumber for the flooring alone which can easily exceed $30,000. Just those two things and you’re over your $100,000 guesstimate. And you haven’t accounted for permits, surveying, connections to city utils. The real cost of materials in a home in BC is more like $500,000… to START. Plus you have contractor fees that can easily hit 20% of your materials cost… if not more.
I own a house in BC that we built in 2019… I saw the materials cost… and the costs have gone up a LOT since then. You are way off on your cost of building materials estimate.
Building costs on average range from $120-$260 / square foot in Canada. A small sized starter home is not 2000ft but 1000, which puts us firmly in the $100-200k range, not the $600k they actually sell for at minimum. And this isn’t getting into the fact that once a home is built it will typically be good for many many owners.
That’s still not accounting for foundation costs… contractor rates… and so on. Even with a 1000 sqft home, you’re still going to find youreslef pushing over $200,000 in materials and other costs… then there’s the land value. Lumber costs will make you cry… the wood you use in construction is bloody expensive nowadays. I don’t think that you can honestly get away with $120/sqft…
But taking your price of say… .$200k (I picked the upper end because I think you’re low and using reference data that several years old) in materials cost… add in surveying, foundation, building permits, licenses, services, and the one big expense you’re missing… land to build on… and you’re not going to have a house built (even if you do almost all the work yourself) for $200k.
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Congratulations on reading comprehension! We are discussing the current housing system and its flaws! Good job!
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Yes, I am explaining how landlords are a problematic aspect of the system, I believe you were busy implying that they’re not, would you like to get back to it?
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If there were no landlords, there wouldn’t be a supply problem.
Because landlords own the supply and increase the costs of housing everywhere.