Population and Housing

[danbrotherston]

I actually prefer landlord...

There is an inherent power imbalance (through financial resources, legal resources, and through the renter being beholden to the landlord for their home) between typical residential renters and landlords. The terms make that imbalance clear. I don't think changing the words would eliminate the power imbalance so I don't think we should change the words until we remove that power imbalance.

Well one thing I would point is that in Ontario right now part of the power imbalance comes from the fact that tenants cannot, in practice, use the Tribunal to deal with landlord problems. Why? Because they’re massively backlogged, and in order to prevent the entire system from collapsing they are prioritizing rental arrears hearings. This is necessary because if it becomes known that paying rent is optional, everything falls apart completely, in a way that it doesn’t if some tenants/landlords take advantage of and mistreat their landlords/tenants.

If there was an express process to force ongoing payment of rent, then those who are taking advantage of the system to avoid paying rent would be removed from the market (or shape up), and then tenants (in particular) could actually get action when they file an application against a bad landlord. Overall, this would lead to an improvement in conditions for everybody (except for the freeloaders).

The rules in Ontario are actually pretty fair for the most part. They could be improved, but rules on things like rent control and notice periods are reasonably well designed. The problem is that nothing can be enforced promptly; in this specific area, this is a massive boon, not to tenants in general, but to thieves (theft of services is still theft), because the theft continues every day that the parties are waiting for the hearing; and to bad landlords. All a bad tenant has to do to stay in a property for free is cause delays; and a bad landlord knows it will take a long time for a tenant to get a ruling against them.

"Rules on rent control are well designed"...I'd argue that they aren't. Rent control is good in theory. In practice, it doesn't apply to a large number of rentals, and more, it is pretty easy for landlords to get around. This happened to my grandma. Her building hiked the rent of all the tenants 5-20%. IANAL but I felt that the justifications were invalid. They claimed "improvements" had been made, but these improvements were just regular maintenance (e.g., repairing leaking plumbing).

The tenants went to a tribunal, had a hearing. But the landlord is represented by a professional lawyer who understands the LTA thoroughly. The tenants do not. They argued the rent increase was unfair, because the landlord doesn't maintain the building very well so it should be cheaper--completely the wrong tactic.

The rent increase for 50 low income individuals was rubber stamped.

This is what I mean by there is a power imbalance.

And before you suggest that I should have helped them...my mom did try. Some of them wanted to withhold rent payments for things not being fixed in the building, which would have only gotten them evicted. (There's a flip side right...in most transactions, I can withhold payment for non-performance of services...but not for rent).

I would argue that a better rent control scheme would be full rent stabilization for all units, and ZERO exceptions to increasing rent at inflation. A landlord is responsible for properly saving for and funding maintenance, and they can only raise rent in order to make improvements with the express written consent of the tenants affected by the improvements and subsequent increases.

Of course, now you're going to have buildings which are not maintained, and now you have to set maintenance standards. Which can be problematic, but it is something we already do in condo buildings through the reserve fund study (although it isn't actually enforced that those repairs are done, only that money is collected for them).

Realistically, it's not a policy area I've studied extensively, I just know I have experienced it as a tenant both first and second hand, and have always felt cheated by my landlord. (I chose to buy a house and leave our apartment rather than take the landlord to tribunal after they illegally raised MY rent...but that was a privilege I had--that I wouldn't necessarily even have today).

[ijmorlan]

"Rules on rent control are well designed"...I'd argue that they aren't. Rent control is good in theory. In practice, it doesn't apply to a large number of rentals, and more, it is pretty easy for landlords to get around. This happened to my grandma. Her building hiked the rent of all the tenants 5-20%. IANAL but I felt that the justifications were invalid. They claimed "improvements" had been made, but these improvements were just regular maintenance (e.g., repairing leaking plumbing).
[…]

And before you suggest that I should have helped them...my mom did try. Some of them wanted to withhold rent payments for things not being fixed in the building, which would have only gotten them evicted. (There's a flip side right...in most transactions, I can withhold payment for non-performance of services...but not for rent).

I would argue that a better rent control scheme would be full rent stabilization for all units, and ZERO exceptions to increasing rent at inflation. A landlord is responsible for properly saving for and funding maintenance, and they can only raise rent in order to make improvements with the express written consent of the tenants affected by the improvements and subsequent increases.

I wouldn’t suggest you should have helped her. The system should be set up so that people in basic commercial transactions don’t as a matter of course need to hire representatives to help them, and their family shouldn’t need to feel obligated either. It certainly sounds like the landlord abused the above-guideline process. I think the tenants probably should have applied for a rent abatement to deal with the poor maintenance, and should have (separately) argued that the above-guideline increase was not justified by the work done.

But this is what I mean by saying the rules are well (not perfectly) designed. Based on your description, I suspect the landlord violated the rules. The tribunal process didn’t work well for the tenants however. Similarly, in the cases I’ve been discussing, freeloaders can get months of free accommodation by just not paying.

Realistically, it's not a policy area I've studied extensively, I just know I have experienced it as a tenant both first and second hand, and have always felt cheated by my landlord. (I chose to buy a house and leave our apartment rather than take the landlord to tribunal after they illegally raised MY rent...but that was a privilege I had--that I wouldn't necessarily even have today).

I’m not sure why you think you would need to take the landlord to the Tribunal to deal with an illegal rent increase. All you need to do is calculate the maximum legal rent increase and pay that. Most likely they won’t take you to the Tribunal, because they know the rules perfectly well; if they do, make sure you have your math right and get a ruling in your favour. Even if you mess up and pay too little, the worst possible result from the Tribunal is a ruling that you have to pay $X in rent arrears; at least the first time there is no penalty for not paying rent other than a requirement to pay the landlord’s filing fee, not even a requirement to pay interest on the arrears (being eventually required to pay is not a penalty).

Similarly, I have repeatedly heard of people not getting their rent deposit (“last month’s rent”) back. I cannot understand why any tenant would pay rent at the beginning of their last month; they are entitled to apply the deposit against the rent payment, which typically just means they don’t owe anything for their last month.

(not legal advice; but I have some experience with this and have read a lot, and I’m confident in the above)

[tomh009]

This has had a pretty low profile, I have not seen this mentioned in either the Record or on these forums, but oneROOF is pretty close to completing the construction of a 44-unit affordable housing building targeted for youth.

(The photo is actually from a month ago, I unfortunately forgot to post it earlier.)

   

[ac3r]

Home prices continue to drop in Kitchener-Waterloo area: https://globalnews.ca/news/8891822/kitch...-may-2022/

With interest rates continuing to rise, the average cost of buying a home in the area continues to fall, according to the Kitchener-Waterloo Association of Realtors.

After the average price peaked at $1,007,109 in February, it has fallen for three straight months, dropping to $875,194 in May.

[Bytor]

Home prices continue to drop in Kitchener-Waterloo area: https://globalnews.ca/news/8891822/kitch...-may-2022/

With interest rates continuing to rise, the average cost of buying a home in the area continues to fall, according to the Kitchener-Waterloo Association of Realtors.

After the average price peaked at $1,007,109 in February, it has fallen for three straight months, dropping to $875,194 in May.

But they are still up almost 20% year-over-year, which means that prices aren't truly dropping. We saw similar chaotic anomalous drop in the spring of last year which then turned around and gave us these near-20% increases.

Until we start seeing a trend of year-over-year drops that persists long enough to bring us back to 2015 prices at minimum before we start seeing increases in line with no more than inflation, we will nor be past this housing crisis.

[clasher]

Interest rates are also going up so the cheaper house will cost more on the payback... I dunno if it'll make up for the price drop or not.

[dtkvictim]

Interest rates are also going up so the cheaper house will cost more on the payback... I dunno if it'll make up for the price drop or not.

I see a lot of boomer comments on housing related news articles (don't ask why I read the comments...) stating no sympathy for younger generations, because they have it so easy with 2% interest rates. Back in their day they had an uphill both ways 12% rate! They seem to ignore the fact that, especially with housing, people are only concerned with the carrying cost (mortgage payments) leading to proportional asset inflation.

You might consider this breaking even, but from my perspective, why shouldn't I favour a higher interest rate? Genuine question.

Higher interest rate means lower asset price, now it's much easier for my income (which never inflates) to save for a down payment. It generally also means higher GIC returns and higher savings account rates, making saving far more stable and risk free. At lower rates I'm pissing away my savings to inflation, or putting them into far less predictable index funds.

[ijmorlan]

Higher interest rate means lower asset price, now it's much easier for my income (which never inflates) to save for a down payment. It generally also means higher GIC returns and higher savings account rates, making saving far more stable and risk free. At lower rates I'm pissing away my savings to inflation, or putting them into far less predictable index funds.

I wonder what house prices would be like if there was no such thing as a mortgage?

I’m not advocating for this, but I’d love to know as a matter of curiosity.

This also relates to why government programs to try to make housing affordable by making it easier to get a mortgage are ultimately unhelpful: they just re-arrange who can qualify to purchase a property, without doing much to cause an actual increase in the amount of construction.

[tomh009]

I wonder what house prices would be like if there was no such thing as a mortgage?

I’m not advocating for this, but I’d love to know as a matter of curiosity.

I assume what you are asking is, what would house prices be like if you could not borrow money to buy a house.

The short answer is that the prices would surely be lower. But home ownership rates would be lower, and the construction business would not exist the same way it does today. You can see the artifacts of inability to borrow for a house in most developing countries: partially-built houses , or houses where the first floor was built (and is inhabited) but the second floor has just some walls or rebar. Basically, you build as you have money, you don't just go out and buy a house.

[tomh009]

Interest rates are also going up so the cheaper house will cost more on the payback... I dunno if it'll make up for the price drop or not.

I see a lot of boomer comments on housing related news articles (don't ask why I read the comments...) stating no sympathy for younger generations, because they have it so easy with 2% interest rates. Back in their day they had an uphill both ways 12% rate! They seem to ignore the fact that, especially with housing, people are only concerned with the carrying cost (mortgage payments) leading to proportional asset inflation.

You might consider this breaking even, but from my perspective, why shouldn't I favour a higher interest rate? Genuine question.

Higher interest rate means lower asset price, now it's much easier for my income (which never inflates) to save for a down payment. It generally also means higher GIC returns and higher savings account rates, making saving far more stable and risk free. At lower rates I'm pissing away my savings to inflation, or putting them into far less predictable index funds.

An interesting perspective! Yes, the monthly payments may end up being similar, but the down payments are more manageable, and the overall debt load significantly smaller.

Full disclosure: my first mortage was at about 14%, back in 1988.

[clasher]

Interest rates are also going up so the cheaper house will cost more on the payback... I dunno if it'll make up for the price drop or not.

I see a lot of boomer comments on housing related news articles (don't ask why I read the comments...) stating no sympathy for younger generations, because they have it so easy with 2% interest rates. Back in their day they had an uphill both ways 12% rate! They seem to ignore the fact that, especially with housing, people are only concerned with the carrying cost (mortgage payments) leading to proportional asset inflation.

You might consider this breaking even, but from my perspective, why shouldn't I favour a higher interest rate? Genuine question.

Higher interest rate means lower asset price, now it's much easier for my income (which never inflates) to save for a down payment. It generally also means higher GIC returns and higher savings account rates, making saving far more stable and risk free. At lower rates I'm pissing away my savings to inflation, or putting them into far less predictable index funds.

With the way inflation seems to be going I'm not sure people will find it easier to save money for a smaller down payment. The math goes beyond the 10 fingers on my hand so like I said, I dunno if it's a gain or if it's just robbing peter to pay paul?

[ijmorlan]

I wonder what house prices would be like if there was no such thing as a mortgage?

I’m not advocating for this, but I’d love to know as a matter of curiosity.

I assume what you are asking is, what would house prices be like if you could not borrow money to buy a house.

The short answer is that the prices would surely be lower. But home ownership rates would be lower, and the construction business would not exist the same way it does today. You can see the artifacts of inability to borrow for a house in most developing countries: partially-built houses , or houses where the first floor was built (and is inhabited) but the second floor has just some walls or rebar. Basically, you build as you have money, you don't just go out and buy a house.

Yes, that’s what I’m wondering about. Clearly, prices would be lower, because the buying power of most people would be less.

My suspicion is that all the housing would end up owned by those wealthy enough to buy for cash, meaning that almost everybody would rent.

Then I was thinking a bit and realized that it’s not just a thought experiment: it actually would be possible to implement this policy. If the law said that any debt secured by real property was not collectable and that foreclosure/power of sale were abolished, then it would be impossible to get a mortgage. Well, maybe from the mob, which has its own ways of collecting on debts.

I suspect that we want an intermediate level of mortgage availability that gives ordinary people enough buying power but not so much that prices go to the stratosphere.

[danbrotherston]

I assume what you are asking is, what would house prices be like if you could not borrow money to buy a house.

The short answer is that the prices would surely be lower. But home ownership rates would be lower, and the construction business would not exist the same way it does today. You can see the artifacts of inability to borrow for a house in most developing countries: partially-built houses , or houses where the first floor was built (and is inhabited) but the second floor has just some walls or rebar. Basically, you build as you have money, you don't just go out and buy a house.

Yes, that’s what I’m wondering about. Clearly, prices would be lower, because the buying power of most people would be less.

My suspicion is that all the housing would end up owned by those wealthy enough to buy for cash, meaning that almost everybody would rent.

Then I was thinking a bit and realized that it’s not just a thought experiment: it actually would be possible to implement this policy. If the law said that any debt secured by real property was not collectable and that foreclosure/power of sale were abolished, then it would be impossible to get a mortgage. Well, maybe from the mob, which has its own ways of collecting on debts.

I suspect that we want an intermediate level of mortgage availability that gives ordinary people enough buying power but not so much that prices go to the stratosphere.

I'll say it again, because I think it bears repeating.

Renting should does not have to be a bad thing. In a reasonable housing market, renters can pay the carrying costs of a home, and don't have to come out behind owners. This was true for at least some of our history and also the history in other places.

The problem is our housing supply, not whether it is owned or not.

And in my opinion is very unfortunate that our society looks down on renters. There can be many advantages to renting. Peace of mind, stability, and flexibility are obvious examples. But they fall apart when legislation and the market conspire to make housing an investment not a home.

Edit: Some clarification:

Renting gives you peace of mind and stability because when the roof on the house I live in right now fails, I don't need to come up with 50k to replace it, nor do I need to come up with 15k for a new combi heatpump. I also have the next 3 years of rent increases locked in the same way a mortgagee would.

On the other hand, I have the flexibility to leave any time after the lease term, for free, and any time before then for a fixed cost. Unlike an owned home which has enormous costs any time you move, to say nothing of the variability of the housing market.

[ac3r]

Interest rates are also going up so the cheaper house will cost more on the payback... I dunno if it'll make up for the price drop or not.

I see a lot of boomer comments on housing related news articles (don't ask why I read the comments...) stating no sympathy for younger generations, because they have it so easy with 2% interest rates. Back in their day they had an uphill both ways 12% rate! They seem to ignore the fact that, especially with housing, people are only concerned with the carrying cost (mortgage payments) leading to proportional asset inflation.

Gotta stay far away from comment sections my dude. Those places will give you brainrot haha.

Boomers need their internet privileges taken away TBH. Not only did they ruin the world and planet, they've now ruined the internet. Used to be "our" place to unplug (by plugging in) and have fun in a new technology, culture and world but then Web 2.0 dumbed down the internet to the point every dumb boomer in the world is on Twitter or in comment sections saying asinine things.

[tomh009]

I'll say it again, because I think it bears repeating.

Renting should does not have to be a bad thing. In a reasonable housing market, renters can pay the carrying costs of a home, and don't have to come out behind owners. This was true for at least some of our history and also the history in other places.

The problem is our housing supply, not whether it is owned or not.

And in my opinion is very unfortunate that our society looks down on renters. There can be many advantages to renting. Peace of mind, stability, and flexibility are obvious examples. But they fall apart when legislation and the market conspire to make housing an investment not a home.

Edit: Some clarification:

Renting gives you peace of mind and stability because when the roof on the house I live in right now fails, I don't need to come up with 50k to replace it, nor do I need to come up with 15k for a new combi heatpump. I also have the next 3 years of rent increases locked in the same way a mortgagee would.

On the other hand, I have the flexibility to leave any time after the lease term, for free, and any time before then for a fixed cost. Unlike an owned home which has enormous costs any time you move, to say nothing of the variability of the housing market.

Do we really look down on renters? I know some professional people who prefer to rent, for reasons similar to yours. And I don't think they're looked down on. On the other hand, many people aspire to own their houses (or condos), either to "own" something, or because they believe that it's a fabulous investment. I personally think it's more of the latter and less of the former.

Finally, there is far less variety and selection in the rental market than in the houses and condos being sold.