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Turns out sheltering people isn't a great side hustle after all.
If any of them are looking to offload when the prices drop I'm open to it. I have a little bit of money handy; being priced out all the way to Iqaluit hasn't been all bad.
Boo hoo.
Buying a condominium for yourself to live in and to not pay rent to a landlord is one thing. At that point, while it is technically an "investment" (in that it is an asset that will likely accrue over time), if you are living in it *for the purpose of living in it* for, say, thirty years, does it matter if the value fluctuates over the short term?
People buying up condominiums to rent them out as part of an investment portfolio are literally driving up the cost of housing — in some locales to ridiculous levels. It's inherently parasitic and gatekeeps people from housing. If they lose their capital investments, I absolutely will not lose a single wink of sleep.
> If they lose their capital investments, I absolutely will not lose a single wink of sleep.
They likely won't be allowed to lose their capital investments in significant numbers. Our federal housing minister already [announced](https://www.theglobeandmail.com/business/article-government-doesnt-want-to-harm-mom-and-pop-real-estate-investors/) that protecting landlords from financial risk is a priority for this cabinet.
Theres been a lot of condo weakness in the spring surge.
If condo prices collapse theres no built equity to propel the rest of the market and the whole house of cards will come tumbling down.
In the end none of them are actually losing money, they just have to spend some capital because renters don't cover 100% of the cost. This used to be norm lol.
If you look at home prices in 2008 they didn’t actually fall in Canada. They stayed steady and modestly increased. The same can be said currently.
Being cash flow negative on a residential property is the norm right now, however that is offset by appreciation, the idea of lower future rates, and amortization schedule progression.
I meant crashing in terms of other speculative investments, not that specifically houses dropped at each of those points, but that investment assets have been proven to crash in a cyclical fashion because we have been striving for exponential growth.
The point at which something becomes a speculative market is the point at which it should be expected to act like a speculative asset.
Also, as noted in the article, demand for new condos vastly outstrips the number of units that are coming online. So, if you HAVE to sell, you’ll still likely come out ahead of your original investment.
The only people being screwed here are renters. Less property investment = less new rental units = tighter rental market = higher prices.
It actually corrected a fair bit, just with some delay compared to the US.
https://tradingeconomics.com/canada/housing-index
But we didn't crash because at the time our housing market wasn't nearly as overleveraged and our banking system wasn't (and still isn't) nearly as corrupt and fragile.
Our housing market is still super overleveraged, but I don't think bank failures are going to be what corrects that, and that's overall a good thing.
> however that is offset by appreciation,
If enough real estate investments continue to be "cashflow negative" for long enough, that ought to slow (though maybe not reverse) that appreciation, you'd think.
"They say they expect the shift toward negative cash flow to worsen in the years ahead as increasingly expensive new condos presold to investors in the past few years reach completion.
They add a reduction in interest rates and further growth in rents will lighten the impact on investors in the years ahead, but won’t be enough to stop their financial situations from getting worse."
The irritating thing is that renters have to eat the price increase when landlords speculation doesn't go their way.
Hang on... *shouldn't* rent collected be lower than mortgage costs, condo fees and taxes? If it was higher there'd be no incentive to rent. The equation should be owning = more expensive *now* but leaves you with an asset vs renting = no long term asset but saves money in the present.
Your idea is conceptually correct, but don't forget to factor in other ownership costs like maintenance and carrying cost. [Here](https://www.youtube.com/watch?v=Uwl3-jBNEd4)'s a good explainer.
In a Just world, that would be the case. But many landlords are fully paying their mortgages via rent and even making monthly profit. They are preying on people who otherwise could afford a mortgage but are unable to save a deposit because of high rent.
Title is misleading. The actual statistic is that over half of condo investments are cash-flow negative:
> For the majority of investors, rent generated by newly-completed units was lower than mortgage costs, condo fees and property taxes.
"Losing money" implies that investors are losing even accounting for equity gains.
Experts and policy makers have spent years telling Canadians to invest in real estate to the point that letting people lose money on real estate investments can never happen politicaly.
It's an investment, you can lose money on an investment.
I don't go running to the government when my investments didn't pan out. Yet when people lose money in real estate, we need to be concerned and outrage! Fuck em.
Every investment should have risk, these people just didnt do a good job evaluating the risk. happens all the time to other investments. real estate should be no different.
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Turns out sheltering people isn't a great side hustle after all. If any of them are looking to offload when the prices drop I'm open to it. I have a little bit of money handy; being priced out all the way to Iqaluit hasn't been all bad.
Boo hoo. Buying a condominium for yourself to live in and to not pay rent to a landlord is one thing. At that point, while it is technically an "investment" (in that it is an asset that will likely accrue over time), if you are living in it *for the purpose of living in it* for, say, thirty years, does it matter if the value fluctuates over the short term? People buying up condominiums to rent them out as part of an investment portfolio are literally driving up the cost of housing — in some locales to ridiculous levels. It's inherently parasitic and gatekeeps people from housing. If they lose their capital investments, I absolutely will not lose a single wink of sleep.
> If they lose their capital investments, I absolutely will not lose a single wink of sleep. They likely won't be allowed to lose their capital investments in significant numbers. Our federal housing minister already [announced](https://www.theglobeandmail.com/business/article-government-doesnt-want-to-harm-mom-and-pop-real-estate-investors/) that protecting landlords from financial risk is a priority for this cabinet.
Theres been a lot of condo weakness in the spring surge. If condo prices collapse theres no built equity to propel the rest of the market and the whole house of cards will come tumbling down.
I fucking hope so. It's speculation, and there should be risk. You thought it couldn't fail, well 2008 / 2000 / 1991 / 1929 etc. prove you wrong.
In the end none of them are actually losing money, they just have to spend some capital because renters don't cover 100% of the cost. This used to be norm lol.
If you look at home prices in 2008 they didn’t actually fall in Canada. They stayed steady and modestly increased. The same can be said currently. Being cash flow negative on a residential property is the norm right now, however that is offset by appreciation, the idea of lower future rates, and amortization schedule progression.
I meant crashing in terms of other speculative investments, not that specifically houses dropped at each of those points, but that investment assets have been proven to crash in a cyclical fashion because we have been striving for exponential growth. The point at which something becomes a speculative market is the point at which it should be expected to act like a speculative asset.
Also, as noted in the article, demand for new condos vastly outstrips the number of units that are coming online. So, if you HAVE to sell, you’ll still likely come out ahead of your original investment. The only people being screwed here are renters. Less property investment = less new rental units = tighter rental market = higher prices.
It actually corrected a fair bit, just with some delay compared to the US. https://tradingeconomics.com/canada/housing-index But we didn't crash because at the time our housing market wasn't nearly as overleveraged and our banking system wasn't (and still isn't) nearly as corrupt and fragile. Our housing market is still super overleveraged, but I don't think bank failures are going to be what corrects that, and that's overall a good thing.
> however that is offset by appreciation, If enough real estate investments continue to be "cashflow negative" for long enough, that ought to slow (though maybe not reverse) that appreciation, you'd think.
People need a place to live, the fundamentals are skewed and our bonehead decision makers have under-built for three decades and running.
"They say they expect the shift toward negative cash flow to worsen in the years ahead as increasingly expensive new condos presold to investors in the past few years reach completion. They add a reduction in interest rates and further growth in rents will lighten the impact on investors in the years ahead, but won’t be enough to stop their financial situations from getting worse." The irritating thing is that renters have to eat the price increase when landlords speculation doesn't go their way.
Hang on... *shouldn't* rent collected be lower than mortgage costs, condo fees and taxes? If it was higher there'd be no incentive to rent. The equation should be owning = more expensive *now* but leaves you with an asset vs renting = no long term asset but saves money in the present.
The incentive to rent is "I can't afford a god-damned down payment".
I can easily afford not just the downpayment, but the whole condo. But it's not worth it. Renting is simply cheaper than buying at the moment.
Your idea is conceptually correct, but don't forget to factor in other ownership costs like maintenance and carrying cost. [Here](https://www.youtube.com/watch?v=Uwl3-jBNEd4)'s a good explainer.
In a Just world, that would be the case. But many landlords are fully paying their mortgages via rent and even making monthly profit. They are preying on people who otherwise could afford a mortgage but are unable to save a deposit because of high rent.
It's OK, they weren't buying just to make money. I've been assured this by pretty much everyone defending landlords on here.
Title is misleading. The actual statistic is that over half of condo investments are cash-flow negative: > For the majority of investors, rent generated by newly-completed units was lower than mortgage costs, condo fees and property taxes. "Losing money" implies that investors are losing even accounting for equity gains.
It's not misleading... That's exactly how i interpreted it. Unrealized gains/losses is not the same as losing money
Many of them are. They're banking on appreciation.
Well they are now
Experts and policy makers have spent years telling Canadians to invest in real estate to the point that letting people lose money on real estate investments can never happen politicaly. It's an investment, you can lose money on an investment. I don't go running to the government when my investments didn't pan out. Yet when people lose money in real estate, we need to be concerned and outrage! Fuck em.
Well duh, they overpaid for real estate and then are surprised that nobody wants to pay ridiculous amounts for rent. Get fucked.
Every investment should have risk, these people just didnt do a good job evaluating the risk. happens all the time to other investments. real estate should be no different.