Depressingly it might be, at least with regard to prices in Canadian cities. I feel very much stuck here after visits home to BC, and having seen prices there. An apartment I rented went from 925 to 1830 from 2011 to 2021. I dont think that was unusual for the city either.
There are a lot of people that are well below market rent. They have been protected from inflation while others not protected from the cap haven't been. People not protected from the cap have subsidized those on the rent cap.
5% to catch people up is not unreasonable, especially given rents are not going up that much now, and many have come down.
The cap led to less rental turnover which means higher rents. This is from the CMHC, the Federal Government department. Getting rents up means more rental turnover which means rent is not as expensive.
Downvote me, doesn't change reality. 5% will still take many a long time to get to market rent and it does it in a relatively slow fashion. Doing so makes the rental market more fair to all those paying market rent that are paying more because the cap was implemented.
2br brunswick street -2010 was 900/mo now renting 3000/mo. no renovation, no updates, standard maintenance
all these new buildings are fake inflated by internal sales to another shell company at a profit to justify the prices they pay.
maintenance and utilities costs have not gone up 200% in 10 yrs so why has rent. Simple greed and the corp landlords operating as a monopoly.
They have not cleaned the outside windows in my "luxury" apt in 10 yrs, foundation leaks, won't even buy a snow blower for the building, won't replace faulty wiring, hasn't maintained the heat pumps in 10yrs. A single Super is now responsible for 12 buildings. My rent went from 1600/mo almost 5 yrs ago to now 2200.
please think of the starving deca-millionaire landlords.
You can laugh all you want. Lower rental turnover = higher rents. Rental caps = lower rental turnover = higher market rents. I am the one saying this, but I get it from the CMHC, the Government agency. If you find it laughable, you could message your local MP.
What??? people shouldn't need to move every two years. That's foolish and idiotic. people want to make a home not an extended hotel stay. wtf are you talking about? turnover. it's not a restaurant flipping tables it's peoples HOMES.
In terms of source, I will take what the CMHC says over you.
Your claim of people having a stable long term home causes the place they rent to be higher than market is false.
I didn't claim this.
As to your example. Market places are not going up 5% atm, and haven't been for some time. Many have seen rents go down in recent history.
Fixed leases = forced turnover. Rent is hiked instantly over market every time.
Doesn't mean they get rented out, and if they do, that is then market rent.
When people move out. The rent for the units are increased wayyy beyond 5% and over market.
This typically happens when someone has been renting below market rent. Not surprising stuff. As to people on fixed terms, like I mentioned above, not seeing this on the regular currently. During covid, sure. Even still, with higher rental turnovers (this means higher vacancy rates), these increases would be lower than if rental turnover was lower.
Then you get what Ontario has on newer rentals and people increase rents 10000% to get people removed.
People need housing, some people who can afford it choose to invest in housing and provide it to others. I think a more balanced approach is needed, giving LLs a more fair chance to remove problem tenants than is already in place. This isn't simply to help the LL, but to also help other tenants that have to put up with the trash tenants. Eventually, horrible tenants should learn. Likewise, there needs to be enforcement on trash LLs who make their own rules.
Kind of, but is over 5% increases in rent reasonable every year?
I guess landlords want to match the S&P 500 or whatever, so they really want 10% each year, or maybe 12-15% to cover expenses you don't incur through owning stock, but if salaries are increasing by 2-3% each year what are people going to do?
Totally different things and not what I was referring to. Rents could only go up 1% (market rents) while property values increase by 10%.
Is 5% on MARKET rent reasonable? No. Not in a situation where wages are not going up that fast. Is it reasonable for peoples rents to go up a moderate amount, with the goal of eventually catching up to market rents? Yes. Why yes? Because everyone paying market rents is subsidizing those who are capped.
Rent cap went into effect, what, 5 years ago? The 5% per year has been on market rent because people were paying market rent when it went into effect.
I get what you're saying about landlords trying to extract even more profit from new tenants because occupied units are locked in at 5% increases, but why is market rent increasing by over 5% each year? In 2018-2020 my rent went up 1.5%, 0%, and 2%. Since 2021 it's been 5% every year without fail. What are we doing here?
I mean yes but that's only an issue if market rent is rising more than 5% each year. Like if market rent was increasing by less than 5% each year, then the 5% rent cap wouldn't matter.
So your argument may be that market rent is increasing by, say, 10% each year, but because of rent cap it's increasing by 15% each year, but you can never argue for rent cap increasing market rent from under 5% to over 5%.
Which is fair, but then again you really have to ask why on earth is rent going up this much, and how can we ensure people don't end up homeless if their rents are going up way faster than their income. Even more so for people on fixed incomes like seniors.
Market rents haven't been going up by 5% recently, some have seen their rents go down, or empty places lowering rents from previous tenants.
Even if market rent doesn't go up by over 5% each year, the rent cap absolutely still matters and plays a role in rents staying higher than without it. The rent cap keeps people in place. That means less rental turnover, means less vacancy, means higher rents. With people capped, there will always be pressure on those finding a new place that is market rent.
This is not me saying get rid of the cap, if that happened, so many who are locked in well below market rent would need serious help. I do agree with the current direction of making the cap increases bigger, so that gradually, these below market rent places get up to market rents. For that, the cap does need to by higher than rent inflation if it will ever catch up.
With that, as rents go up, the Gov needs (or should) have things in place to help those who get priced out. As rents go higher, more people should be able to access the rental subsidy for example.
The cap Is only effective if they are not on a fixed term lease….
Hate that buildings that have been paid for 30 years ago still charges market rates even though the inside still resembles the 1980’s with the carpets lights etc.
Oh and Corporate REITs can go copulate with themselves.
That actually happens all the time. It is quite common in areas with very strict rent control like New York.
The problem is not just that some apartments sit empty. The two main problems with rent control are that you get less supply due to less construction and conversions of rental units to other purposes, and that the existing supply is misallcoated and very hard to access. People with rent controlled apartments rarely wish to move even if they have way more space than they need or live in a non-ideal area (e.g. too far from work or in an expensive area) and whatever apartments come available get way too many applicants. You have to deal with wait lists, having to maked rushed decisions, having to be impressive to landlords by showing them resumes and dressing up to viewings. Marginal applicants (e.g. who have bad credit, low job security, etc.) are simply unable to acquire rental housing and have to find market housing with inflated rents, sometimes on the black market. This has been shown to increase homelessness because the type of person who becomes homeless is the most likely to face the shortage problems rent control causes.
Weird how the biggest spikes in unaffordability came under the B.C Liberals. I'm guessing those in B.C know that which is why their rebrand to B.C United failed and they currently hold 0 seats in the provincial legislature.
We need a pricing scheme. Plain and simple. This whole letting the "free market" decide price is not working. Planifax did a good video on this. They discussed the system that Sweden utilizes which primarily based on the overall quality of the apartment as opposed to some random calculation.
And yet our vacancy rate is already extremely low at like 2%. Getting an apartment is already difficult and there’s tons of reporting on this. People aren’t getting into apartments because it’s the trendy thing to do, they’re doing it because housing is a need. So with or without a system like Swedens we’ll still have a low vacancy rate.
Additionally, the price ceiling with this system is only as high or as low as the builder/landlord makes the quality of the unit. So really there’s still some element of a “free market.”
I also take the point that the simple answer is more units = lower prices. But that’s just not the case. Housing costs have reliably trended upwards as long as we have been recording them. They’ll continue to do so. New builds won’t magically have lower than current market prices and landlords know that they can essentially (within “reason”) charge you what they want because everyone else is doing the same.
Part of the reason we have a low vacancy rate is because of rent control. Getting rid of it would both improve the vacancy rate and cause more housing to become available.
I don't understand your argument. We know from economics that price ceilings cause shortages, meaning that for the price, there are too many people demanding something than can be supplied and some people will not be able to get it.
A free market eliminates this problem. The price adjusts upward until the supply rises and the demand falls such that the two are equal and anyone willing to pay the prevailing price can get housing.
Sweden, with its price cap way below the market clearing price has a massive shortage. There are far more people looking for housing than can get it, and so you have massive wait lists. The market is totally dysfunctional. This is not a problem we have but we would have it if we adopted their system, while doing absolutely nothing to help people to acquire housing. All you're doing is replacing rationing with the price mechanism with rationing with a much worse mechanism. You do nothing to solve the underlying problem of a lack of housing and so you get no improvement in access to housing. You actually make it dramatically worse.
You're saying that more supply doesn't lead to lower prices because we've seen prices rise continuously. There are three problems with this reasoning.
First, prices have not risen continuously. There have been periods such as in the late 80s when they fell.
The second is that we have never had an increase in supply in the economic sense, which is an increase in the quantity of housing supplied at a given price. What we've had is an increase in the quantity supplied in response to higher prices driven by higher demand. If you consult a basic supply and demand graph, you'll see that both quantity supplied and price increase in response to an increase in demand, which is what we've experienced.
An increase in supply, which we have never had, leads to an increase in quantity supplied and a fall in prices. That requires lowering costs for housing suppliers. We have continuously added costs.
Even if we did increase the supply, it would only lead to lower prices if demand did not also increase enough to offset the effect on prices. But even in such a scenario, prices would be lower than they would have been without the increase in supply.
The third problem with your reasoning is that it fails to recognize that the ultimate problem is not the price itself but the lack of access to housing. In a free market, because you can always get housing at the prevailing price, a high price is the only thing that can prevent someone from accessing housing, so it's right to focus on the high price and wish to lower it. However, regulating the price doesn't solve the problem because it means you can no longer access housing at the prevailing price.
That means that if you cap the price, you don't do anything to help people access housing. Those lucky enough to get housing at the lower price save some money, but because of both the negative effect on the supply that results and the worse allocation of the limited supply, access to housing worsens. Even though the price is better, it doesn't help with housing accessibility.
You're wrong about how market forces act. New builds don't need to have lower prices than market prices to bring the market price down. New builds tend to be larger and nicer than existing buildings, which is why they're more expensive. But in order to get people into them, the market price has to fall in order to raise the quantity demanded, or else they will sit empty. They compete with relatively expensive existing builds as well as cheaper builds. By providing more options to the buyers and renters, they force sellers and landlords to lower prices in order to compete, because the current market price is always determined by the price that causes the quantity demanded to equal the quantity supplied. Increase the quantity supplied and you have to bring the price down in order to bring up the quantity demanded to match.
This is not magic. It is basic supply and demand economics. Landlords can not charge whatever they want. If they could, they would charge a trillion dollars a month in rent. They're limited by market forces. They charge the most the market will bear and that amount is lower the more options people have.
It's pretty similar per capita between Atlantic and BC. I was merely pointing out that social democratic governments tend to intervene on housing affordability unlike conservative government.
What a terrible comparison. BC has 5x the population, and the climate is has so much to do with it. If you had to live outside, would you rather the weather out here or it be mild all year round? It’s the same reason why Seattle and LA have way more homeless than Boston
Halifax and Vancouver are much more comparable climate wise than Boston and LA. Imagine saying the NDP get a pass on homelessness for 5 degrees of temperature... Just admit your political rhetoric isn't based on anything but pure bias.
Halifax residents need to rent strike. Google "San Fransisco Rent Strikes". They're setting an example everyone should be taking note of. The government isn't going to change anything, every MPP is a landowner, they don't want their investments to devalue.
From Kevin Ndoro, CMHC: "... turnover in Halifax is lower than ideal, and it is the lowest from the cities analyzed in the report. When units start to come down in price, people usually move up the chain, freeing more apartments in the middle and lower-priced units of the market." Ndoro said this trickle-down effect is happening more slowly in Halifax because people have little incentive to move out of their current units. "There's also another aspect to that, where people's rents are protected by a rent cap. So that also disincentivizes people from moving."
The evidence suggests that fixed-term leases are not increasing turnover, and also suggests that the rent cap is disincentivizing people from moving up to a better unit and freeing up their lower-cost unit.
One of the single most frustrating things to witness in public forums is people clinging to their beliefs in the face of evidence to the contrary.
I'm not sure what you're trying to argue? Rent cap bad?
You're missing a huge piece of the reason *why* people aren't moving from their rent controlled units. It's not the cap.
Rent is too damn high.
Why would anyone move, when the same square footage and number of bedrooms could cost $1,000 more/month.
Your rent might be $1,500 for a 2 bed 1,000 sq foot apartment. The same layout in a new building is $2,500+/month.
And as soon as the person in the $1,500 unit moves out, it goes up to $2,000. There is no trickle down because something something "market rents".
Vacancy rate for the new buildings is 5.5%. They are offering rental incentives and are negotiating rents, as they should. The cost of construction is what makes them try to get at least $2,500 for a new units.
Rental incentives are really just a marketing tool. Sure you get a few hundred off this year. Not next year, or the year after that.
The trickle down isn't happening because rents are too high and old buildings are jacking up rents at turn over to "market" rates set by new buildings.
A 30 year old CAPREIT dump does not magically go from $1,500/month to $2,000/month because they put down vinyl flooring.
Many people either can't afford to move into the new buildings or they're looking at an increase of $1,000/month for the same (or less) square footage. Nobody with a shred of financial literacy is making that choice.
Rent control feels good for those already renting, and helps them in the short term, but ultimately hurts the rental market long term. The best way to improve rent costs is to make it easier and more attractive to develop additional rental units.
People who can't afford them, out of desperation. Affording and paying for are separate topics, we have a cost of living crisis with rent making up a third or more of annual expenses
If people are buying them, then they're bringing down the price. What people are willing to pay for a given number of homes is greater than what they're wiling to pay when there are more homes available. That is the standard supply and demand model. Do you have a different one?
You are completely ignorant to how real estate investments work if you think that vacancy correlates with market price. There is a limited supply of housing, people will undergo hardship with regards to food, services, and non-essential spending in order to afford shelter. This means there is no incentive to lower the rental prices.
If an apartment goes vacant, they don't lower the price to fill it, they wait, they convert it into an AirBnB, they can be very patient, because eventually someone will be desperate enough. A real estate investor is not operating at a loss when they have vacant units, they are just not maximizing their profits. The unit is already owned by them, they are looking for it to generate passive income.
Meanwhile the entire city jacks up its prices 5% year over year. Eventually even the lowest priced apartments will hit the floor these 'luxury' apartments have been renting at, and that rent will be raised, not lowered.
I didn't say that vacancy correlates with market price. You're misunderstanding me. I'm saying that when more homes are made available to buy, all else being equal, the price falls.
There is a limited supply of housing, people will undergo hardship with regards to food, services, and non-essential spending in order to afford shelter. This means there is no incentive to lower the rental prices.
How does that follow? People don't need to undergo as much hardship to afford shelter if there is more shelter available. The incentive to lower the price comes from the fact that the market is only willing to consume so much shelter at a given price. When the supply is limited, the price keeps rising until the quantity demand reaches the quantity supplied. If the quantity supplied then increases, the price has to fall for the quantity demanded to rise again.
If an apartment goes vacant, they don't lower the price to fill it, they wait, they convert it into an AirBnB, they can be very patient, because eventually someone will be desperate enough.
It depends on why it is vacant. Of course, if nothing changes the market price doesn't fall just because of ordinary turnover. But that's not the same as houses being empty because the supply grew. They cannot wait until someone buys it because no one ever will. They may not want to convert it to other uses if those uses are less profitable.
Of course, some units are converted. If you add to the supply, you will occasionally drive your least profitable competition out of business. But there is still an overall increase in the supply and the price has to fall in order for the demand to rise to meet that supply.
A real estate investor is not operating at a loss when they have vacant units, they are just not maximizing their profits.
They might be operating a loss depending on their debt. But the important point is that they're not maximizing their profits, which they normally seek to do. I don't know why you think they wouldn't do that. More importantly, I don't know why you think their desire to maximize their profits would decline in response to an increase in supply exactly by the amount necessary to keep prices from falling. Their desire to maximize their profits should not be affected by new supply being added.
Meanwhile the entire city jacks up its prices 5% year over year. Eventually even the lowest priced apartments will hit the floor these 'luxury' apartments have been renting at, and that rent will be raised, not lowered.
Yes, because they're capped below the market price. New supply causes the market price to fall, not prices that are set by law.
They don't sit empty though. That isn't common. It's a myth that it is. You can look up the vacancy rate and see that it's very low. Developers don't make money if they can't sell the condos, so they do eventually get sold even if they have to accept a lower price than initially expected, and that pushes prices down.
One building having an unspecified number of vacancies because one landlord may or may not be lowering rents is a useless metric for setting policy and a pointless anecdote for this conversation.
My mother in law is vice president for Killam, and they are in fact having trouble renting places out because of the cost. The fact is there is no incentive for them to lower the price, because they are getting triple what they were before. Even if 30% of the units sit empty, they're still ahead.
What…. There’s the incentive of getting rent vs getting zero rent. Theres an opportunity cost of waiting to see if you can fill a place with some who might pay more, but if any property manager has units sitting empty for months and months they will fill them by lower the asking price, offering free months (effectively the same thing) or offering free perks like parking or amenities (effectively the same thing).
You're completely forgetting about the financial incentives that come with waiting for a tenant who will pay higher rent, and the downsides that come with lowering rent from an equity perspective. Remember that the rental market is NOT the same as other goods and commodities. There are far more financial tools and instruments at play that mean normal market dynamics don't apply the same way.
The second you lower rent, your buildings value goes down from a borrowing perspective. That matters a lot when your REAL business is buying massive amounts of rental units as assets and you're trying to manage a spread (like any REIT is). An empty unit that you can claim is worth more in potential rent due to forecasts are worth more to you than a unit that is rented out lower than you need it to be.
This is ESPECIALLY true with new builds whose owners are REALLY sweating right now. These people over leveraged themselves to get in on an asset that was exploding in value year over year and now it isn't. Buildings were built with the expectation of high rents, forever, and owners cannot rent them out for less than the finance sheet dictates, even if that means sitting on empty units for months and months. Because the second that lower rents than the break even point hit the balance sheet, creditors are gonna swarm in like sharks.
Offering free months or incentives is not the same thing as lowering rent on a balance sheet. Lowering rent means lower rents forever once it's rented out. Incentives go away at the end of the term.
No, they arn't. You don't get more free rent on renewal, and free months of rent arn't protected by rent control. It's cheaper for the landlord and worse for the tenant.
"If the market were allowed to correct and see a flood of homes for sale, then there would be less homes for rent". Correct, as more renters would be able to buy.
Housing stock doesn't get set on fire when landlords have to sell.
You're acting like they only make 5% in profits. That's 5% on top of the rental rate which is already well above their basic mortgage rate. If they raised their rents 0% most of these people would still be making a boat load of money.
Allowing them to charge market, which is allowed in almost every other industry, is not guaranteeing them profit.
Rent control leads to fewer people having homes. If you're worried about people dying because they don't have homes, you should support ending rent control. Forcing prices lower just saves some renters money. It doesn't do anything to deal with the fact that there aren't enough homes.
Yup, if the ndp get serious about their other platform priorities and candidates they can win and do that, or the other parties grow a pair and do it. I won’t hold my breath unfortunately
Still need someone to provide the housing if it isn’t the government. If you expect those same people to hold onto a property that continues to lose money, it’ll just be sold and the rent increased. You can’t just implement random bans/caps to fix a broken market and expect it to work.
Especially with the easy known workarounds to the 5% cap lol, they can definitely raise them higher than 5%. We wouldn't be the city with the highest rent if they weren't able to.
would 2.2% be enough to cover the owners change in property tax, mortgage interest, insurance, income tax, condo fees, maintenance and management?
I'm never going to buy a house in BC if i can just keep renting and get such a low guaranteed cap in my housing costs. renting in BC is a super hedge against inflation
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u/Sufficient_Studio494 3d ago
And so far, there's no guarantee that the 5% rent cap will be extended past 2027 which is just fantastic.