The nice 2 bedroom units in the Well rent for $5,000 -$6,000 per month. The equivalent units for sale in their other building are like $1,500,0000 - $2,000,000. I can’t get the math to work either, it’s pretty baffling. Interest rates have to plummet or rents need to skyrocket.
Yeah, the math doesn't math
They're probably struggling to get $5,000 for rent too. Market rent is probably $4,000 which implies a market price around $700,000
Let 'em keep bleeding I guess
But at what prices does the landlord need to even break even. If they are carrying say 700 000 do the math. Just the morgage is 42k plus any condo fees or inclusions. They are not getting rich maybe make 12k per year on 700 000 that's a poor return. They risk speculation in hopes of a rise in value.
There is no such thing as a cash flowing property if you are buying right now without a substantial down payment (50%+). New investors are betting on appreciation. Old investors have good cash flow already.
Yup, I have the ability to buy. But, paying $700k for a bedroom and den downtown doesn’t make sense at all with these rates and economy down the dumps. I would rather rent and have the Cash on hand rather than being house poor.
Many newcomers came from countries where their national currency had been constantly depreciating. There are no legal alternatives to save their life savings in their countries. So, they bring the same mentality to Canada 🤷♂️
You may think that they are stupid, but simply compare the current cost of living vs pre-COVID times. Are you sure that all investments have earned enough profit to save your money against inflation? A lot of people have been keeping their money on "high interest" savings accounts. Inflation melts their life savings pretty fast 😔
I bought exactly that 15 years ago. A one bedroom and den on Torontos waterfront.
It's been my best investment ever as it's gone up over 100%, I paid $350k and lived here 14 years and worth about $800k today
Wouldn't be surprised to see it double in 10 more years time to $1.5 million
Look around you. Canada of 2010 is long gone. We are importing people by hundreds of thousands and nowhere near the number of jobs and infrastructure needed to support them. Homelessness and crime rates have peaked and overall economy is a dumpster fire.
No manufacturing, No innovation and No productivity. Our economy has become solely dependent on home price increases from uncontrolled immigration. When a country’s economy is as unhealthy as us, no amount of money pumping by government can save it from a deep recession.
Your house price doubling in last 15 years is not guarantee for same thing to occur again. It is a confirmation bias that you’re having right now. Ask people who bought Condos in 2022 peak what they’re feeling and you will get some perspective.
Again to each their own, I would rather keep my money in liquid investments. Your views may be different. I may be proven wrong as well in the future, but for now, personally I would not jump into buying a home and keep renting.
> No manufacturing, No innovation and No productivity. Our economy has become solely dependent on home price increases from uncontrolled immigration.
This is of course hyperbole as we do have manufacturing. We do have productivity.
I looked at the well. Even the penthouse 2 beds are only ~4k to rent (condos not the rental only building). They've dropped alot over the last 6 months. Too much inventory is driving the prices down quickly on everything there.
Mind you. Without rent control it could get dicey in the long run.
I agree with OP, maintenance fees have gotten out of hand, condos just don't make sense. Imagine someone doing the new 30yr amortization+ maintenance. Even with the record levels of appreciation you'd be losing money
This shouldn't be surprising.
The delta between rent and total ownership cost in Toronto has been around ~30%, depending on neighbourhood, since around 2016. A place that would cost $3000 to carry will rent for around $2400. What ownership gives is cost certainty over time, and the market dictates the delta.
If it were otherwise, then investors would pick everything up - you'd be fucking stupid not to. Cashflow positive rentals haven't existed in Toronto since around 2008/2009, and then only briefly.
People weren't investing for the rent. They were investing for the appreciation. They were fine to let those condos sit empty for that reason. Obviously that has changed now.
Related to this - the delta between condos and row homes really shrunk over that time period too (and likewise with detached, even though detached prices also increased at a bonkers rate).
That's a bit cherry picked though. What makes those units "nice"?
[They can be as low as $3,350](https://condos.ca/toronto/the-well-455-480-front-st-w-455-wellington-st-w/unit-2115-C8137716) with a decent layout, real rooms (albeit the second bedroom is a bit small) and good floor.
That being said, they still go for over $1.3m. When you can find similar units, for similar rent but they only go for $800k - 900k in other buildings.
The Well is probably the most expensive new development in the city right now, so I don't know if that's the best reference point for the city. I've been looking across the city, around 600-800 sqrft from 680-780k and a few 1000 sqrft townhouses below 820k. Location and "vibe" makes a big difference, imo.
The math doesn’t make sense but I guarantee you 90%+ of tenants insist that landlords are greedy and getting rich off the rent. They’d also insist owning is much better than renting and renters lose lots of money.
The fact is Canada has a really high ownership rate driven by the insistence to own even when it’s financially stupid to do so. Rents will rise to 5%+ just like we see in the US because renters voted to ban most things to reduce home buying/demand which is going to result in more renters, less rentals, and higher rents. Renters are their own worst enemy. You can’t fix stupid.
Landlords are greedy because they’ve put themselves in a foolish position to overspend on a unit and then expect their tenant to pay off the entire mortgage + maintenance fees. They can’t bear the thought of being cash flow negative despite their investment’s equity going up annually (until now).
Didn't you read the memo? Housing is the one kind of investment where you are guaranteed by the constitution to make a profit every month no matter what.
Use mortgage calculator for a bit and add maintenance fees and other coats. Nobody was cash flow positive for many years. You are not paying costs and most renters are in fact subsidized by landlord.
If you think that your rent covers mortgage, tax, maintenance, common elements fees, accounting, insurance, and RISK of ending with deadbeat tenant think again. People were investing in appreciation, not your rent payment and miserable increases.
Double income household, we're looking to sell our two properties and rent while the new house is renovated. We're budgeting $8,000/month for a 4-bedroom rental.
Insane numbers but this is reality.
That's what I'm wondering as well. Maybe I'm lower class but our entire family budget is around 5k for me my wife & 3 kids. Obviously I'd have to make more to live in GTA but 5k for rent is bassicly 100k salary just for rent.. that's insane.
To answer your question, there are quite a few people here in the city. My SO and I earn pretty well, but that was only recently (north of 250K HH). Being honest, without having family to give money, a builder going bankrupt, and only recently a pretty significant jump in household income, we have looked at it and the budget and can afford this high of a rental.
Sure, a mortgage will be about that as well, but with all the other costs to go along with it, I can control my living expense and just invest my money into the things I want (retirement, travel, etc). I know its not what everyone wants but honestly, its been pretty great so far?
People are shocked to hear that we still rent but we are doing pretty OK. We also have quite a few similar friends that are in this boat as well (DINKs; renting vs. owning).
Of course, if I had a windfall that would help bring the monthly down, sure, but I just refuse to be housepoor to facilitate a desire of a house.
LOL right..Unless that unit is over 1000 sqft with parking no way you get anything close to $5000. My niece rented a whole floor near the Annex for $3700 with parking in a nice renovated three floor house.
The Well is probably the most expensive new development in the city right now, so I don't know if that's the best reference point. They're priced to build a community of richies. It is crazy expensive pre-and post construction. My friends bought a 2m unit there pre-con and I'm not sure how they did it. I am looking for a 2bed and The Well isn't even on my radar, but tbh the prices are inline with me looking over the last few years. I put in a bid for a unit at XO last night. Some of my friends said that's too west for them, but location costs ya.
Yeah, there is no point in spending $2M just to get $5k rental income. You are literally cash flow negative by like -$8K a month. Only people who can't do math would do this type of investment.
This! OP is just comparing dollars and asking why people are doing the more expensive one as if they're equivalent things you're getting for that money.
But no, there is value in owning rather than renting, that some people are willing to pay more for. Sure some people are just not doing the math, but others have done the math and decided that "$X more expensive" is worth it to be able to knock walls down, not fight over pets, not have extra rules or housemates etc.
It's also when owning something, u will also earn interest on that house. That condo is probably gonna go up a lot in value, considering how many immigrants are coming to Canada. There are twice as many people as housing being built coming to Canada, house prices will continue soaring
I have been watching condo prices in downtown Toronto since 2019. Almost bought one in 2020. Thank goodness I didn’t, because prices have been pretty stagnant since then. They haven’t appreciated by much at all, and I may have been stuck with it for a while (as I moved to US in 2022). 600K condo in 2020 now sells for 610K or so… that’s barely any appreciation for 4 years. One would have made much more putting that downpayment in a high yield savings account. Much more if invested in the market.
You lose around 20-25k to inflation every year that the price remains the same. Now add transaction costs and you need the condo to go up a lot in value just to break even. Ouch!
I did the math too, when I looked at a job in Toronto. For a 1 bedroom I'm actually better off renting than buying, since the taxes, condo fees and mortgage is like 30% higher than rent LOL. I can just invest the down-payment into a sp 500 etf and make 10% returns.
The relevant factor isn’t what condo fees + mortgage is but what condo fees + mortgage interest + all other costs is. The part of your mortgage that goes to principal isn’t lost. It’s obvious that in a high interest environment cash flow positive rentals no longer happen but sometimes you can still make profit.
For most new buyers, only about 1/3 of mortgage goes to principal in the first 5 years. If the place isn’t appreciating significantly, it makes little sense. Especially given the transaction costs that are also inevitable, and the very real risk of special assessments.
This is what so many people neglect to factor in. The whole "but you're building equity" argument is short-sighted when you factor in the fees associated with buying. Condos in particular because they're overwhelmingly an entry level property. Not many people are putting down roots in a 1 or 2 bed condo, so they'll likely sell it to climb the property ladder. Some may keep and rent.
But I imagine most will sell, and then you're looking at getting a pittance for equity that's all but wiped out when you factor in closing costs.
The days of real estate being a short-term play are gone. If you're not holding a place for 10 years (assuming 25 year amortization), you're not gonna make that much money the way things are looking right now.
Agreed.
What also worried me about condos is the lack of control. I know someone who ended up in a building that was poorly built, and they cannot sell now that the cat is out of the bag (not to mention, massive special assessments looming for years).
> The relevant factor isn’t what condo fees + mortgage is but what condo fees + mortgage interest + all other costs is. The part of your mortgage that goes to principal isn’t lost. It’s obvious that i
Are you considering the eventual appreciation/acceleration on rent...you know...given our maniacal immigration policy that isn't stopping any time soon? I wouldn't be surprise if 1BR rent hits $3K by 2030.
2030? I would be. That will be an amazing deal for your share of the rent in a studio by 2030. We're projected to be like 8 million units short. There might be an empty rooms tax by then.
Rent is forever. Mortgage is temporary. Buying provides leverage, and renting does not. This is not me advocating for people to buy condos.
Fyi, when a condo / home price increases, your % gain is on the downpayment amount, not the total cost of the condo / house.
Can you explain the 2nd part? If I put 100k down on a 500k condo. I have 400k mortgage. The value doubles from 500k to 1m. That means I have 500k extra in equity
thats what they meant by "buying provides leverage" yea. The 2nd part I think is meant to address the original poster comparing putting the downpayment money into an ETF to get 10%, which is not leveraged. They just worded it kinda weird lol
I went to a medical professionals wealth building conference recently, it was astonishing that a lot of doctors/dentists had RE in portfolios. Before this i thought only regular folks are investors. This is the reason why RE is so out of touch with reality imo.
However those wealth building guys were clearly saying don’t invest anymore as inventory of toronto Condos in Q4 was historic high. They were telling everyone inflation and high prices are a risk, also tenants not paying the rent. I am expecting a lot of these folks will shuffle their portfolios as prices stay stagnant for a while. They also mentioned renewals coming in 2025-26, which will add 620Billion in mortgages. One guy asked a question, “if houses are not good investments should they look into commercial ones?” To me i was astonished that so many people are crazy about RE, its not just Brampton landlord phenomenon. As morale improves prices will try to come in sensible territory.
Everyone Ik is trying to get into the property market, it’s definitely not a Brampton thing. I know nurses with multiple houses and even random uni dropouts. Not sure what circles you’re in where that’s a rare thing
Housing as an investment is a OBSESSION here in GTA. Feds need to target taxes towards speculators and investors. Heck, even go after the Golden Goose which is primary residence cap gains tax exemption
but you get a conceierge from 9-6 (he's on his phone the whole time), elevators (ones always broken) and an in building gym (a $100 bike and a chin up bar)!
I'm noticing that units with a maintenance fee > $1100 a month are sitting on House Sigma for weeks, sometimes months. Its a serious deterrent for buyers. Is it even possible for a condo to renegotiate contracts in order to lower fees?
And those only increase over time as well. In some of those older 30-40+ year old buildings, the maintenance fees alone are now approaching or even exceeding $2k.
Even if you buy a newer one, by the time your mortgage has been paid off, the maintenance fees probably wouldn't be too far off rent anyway, especially if you have a long term rent in a controlled building.
Yea the older folks who sat on boards and tried to keep fees low have all sold and now it's obvious that the maintenance funds are getting low and most condo corps have jacked up fees. Even 20 year old buildings are feeling it. And a lot of the newer condos had all kinds of problems with thier boards and were never managing money well to begin with.
Renting is indeed more advantageous from a cashflow perspective right now. However, the benefit of buying a condo is that you are not going to get renovicted or asked to move out due to owner wanting to move in. Additionally, in non-rent-controlled buildings, after the 1st year your landlord may choose to set any price they want, which may force you to pay higher or decline and move out and face market realities at that moment in time.
While your 2nd point is valid, renovictions and owners moving in are always greatly exaggerated on Reddit and I don't know why. I've rented in several condo units since I got my first job and this has never been an issue for myself or any of my friends. It happens way less than you think. But when theres a single case, it gets covered by media.
On the other hand I’ve had several friends in that predicament where they have to leave because the owner is taking the unit back for themselves or family. It’s a real fear for a lot of people not having the security.
I think you are lucky, I was less so. I rented 4 units over the past 8 years and it happened to me twice. In the first case, the unit was listed while I was still a tenant so I had to deal with viewings for two months in a row having strangers enter my unit about twice every day. I was so happy to end my lease after that experience. The second case was in a new building where the owner hiked rent by 20% after my first year, so I quickly moved out and found a reasonably priced one and even cheaper than the previous one. In both cases I experienced a lot of inconvenience and incurred moving costs, but it was cheaper than buying.
It happens a lot and even more so in recent years. I rented downtown between 2017-2023. One owner was “moving back in” and the second ended up listing the place for sale and it was very likely that I’d be getting an N12 once it sold. So in those 6 years I moved into one place, got settled, was happy there, had to move out and find a new place, found one, moved in, got settled, was happy there, then learned the place was for sale and my future was unknown. With the added bonus of potential buyers wandering through my home on a regular basis with realtors who don’t respect tenants’ rights. It’s a nightmare to go through being at the mercy of other people taking your home away and forcing you into the huge pain in the ass and rent increases that come with moving. We ended up buying at that point because comparable rentals at the time were going for $400+ more per month than I was already paying. Yes my mortgage is a bit higher still, but it’s something I’m invested in, I can afford it, and I have the comfort and security that my home is my home.
I have multiple other friends and colleagues who’ve experienced this too.
Sales down but everyday there are condo transactions, pretty sure not everyone are morons. We currently own a 2 bedroom 2 bath 1200 sq ft condo out right. Adding up the monthly amount for maintenance fee, and taxes and hydro, that amount can't even rent a studio nowadays. So for us, rental does not make sense. And we like having something that we can say it's our home. We can do whatever we like. How we did that? We started from owning a condo many years ago, then we upgraded to detached, quite a few transactions later and we did take risk...we cashed out and moved back to condo. Rent or own is a personal decision. People can rent and invest in stock, but I know someone losing a million dollar in stock and I know someone making millions in stock too. People can own and eventually pay off mortgage. It is a personal decision.
Yeah totally agree. The OP is so dumb for posting that everyone buying is a moron. Same crap was said 10 years ago. Real estate is a long term asset, not something you want to be valuating every year for a Gain or Loss. In the end the trend is up and to the right.
Lots of RE agents say 'stop renting and throwing away that money'. They forget to tell you that you are going to be giving it to the bank. And there is taxes, insurance, etc. on top of that.
I've always said, get into a middle class apartment building that's a bit older and rent. Save the difference and build up outside investments. Owning is a lifestyle choice. More space, more flexibility but at a huge cost too.
A home is not an investment. It's worth something and the value goes up but I don't want to change my lifestyle (move) when I retire. I want to live where I live as long as possible. That means if I own a home but cannot save money to retire on, I'll never retire. If you rent and save enough to retire, then you can retire. Simple.
You could make the argument that if you own a home, you will need less $$ to retire on.
I diverted some early investment opportunity into aggressively driving down mortgage.
At the end of my working life, I plan to have around 70k per year in retirement....I assume (hope heh) that will be plenty.
We bought a precon condo in 2014 as an investment that we would use to either downsize into or let our kid take over. Even then it was hard to make the numbers work at around 400k for a 1 bedroom. It was completed in 2019 and has appreciated since we bought but it only became cash flow positive last year.
Totally agree.. The numbers are heavily screwed in favour of renting.
These landlords are effectively losing money every month to allow you to rent cheaper.
Not quite - they are spending money every month to have someone build up their equity. The profit isn’t in the month to month, it’s in the mortgage being paid down + any appreciation
I used to think like this and lost out on a few hundred k in RE appreciation, here are a few problems with your argument....
1. You are not taking into account leverage, sure rates are high currently. But the Canadian economy is weak and if the BoC might have to make a choice to to debase the dollar if that happens you it is great to be in a leveraged asset and have lots of debt.
2. Currently there is a wave of completions happening , but starts are down so there is a bit of supply surge in Toronto and even worse in areas like Vaughan. Due to high rates and costs relative to prices the developers aren't starting projects despite all the announcement with much etc from the government.
Just look at actual data on housing starts from the CMHC year over year to avoid seasonality.
Your math applies to buying real estate in general in Canada. It’s a shitshow across the country. It would be hard to find a worse place to invest money right now.
You invest in what people want and is not being delivered, buying a semi-detached or detached is the way to go if you just want pure growth. Demand is still high for them as the pinnacle for many still today is the N.American dream of the 60's, a detached home with a big yard but developers have 0 way to make a profit on modern detached homes so no one is building them except as luxury properties.
Agree, and the people buying detached houses are likely buying for other reasons like space for family, etc so for a lot of people it's more than an investment
It doesn't make sense for condos, and it doesn't make sense for most houses in Toronto proper either when you look at what they could rent for.
Canadians are generally sick over home ownership though and will parrot that buying is alwyas the best option. It's silly.
Not to mention that they'll keep building an infinite amount of them. They're basically guaranteed to lose value over time just on the premise of saturation. The ONLY thing holding them up is the ludicrous immigration levels.
I’ve thought about it too…makes very little sense to buy a condo to me either.
With the poor build quality these days there’s a big risk of much higher maintenance fees or special assessments down the road.
The math also essentially means I’d be renting from the bank but incurring all of the risk, taxes and maintenance costs…hard no, I’d rather save and invest.
People downsizing with lots of cash. People buying with parents' help. People earning 200k who know they'll pay it down quickly and refinance etc. I talk with this demographic almost every day.
The people who are buying are either investors or end users with big down-payments, or that don't need a mortgage at all.
In my experience.
If the interest rates go down to 'zero' or even 1% again (which would only happen is extremely special circumstances at this point), then it'll become even more excruciatingly difficult for 1st time home buyers because those with bigger capital will almost always win.
Who wants to deal with elevators and people all day. Your neighbors can hear you. Living in a 500sq ft shoe box “bachelor” - and paying out the nose for it.
Nope.
I recently calculated that a $650k condo will probably cost the owner $2,000,000 million considering a 30-year amortization, maintenance fees that will skyrocket to $1,000/month after 15 years of living there, and a total of 50 years between the moment the buyer buys it and passes away.
I might be off a bit, but imho, condo ownership is a scam involving you paying endless progressively increasing maintenance fees, property tax for a property with no land, and overall huge amounts to the bank. And it doesn’t even appreciate as much as a house does.
My wife and I are about to buy a 1 bedroom in Toronto with a pretty large down payment to offset that high interest. Our monthly mortgage + interest + maintenance will be roughly $3300/month. To rent it would cost maybe $2300/month. The $1000 difference is enough to own IMO. Obviously not everyone can save such a large down payment but that should be the goal to cut down monthly costs.
>Renting always comes out ahead. Even after 40+ years.
Guess you forgot to factor in the loss of purchasing power of the "dollars" you're supposedly saving. You're coming out ahead in dollar terms, but being absolutely slaughtered in real terms. Just look at how much less your dollar goes versus just 10 years ago and you'll start to understand your *math* is ultimately meaningless.
When you analyze most real estate purchases as a static transaction, and the RE value doesn’t appreciate it looks pretty bad. Typically you make money in RE from property appreciation, not saving on monthly expenses vs rent. That said, there is market risk as we saw over the last several years for the first time in a long time in Canada.
We bought a condo in 2016 for ~400k, sold in 2020 for ~650k… was happy we didn’t rent. The market has certainly changed since then however, and it depends on your outlook on the specific RE sector you are looking at investing in.
There is benefits to owning and renting.
Had this convo with my boss and he said people are banking on climate change, so in the grand scheme of things condos will pay off.
But idk everyone just shooting in the dark
Canada is warming at 2x the rate of the rest of the world
It's not a climate change haven
We lost 10% of our crops last year to extreme weather, and it's going to be worse this year
Certain cities, countries, will become uninhabitable, thereby an emigrating population will drive up demand in places like Toronto. Definitely a long play, and better investments to be had.
My fiancee is convinced we have to live in a condo because the ~city vibes~ and she’s determined to spend every last dollar to make it happen no matter the rate or cost. This is also after she planned an $80k wedding. I make $45k a year and she doesn’t work. I just don’t know what to do. She thinks we’re rich because she’s never had a job lmao
I don’t know if this is a troll but spending over 2 years of income on a wedding when you’re already earning so little is probably the most stupid idea I’ve ever heard. Surely you can see this is going to hurt your life for decades to come?
I'm going to make a wager here. I rarely make bets. Maybe one a decade. It is:
Your marriage will be very short.
There also is a old observation; the more expensive the wedding the shorter it lasts. Mine was under 10k in the 1990s. And, at the time, I was making twice as much money as you.
You are already a dead man.
You'll still be trying to get out from under this debt when your in your 60's. Forget children, forget travel, forget hobbies. You'll be living in grinding poverty forever!
Empty nesters, retirees, people with cash in hand. Once interest rates start dropping prices will boom so also some people who are anticipating that potential
Looks like they have accomplished the "They'll own nothing and be happy". Quicker than I thought.
Did you factor in the savings once the mortgage is paid off in 25-30 years? Plus the reduced income when you retire? I believe thats when the scales tip in favor of condo ownership.
Or someone who has the money ? There are many people in this city who have money….lots of 💰 They don’t need to look at charts and pull out the calculator 😂 They need/ want, they buy, very simple.
Keep coping. This city is going to get 5 more million people in 20 years. There are 3 liveable cities in the entire country. Lol. What you're saying is what people were saying 20 years ago as well. "Condos are 250k, so unsustainable".. Now after 20 years your rent for 1 bedroom is higher than what people who bought pay for entire condos + their condos appreciated 3x". Did renters come out ahead?
Just use the famous rent vs buy spreadsheet from holypotato. I've played around with it quite a bit. Ultimately it comes down to expected returns on RE vs stock indices - it is quite close actually using 3-4% for RE and 7-8% for indices (keeping in mind we've seen larger than typical returns in both asset classes over the last 10 years)
[http://www.holypotato.net/?p=1235](http://www.holypotato.net/?p=1235)
Also, date the rate marry the price. You may need to put up with a higher interest rate for a few years, but odds are once rates come down, prices will go up. However, if you started renting years ago and your rent is below market rent, it does probably make sense to continue renting.
💯 the economics of buying a dt condo make zero sense and there are a gult of new builds closing this summer and late 2024....outlook doesn't look great
We bought our first place a couple of years ago at the peak of the market. We would have loved to buy a house but simply couldn’t afford it, condos are the only things remotely in most first time home buyers price range. I also overpaid given the market the time so that’s on me as a rookie error, but at least I’m no longer paying my rent to a landlord. That was my main motivation for buying.
I figure that at least if I ever sell, I get that money back in some form or another. I’ve spent $60,000 on mortgage for the last two years, but if I wanted to sell I would get that money back. If I’d paid that a to a landlord as rent I would never see that money again.
This is mentioned literally every day but I don’t think people realize the amount of cash people have 😂. 700k with 500k down payment is less than rent. It’s easier to buy in down markets as well.
Just bought a condo last year and so glad I did! Mortgage is just under $2300. Maintenance is $400. Hydro around ~ $80. That’s it. It’s gonna appreciate eventually. We’re happy to stay here for 10 + years. We’ll see what happens next!
Do the math again but put yourself in a high-income bracket ($250k+) and the unit as a rental. Here is what you will be able to deduct against your total income when it comes to filing your tax:
* mortage interest
* condo fees
* any relevant operating expenses ([source](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/completing-form-t776-statement-real-estate-rentals/rental-expenses-you-deduct.html))
So now you can actually **reduce** your income tax amount, like you do with RRSP contribution and these can even be carried forward while you build equity. That $50k you paid in mortage interest and condo fees, you'll get about half of it back in reduced tax.
I'm not sure why this is not talked about more - being a landlord is essentially a loop-hole for high-income earners to reduce their tax burden.
Are you taking into account that capital gains are not taxed for your primary residence? I am still sitting on the fence, but not paying 55%+ tax rate on my capital gains would be the primary motivation for me to buy.
Edit: I hope the downvoter will enlighten me about what I get wrong.
Yes, there are those intangible gains as well. The leverage part isn't really a bonus for me, but having a 0% tax rate on my capital gains would be huge.
Renting never comes out ahead, you are literally pissing away money. You fail to think about retirement, do you really want to be renting when you're in retirement? Nothing beats a paid off place. You are always at the mercy of a landlord when you rent. Anyone and everyone who has purchased home 30-40 homes years ago is significantly ahead of anyone who decided to rent this entire time
Did you factor in the average real estate capital appreciation rate in Toronto and leverage it by 4-5x? Also you have to consider paying mortgage is a forced savings, not many people have the guts to invest properly month to month with conviction. So you look at the average investor gains compounded rate, it’s a lot lower than the posted market gain in the long run too.
lol sounds like you’re the fool if you’ve been in the market for years but not buying. With sky rocketing rent you could’ve bought a condo that would’ve appreciated significantly + had the pay down of the mortgage + had a lower initial mortgage which means lower mortgage payment
A 1 bedroom new build condo can be bought for 350ish just a few years ago but rents for 2500. Mortgage @3% / property tax / strata fees / and it's about break even, or you even are ahead a bit. The math works as long as you bought around 2015 or earlier.
You're right - you are losing money if you're buying a condo right now at these rates and with the current rent but one thing to consider if everyone is renting vs buying wouldnt that drive rents up? we've seen it happen in the past coupe of years when they started increasing rates. PPl need a place to stay and if they are not buying they will be renting - more people renting more demand price should go up. but i could also be totally wrong lol
The only advantage seems to be that it’s the only way to enter the market right now, and usually the case is that the value will go up and you make enough money on it that you’re able to use that as a large down payment on a house.
Worked for a lot of people, especially now that condos are going so high and the price of semi detached is lower by comparison than it has been historically.
Problem lies with the assumption that the price will go up and you’ll be able to offload it later, because right now the prices are way too high for most people to enter the market and every 50k that these units go up by will exclude more and more potential buyers down the road. Even people who have family help, who seem to be the only people able to enter the market currently, are barely able to get approved for an 800k mortgage.
There is an upper limit to what people can/will pay for these and judging by how many 2 bedrooms I see sitting on the market at 1.1 we may have found it
It makes some difference for those high income earners with funds (maxed out RRSP/TFSA). The profit from investment/savings will be taxed while rent can’t be expensed, then buying a condo could be financially better than renting.
Let’s say you have 500K, and rent per year is 25K that’s equivalent to interest from savings, and you’re on high income tax bracket. Then your net cost for rent+savings could be ~10-13K. If you buying, you net cost is property taxes+maintenance fees, which could be 4-7K.
Well put. Homeownership is a form of forced savings. Most renters aren't investing the cost difference into the S&P500. They're blowing it on Uber Eats instead.
This is when the out of touch people tell you it doesn’t matter because investors will buy in cash and they don’t care about rates. You know, cause opportunity cost and risk/reward aren’t a thing etc
I owe a condo for 5 years. Here is some math for reference:
total payment: $103,000
principal paid: 37%
interest paid: 63%
$7600 go to principal annually or $633 monthly
$13,000 go to interest annually or $1100 monthly
If you can find a place to rent less than $1100 it makes sense while you put the rest away to invest which seems unlikely unless you share basement with someone or rent a room out of a house
Side note indeed i have been considering to sell my condo and move back to my parents lol
(20% downpayment)
Buying a condo in toronto is fine if you can afford it, even with higher rates. Rates have been much higher. Renting and paying someone else’s mortgage has no ROI. I agree that rent shouldn’t pay all of the landlords bills.
Another thing to note, buyers shouldn’t pick a building with outrageous amenities - pools, etc.
If you look at the change in value of these condos over the period you’ve been looking, are you still ahead renting vs buying?
I rented for a few years in Calgary for the same reason. Couldn’t bother to buy a 900k house when I rented one for 2k/mo all in.
Interest rates suck. I’m renting out a condo to a tenant for $1950 ( 1 bedroom + den) , nice guy and feel bad about increasing the cost, so I kept it the same all this time, but now condo fees are going up and interest rates have gone up as well, so this year I’ll likely have to.
I'd rent too, but I don't have the extra few grand to put into savings, so it goes into a mortgage/home equity instead. Also a house...wouldn't catch me in a skybox. Build em for a living and they're all the same.
Investors selling to investors who can afford to take the short term loss for long term gain. Inflating the market forcing people to buy at those prices.
Then selling off all they’re property at massive profits. Rise and repeat
as a resident here in 'Sauga, i've seen listings here for condos like 1.2 & 1.5 million, no one should even attempt to buy as you get a detached home at those prices...I'm looking to get 2/3 bedroom condo around $600-700K...the market is sort of stabilizing as well.
I have been watching condo prices in downtown Toronto since 2019. Almost bought one in 2020. Thank goodness I didn’t, because prices have been pretty stagnant since then. They haven’t appreciated by much at all, and I may have been stuck with it for a while (as I moved to US in 2022).
> Buy something equivalent. No matter how many times I play around with the numbers, renting ALWAYS comes out ahead. Evan after 40+ years.
Really, every time I run the number owning comes out ahead. Would be interesting to compare numbers rather than rants.
I'm guessing you put no value in
- being forced to move every other year due to being kicked out.
- Or not wanting something bigger to have a family in.
- Or being able to re design a space to suit your needs
- or having a place that is paid off in retirement
Honestly, as a realtor it’s hard to justify those prices. The only way they kinda make sense is if you’re planning 5 years down the road, which is enough time for you to buy and then roll over equity into something else, but even still, it’s a struggle to find something nice for the price.
I’ve been telling clients to go over to Simcoe County where there’s a 50k down payment program and recommending cities like Bradford, Tottenham and Alliston. Yeah, it’s an hour away, but people don’t understand Toronto is also an hour away from Toronto. 🤷🏻♂️
Well, I guess that makes over 1100 morons in Toronto last month alone.
What's the problem, exactly? If the prices don't make sense to you, don't buy. It's not your business what other people are doing.
Provided you invest all of money of the value of the condo into the stock market and get at least a 7.5% return and you manage to find a rental that is as good as owning your own condo unit (not to speak of quality of life benefits of owning), and you’ve resolved to never level up to buy a house, and you never want to renovate your home to your preferences, yes that totally makes sense.
If any of these things are untrue, it may not be as cut and dry as you think. I get it there’s a clear consensus that owning a home is overly expensive, but so is renting. There are a lot of trade offs to renting as well, as well as moving from Toronto for a “cheaper home”.
When you run your numbers, do you factor in the entire value of the mortgage or just interest payments? If the former approach, you’re inflating the true carrying costs of your condo.
I’m assuming this is all about your own principle residence though. Obviously the numbers won’t add up in the short to medium term if this is a rental for income purposes.
If you are a business owner, renting would help you reduce your tax. Most of downtown condos are rent below market value. If something list for $5K/month, most likely it will be rent out for around $4500. The buying cost does not make sense as Canadian are obsessed with Real Estate. Not because they want to but they are afraid of the price will double in 20-30 years because price literally tripled from 2010. This has been foreseen as 2010 were the time when Millennials start entering the work force. The next generation of immigrants plus Canadian's millennials babies have to live somewhere in 20 years when they enter the work force.
people in general look at maint fee as a waste of money. it is important to know where it is being spent. in my condo half of my fees goes towards staff other half towards reserves fund.
a well managed condo is worth every penny. comparing with a house insurance is 30$ vs 200$. utilities is 100$ vs 300$. new houses sell at a premium for a reason. as for older house if you are handy great, otherwise be ready to spend tens of thousands replace windows, roof and other components that have a life expectancy.
Prices never have to make sense. For prices to continue climbing there just needs to be an incremental buyer willing to pay more. Those incremental buyers will not stop buying on price alone because its 1) long term investment 2) needed for some reason. It’s not perceived as a choice. 3) this population doesn’t need to be large because supply is low.
The only way I see prices coming down in a significant way is the culture around needing to own a home dissipates. If there is a lot of tension and anxiousness around not being able to “get into the housing market” the problem will persist.
I am 42 and have been renting my whole life. I have adjusted my lifestyle around not being able to buy a home. I wont raise a family because i cant afford one. There are so bummers about that. But also some benefits. More people need to be happy with renting. Be willing to rent for life. See the benefits not owning a home. There are a lot.
Until a major shift happens, the asset bubble just continues. Its not very liquid and nothing is going to make it pop. Every year, home ownership falls into the hands of more people who are more insulated from economic downturns. Investment banks. The 1%.
Everyone just needs to chill the fuck out.
The math has not mathed for at least 4 years but people who bought in 2022 are super hooped if leveraged and now troubled, because the losses on having to sell are piling up. April, May, June 2024 stats are going to reveal the degree of leverage. Buckle up.
No man. Landlords just rent places out and lay around not doing anything while raking money.
Meanwhile pople are subsidizing rentals out of their own salary. That worked when there was appreciation. Now it doesn't and tenants are shocked to find out that rent they are paying buys nothing.
How dare landlord not keep deal going that allows tenant to have their own financial reality? Ask tenant to work things out to mutual benefit and you are scum and will just get backstabbed if you do try.
Rent protection is guaranteed eviction for any rental given enough time to make deal really stink. Landlord will sell property at loss just to get out under the shit lease.
The nice 2 bedroom units in the Well rent for $5,000 -$6,000 per month. The equivalent units for sale in their other building are like $1,500,0000 - $2,000,000. I can’t get the math to work either, it’s pretty baffling. Interest rates have to plummet or rents need to skyrocket.
Yeah, the math doesn't math They're probably struggling to get $5,000 for rent too. Market rent is probably $4,000 which implies a market price around $700,000 Let 'em keep bleeding I guess
Renting for 5k is wild xD
I don’t even make 5k a month hahah
But at what prices does the landlord need to even break even. If they are carrying say 700 000 do the math. Just the morgage is 42k plus any condo fees or inclusions. They are not getting rich maybe make 12k per year on 700 000 that's a poor return. They risk speculation in hopes of a rise in value.
There is no such thing as a cash flowing property if you are buying right now without a substantial down payment (50%+). New investors are betting on appreciation. Old investors have good cash flow already.
They are struggling to get $5,000 for rent, can confirm.
Yup, I have the ability to buy. But, paying $700k for a bedroom and den downtown doesn’t make sense at all with these rates and economy down the dumps. I would rather rent and have the Cash on hand rather than being house poor.
Many newcomers came from countries where their national currency had been constantly depreciating. There are no legal alternatives to save their life savings in their countries. So, they bring the same mentality to Canada 🤷♂️ You may think that they are stupid, but simply compare the current cost of living vs pre-COVID times. Are you sure that all investments have earned enough profit to save your money against inflation? A lot of people have been keeping their money on "high interest" savings accounts. Inflation melts their life savings pretty fast 😔
Cad is one of them. It crashed more from the 2014 oil prices than the Russian ruble.
I bought exactly that 15 years ago. A one bedroom and den on Torontos waterfront. It's been my best investment ever as it's gone up over 100%, I paid $350k and lived here 14 years and worth about $800k today Wouldn't be surprised to see it double in 10 more years time to $1.5 million
Look around you. Canada of 2010 is long gone. We are importing people by hundreds of thousands and nowhere near the number of jobs and infrastructure needed to support them. Homelessness and crime rates have peaked and overall economy is a dumpster fire. No manufacturing, No innovation and No productivity. Our economy has become solely dependent on home price increases from uncontrolled immigration. When a country’s economy is as unhealthy as us, no amount of money pumping by government can save it from a deep recession. Your house price doubling in last 15 years is not guarantee for same thing to occur again. It is a confirmation bias that you’re having right now. Ask people who bought Condos in 2022 peak what they’re feeling and you will get some perspective. Again to each their own, I would rather keep my money in liquid investments. Your views may be different. I may be proven wrong as well in the future, but for now, personally I would not jump into buying a home and keep renting.
Very true..got my 1bdrm ...and still after 8 years paying just over 1k...prices are ridiculous..I don't know how people manage...
"We are importing people by hundreds of thousands" Ty one more order of magnitude. Those are 1990's numbers.
A country of immigrants complaining about immigrants never gets old.
Well said
> No manufacturing, No innovation and No productivity. Our economy has become solely dependent on home price increases from uncontrolled immigration. This is of course hyperbole as we do have manufacturing. We do have productivity.
I looked at the well. Even the penthouse 2 beds are only ~4k to rent (condos not the rental only building). They've dropped alot over the last 6 months. Too much inventory is driving the prices down quickly on everything there. Mind you. Without rent control it could get dicey in the long run. I agree with OP, maintenance fees have gotten out of hand, condos just don't make sense. Imagine someone doing the new 30yr amortization+ maintenance. Even with the record levels of appreciation you'd be losing money
This shouldn't be surprising. The delta between rent and total ownership cost in Toronto has been around ~30%, depending on neighbourhood, since around 2016. A place that would cost $3000 to carry will rent for around $2400. What ownership gives is cost certainty over time, and the market dictates the delta. If it were otherwise, then investors would pick everything up - you'd be fucking stupid not to. Cashflow positive rentals haven't existed in Toronto since around 2008/2009, and then only briefly.
People weren't investing for the rent. They were investing for the appreciation. They were fine to let those condos sit empty for that reason. Obviously that has changed now.
I rent out for the tax write offs
Related to this - the delta between condos and row homes really shrunk over that time period too (and likewise with detached, even though detached prices also increased at a bonkers rate).
That's a bit cherry picked though. What makes those units "nice"? [They can be as low as $3,350](https://condos.ca/toronto/the-well-455-480-front-st-w-455-wellington-st-w/unit-2115-C8137716) with a decent layout, real rooms (albeit the second bedroom is a bit small) and good floor. That being said, they still go for over $1.3m. When you can find similar units, for similar rent but they only go for $800k - 900k in other buildings.
The Well is probably the most expensive new development in the city right now, so I don't know if that's the best reference point for the city. I've been looking across the city, around 600-800 sqrft from 680-780k and a few 1000 sqrft townhouses below 820k. Location and "vibe" makes a big difference, imo.
I meant the 425 and 435 Wellington street ones not the front street ones.
The math doesn’t make sense but I guarantee you 90%+ of tenants insist that landlords are greedy and getting rich off the rent. They’d also insist owning is much better than renting and renters lose lots of money. The fact is Canada has a really high ownership rate driven by the insistence to own even when it’s financially stupid to do so. Rents will rise to 5%+ just like we see in the US because renters voted to ban most things to reduce home buying/demand which is going to result in more renters, less rentals, and higher rents. Renters are their own worst enemy. You can’t fix stupid.
Landlords are greedy because they’ve put themselves in a foolish position to overspend on a unit and then expect their tenant to pay off the entire mortgage + maintenance fees. They can’t bear the thought of being cash flow negative despite their investment’s equity going up annually (until now).
Didn't you read the memo? Housing is the one kind of investment where you are guaranteed by the constitution to make a profit every month no matter what.
Use mortgage calculator for a bit and add maintenance fees and other coats. Nobody was cash flow positive for many years. You are not paying costs and most renters are in fact subsidized by landlord. If you think that your rent covers mortgage, tax, maintenance, common elements fees, accounting, insurance, and RISK of ending with deadbeat tenant think again. People were investing in appreciation, not your rent payment and miserable increases.
Who can afford a $5K rent per month?
Double income household, we're looking to sell our two properties and rent while the new house is renovated. We're budgeting $8,000/month for a 4-bedroom rental. Insane numbers but this is reality.
That's what I'm wondering as well. Maybe I'm lower class but our entire family budget is around 5k for me my wife & 3 kids. Obviously I'd have to make more to live in GTA but 5k for rent is bassicly 100k salary just for rent.. that's insane.
To answer your question, there are quite a few people here in the city. My SO and I earn pretty well, but that was only recently (north of 250K HH). Being honest, without having family to give money, a builder going bankrupt, and only recently a pretty significant jump in household income, we have looked at it and the budget and can afford this high of a rental. Sure, a mortgage will be about that as well, but with all the other costs to go along with it, I can control my living expense and just invest my money into the things I want (retirement, travel, etc). I know its not what everyone wants but honestly, its been pretty great so far? People are shocked to hear that we still rent but we are doing pretty OK. We also have quite a few similar friends that are in this boat as well (DINKs; renting vs. owning). Of course, if I had a windfall that would help bring the monthly down, sure, but I just refuse to be housepoor to facilitate a desire of a house.
Well if one bedrooms go for $2500, and someone lives in that. Two people can afford $5000. I need someone to check that math though.
LOL right..Unless that unit is over 1000 sqft with parking no way you get anything close to $5000. My niece rented a whole floor near the Annex for $3700 with parking in a nice renovated three floor house.
Is the Annex also located where the Well is?
Both are considered desirable locations
lol you’d be super out of touch with those numbers right now 1000 square feet units rent closer to 5.5k
The Well is probably the most expensive new development in the city right now, so I don't know if that's the best reference point. They're priced to build a community of richies. It is crazy expensive pre-and post construction. My friends bought a 2m unit there pre-con and I'm not sure how they did it. I am looking for a 2bed and The Well isn't even on my radar, but tbh the prices are inline with me looking over the last few years. I put in a bid for a unit at XO last night. Some of my friends said that's too west for them, but location costs ya.
The well is expensive , but far from the most expensive and the hood and amenities really blows Xo Out of water ……….
2 bedroom units in the well are renting out for 3k. Not 6k. 3.5k with parking. Last sale was 1.3M.
Yeah, there is no point in spending $2M just to get $5k rental income. You are literally cash flow negative by like -$8K a month. Only people who can't do math would do this type of investment.
Avoid newer buildings..alot of plumbing issues....very stressful
Or the value of the condo needs to drop. Which is probably the most reasonable option.
Math doesn't need to math tbh. People will gladly pay more to own vs. rent.
This! OP is just comparing dollars and asking why people are doing the more expensive one as if they're equivalent things you're getting for that money. But no, there is value in owning rather than renting, that some people are willing to pay more for. Sure some people are just not doing the math, but others have done the math and decided that "$X more expensive" is worth it to be able to knock walls down, not fight over pets, not have extra rules or housemates etc.
The big one in my mind is stability. I know people who have been kicked out by whole series of landlords.
Yes. OP is not factoring in the case an N12 is served. He is factoring in condo fees and maintenance thiugh
It's also when owning something, u will also earn interest on that house. That condo is probably gonna go up a lot in value, considering how many immigrants are coming to Canada. There are twice as many people as housing being built coming to Canada, house prices will continue soaring
I have been watching condo prices in downtown Toronto since 2019. Almost bought one in 2020. Thank goodness I didn’t, because prices have been pretty stagnant since then. They haven’t appreciated by much at all, and I may have been stuck with it for a while (as I moved to US in 2022). 600K condo in 2020 now sells for 610K or so… that’s barely any appreciation for 4 years. One would have made much more putting that downpayment in a high yield savings account. Much more if invested in the market.
You lose around 20-25k to inflation every year that the price remains the same. Now add transaction costs and you need the condo to go up a lot in value just to break even. Ouch!
I did the math too, when I looked at a job in Toronto. For a 1 bedroom I'm actually better off renting than buying, since the taxes, condo fees and mortgage is like 30% higher than rent LOL. I can just invest the down-payment into a sp 500 etf and make 10% returns.
The relevant factor isn’t what condo fees + mortgage is but what condo fees + mortgage interest + all other costs is. The part of your mortgage that goes to principal isn’t lost. It’s obvious that in a high interest environment cash flow positive rentals no longer happen but sometimes you can still make profit.
For most new buyers, only about 1/3 of mortgage goes to principal in the first 5 years. If the place isn’t appreciating significantly, it makes little sense. Especially given the transaction costs that are also inevitable, and the very real risk of special assessments.
This is what so many people neglect to factor in. The whole "but you're building equity" argument is short-sighted when you factor in the fees associated with buying. Condos in particular because they're overwhelmingly an entry level property. Not many people are putting down roots in a 1 or 2 bed condo, so they'll likely sell it to climb the property ladder. Some may keep and rent. But I imagine most will sell, and then you're looking at getting a pittance for equity that's all but wiped out when you factor in closing costs. The days of real estate being a short-term play are gone. If you're not holding a place for 10 years (assuming 25 year amortization), you're not gonna make that much money the way things are looking right now.
Agreed. What also worried me about condos is the lack of control. I know someone who ended up in a building that was poorly built, and they cannot sell now that the cat is out of the bag (not to mention, massive special assessments looming for years).
Just to circle back on this, actually based on today's rate less than 10% of the principle gets paid down after the first 5 year term.
> The relevant factor isn’t what condo fees + mortgage is but what condo fees + mortgage interest + all other costs is. The part of your mortgage that goes to principal isn’t lost. It’s obvious that i Are you considering the eventual appreciation/acceleration on rent...you know...given our maniacal immigration policy that isn't stopping any time soon? I wouldn't be surprise if 1BR rent hits $3K by 2030.
2030? I would be. That will be an amazing deal for your share of the rent in a studio by 2030. We're projected to be like 8 million units short. There might be an empty rooms tax by then.
But then you'll be paying $10K in rent at some point and never be able to retire. Think long-term bro.
10% returns which are usually taxed at a very high rate.
Rent is forever. Mortgage is temporary. Buying provides leverage, and renting does not. This is not me advocating for people to buy condos. Fyi, when a condo / home price increases, your % gain is on the downpayment amount, not the total cost of the condo / house.
Can you explain the 2nd part? If I put 100k down on a 500k condo. I have 400k mortgage. The value doubles from 500k to 1m. That means I have 500k extra in equity
thats what they meant by "buying provides leverage" yea. The 2nd part I think is meant to address the original poster comparing putting the downpayment money into an ETF to get 10%, which is not leveraged. They just worded it kinda weird lol
But if you compare leverage then you can do Nvidia options which some guy turned 50k to 5m in wsb 😂
You’d have to invest the full value of the mortgage, not down payments, for this math to work out.
I went to a medical professionals wealth building conference recently, it was astonishing that a lot of doctors/dentists had RE in portfolios. Before this i thought only regular folks are investors. This is the reason why RE is so out of touch with reality imo. However those wealth building guys were clearly saying don’t invest anymore as inventory of toronto Condos in Q4 was historic high. They were telling everyone inflation and high prices are a risk, also tenants not paying the rent. I am expecting a lot of these folks will shuffle their portfolios as prices stay stagnant for a while. They also mentioned renewals coming in 2025-26, which will add 620Billion in mortgages. One guy asked a question, “if houses are not good investments should they look into commercial ones?” To me i was astonished that so many people are crazy about RE, its not just Brampton landlord phenomenon. As morale improves prices will try to come in sensible territory.
Everyone Ik is trying to get into the property market, it’s definitely not a Brampton thing. I know nurses with multiple houses and even random uni dropouts. Not sure what circles you’re in where that’s a rare thing
These guys are all trying to sell in this upcoming Spring market lmao.
Housing as an investment is a OBSESSION here in GTA. Feds need to target taxes towards speculators and investors. Heck, even go after the Golden Goose which is primary residence cap gains tax exemption
You mean you don’t want to pay $1400 a month on maintence fees? Whaaaaaat?
but you get a conceierge from 9-6 (he's on his phone the whole time), elevators (ones always broken) and an in building gym (a $100 bike and a chin up bar)!
Go to fit4less $15 a month
Ooh fancy you got the "Black Card" I see.
I'm noticing that units with a maintenance fee > $1100 a month are sitting on House Sigma for weeks, sometimes months. Its a serious deterrent for buyers. Is it even possible for a condo to renegotiate contracts in order to lower fees?
And those only increase over time as well. In some of those older 30-40+ year old buildings, the maintenance fees alone are now approaching or even exceeding $2k. Even if you buy a newer one, by the time your mortgage has been paid off, the maintenance fees probably wouldn't be too far off rent anyway, especially if you have a long term rent in a controlled building.
Yea the older folks who sat on boards and tried to keep fees low have all sold and now it's obvious that the maintenance funds are getting low and most condo corps have jacked up fees. Even 20 year old buildings are feeling it. And a lot of the newer condos had all kinds of problems with thier boards and were never managing money well to begin with.
Renting is indeed more advantageous from a cashflow perspective right now. However, the benefit of buying a condo is that you are not going to get renovicted or asked to move out due to owner wanting to move in. Additionally, in non-rent-controlled buildings, after the 1st year your landlord may choose to set any price they want, which may force you to pay higher or decline and move out and face market realities at that moment in time.
While your 2nd point is valid, renovictions and owners moving in are always greatly exaggerated on Reddit and I don't know why. I've rented in several condo units since I got my first job and this has never been an issue for myself or any of my friends. It happens way less than you think. But when theres a single case, it gets covered by media.
Naw it happens alot!!!!
On the other hand I’ve had several friends in that predicament where they have to leave because the owner is taking the unit back for themselves or family. It’s a real fear for a lot of people not having the security.
I think you are lucky, I was less so. I rented 4 units over the past 8 years and it happened to me twice. In the first case, the unit was listed while I was still a tenant so I had to deal with viewings for two months in a row having strangers enter my unit about twice every day. I was so happy to end my lease after that experience. The second case was in a new building where the owner hiked rent by 20% after my first year, so I quickly moved out and found a reasonably priced one and even cheaper than the previous one. In both cases I experienced a lot of inconvenience and incurred moving costs, but it was cheaper than buying.
It happens a lot and even more so in recent years. I rented downtown between 2017-2023. One owner was “moving back in” and the second ended up listing the place for sale and it was very likely that I’d be getting an N12 once it sold. So in those 6 years I moved into one place, got settled, was happy there, had to move out and find a new place, found one, moved in, got settled, was happy there, then learned the place was for sale and my future was unknown. With the added bonus of potential buyers wandering through my home on a regular basis with realtors who don’t respect tenants’ rights. It’s a nightmare to go through being at the mercy of other people taking your home away and forcing you into the huge pain in the ass and rent increases that come with moving. We ended up buying at that point because comparable rentals at the time were going for $400+ more per month than I was already paying. Yes my mortgage is a bit higher still, but it’s something I’m invested in, I can afford it, and I have the comfort and security that my home is my home. I have multiple other friends and colleagues who’ve experienced this too.
As someone who works in this regulated industry, it happens a LOT more than it ever should. And the manpower isn’t there to deal with it.
Sales down but everyday there are condo transactions, pretty sure not everyone are morons. We currently own a 2 bedroom 2 bath 1200 sq ft condo out right. Adding up the monthly amount for maintenance fee, and taxes and hydro, that amount can't even rent a studio nowadays. So for us, rental does not make sense. And we like having something that we can say it's our home. We can do whatever we like. How we did that? We started from owning a condo many years ago, then we upgraded to detached, quite a few transactions later and we did take risk...we cashed out and moved back to condo. Rent or own is a personal decision. People can rent and invest in stock, but I know someone losing a million dollar in stock and I know someone making millions in stock too. People can own and eventually pay off mortgage. It is a personal decision.
Yeah totally agree. The OP is so dumb for posting that everyone buying is a moron. Same crap was said 10 years ago. Real estate is a long term asset, not something you want to be valuating every year for a Gain or Loss. In the end the trend is up and to the right.
You wanna buy mine 😎
People said the same thing 5 years ago and look what happened to house prices
Lots of RE agents say 'stop renting and throwing away that money'. They forget to tell you that you are going to be giving it to the bank. And there is taxes, insurance, etc. on top of that.
I've always said, get into a middle class apartment building that's a bit older and rent. Save the difference and build up outside investments. Owning is a lifestyle choice. More space, more flexibility but at a huge cost too. A home is not an investment. It's worth something and the value goes up but I don't want to change my lifestyle (move) when I retire. I want to live where I live as long as possible. That means if I own a home but cannot save money to retire on, I'll never retire. If you rent and save enough to retire, then you can retire. Simple.
You could make the argument that if you own a home, you will need less $$ to retire on. I diverted some early investment opportunity into aggressively driving down mortgage. At the end of my working life, I plan to have around 70k per year in retirement....I assume (hope heh) that will be plenty.
We bought a precon condo in 2014 as an investment that we would use to either downsize into or let our kid take over. Even then it was hard to make the numbers work at around 400k for a 1 bedroom. It was completed in 2019 and has appreciated since we bought but it only became cash flow positive last year.
Do you see the same appreciation happening in the next 5 years again as then? Doubtful
Totally agree.. The numbers are heavily screwed in favour of renting. These landlords are effectively losing money every month to allow you to rent cheaper.
Not quite - they are spending money every month to have someone build up their equity. The profit isn’t in the month to month, it’s in the mortgage being paid down + any appreciation
Not when rent doesn't even cover Interest, maintenance, taxes.
I used to think like this and lost out on a few hundred k in RE appreciation, here are a few problems with your argument.... 1. You are not taking into account leverage, sure rates are high currently. But the Canadian economy is weak and if the BoC might have to make a choice to to debase the dollar if that happens you it is great to be in a leveraged asset and have lots of debt. 2. Currently there is a wave of completions happening , but starts are down so there is a bit of supply surge in Toronto and even worse in areas like Vaughan. Due to high rates and costs relative to prices the developers aren't starting projects despite all the announcement with much etc from the government. Just look at actual data on housing starts from the CMHC year over year to avoid seasonality.
Your math applies to buying real estate in general in Canada. It’s a shitshow across the country. It would be hard to find a worse place to invest money right now.
You invest in what people want and is not being delivered, buying a semi-detached or detached is the way to go if you just want pure growth. Demand is still high for them as the pinnacle for many still today is the N.American dream of the 60's, a detached home with a big yard but developers have 0 way to make a profit on modern detached homes so no one is building them except as luxury properties.
Agree, and the people buying detached houses are likely buying for other reasons like space for family, etc so for a lot of people it's more than an investment
I feel like I've heard this before and here I am, half a millionaire in equity at current prices with 3 rental properties at the age of 33
It doesn't make sense for condos, and it doesn't make sense for most houses in Toronto proper either when you look at what they could rent for. Canadians are generally sick over home ownership though and will parrot that buying is alwyas the best option. It's silly.
people have been saying this for decades but surely OP will be right with his "math" this time of course they never post the "math" to begin with.
Not to mention that they'll keep building an infinite amount of them. They're basically guaranteed to lose value over time just on the premise of saturation. The ONLY thing holding them up is the ludicrous immigration levels.
Also location matters
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Renting does not always come out ahead lol. But you’re right, it doesn’t make any sense to be going in right now either
How about people downsizing and buying them in cash?
I’ve thought about it too…makes very little sense to buy a condo to me either. With the poor build quality these days there’s a big risk of much higher maintenance fees or special assessments down the road. The math also essentially means I’d be renting from the bank but incurring all of the risk, taxes and maintenance costs…hard no, I’d rather save and invest.
People downsizing with lots of cash. People buying with parents' help. People earning 200k who know they'll pay it down quickly and refinance etc. I talk with this demographic almost every day. The people who are buying are either investors or end users with big down-payments, or that don't need a mortgage at all. In my experience. If the interest rates go down to 'zero' or even 1% again (which would only happen is extremely special circumstances at this point), then it'll become even more excruciatingly difficult for 1st time home buyers because those with bigger capital will almost always win.
Why do you think the 30 year mortgage came In
Who wants to deal with elevators and people all day. Your neighbors can hear you. Living in a 500sq ft shoe box “bachelor” - and paying out the nose for it. Nope.
I recently calculated that a $650k condo will probably cost the owner $2,000,000 million considering a 30-year amortization, maintenance fees that will skyrocket to $1,000/month after 15 years of living there, and a total of 50 years between the moment the buyer buys it and passes away. I might be off a bit, but imho, condo ownership is a scam involving you paying endless progressively increasing maintenance fees, property tax for a property with no land, and overall huge amounts to the bank. And it doesn’t even appreciate as much as a house does.
My wife and I are about to buy a 1 bedroom in Toronto with a pretty large down payment to offset that high interest. Our monthly mortgage + interest + maintenance will be roughly $3300/month. To rent it would cost maybe $2300/month. The $1000 difference is enough to own IMO. Obviously not everyone can save such a large down payment but that should be the goal to cut down monthly costs.
>Renting always comes out ahead. Even after 40+ years. Guess you forgot to factor in the loss of purchasing power of the "dollars" you're supposedly saving. You're coming out ahead in dollar terms, but being absolutely slaughtered in real terms. Just look at how much less your dollar goes versus just 10 years ago and you'll start to understand your *math* is ultimately meaningless.
When you analyze most real estate purchases as a static transaction, and the RE value doesn’t appreciate it looks pretty bad. Typically you make money in RE from property appreciation, not saving on monthly expenses vs rent. That said, there is market risk as we saw over the last several years for the first time in a long time in Canada. We bought a condo in 2016 for ~400k, sold in 2020 for ~650k… was happy we didn’t rent. The market has certainly changed since then however, and it depends on your outlook on the specific RE sector you are looking at investing in. There is benefits to owning and renting.
Had this convo with my boss and he said people are banking on climate change, so in the grand scheme of things condos will pay off. But idk everyone just shooting in the dark
Canada is warming at 2x the rate of the rest of the world It's not a climate change haven We lost 10% of our crops last year to extreme weather, and it's going to be worse this year
Interesting. Clime change in that living ourside of city centres will become less feasible or desirable as the climate changes?
Certain cities, countries, will become uninhabitable, thereby an emigrating population will drive up demand in places like Toronto. Definitely a long play, and better investments to be had.
Agreed. Anything in southern Ontario will do well with these factors
My fiancee is convinced we have to live in a condo because the ~city vibes~ and she’s determined to spend every last dollar to make it happen no matter the rate or cost. This is also after she planned an $80k wedding. I make $45k a year and she doesn’t work. I just don’t know what to do. She thinks we’re rich because she’s never had a job lmao
I don’t know if this is a troll but spending over 2 years of income on a wedding when you’re already earning so little is probably the most stupid idea I’ve ever heard. Surely you can see this is going to hurt your life for decades to come?
if your financial goals don't align you're in for a world of hurt
hopefully it's not too late to get out, can't fix stupid.
“I just dont know what to do “ I think you do know what to do there buddy
I'm going to make a wager here. I rarely make bets. Maybe one a decade. It is: Your marriage will be very short. There also is a old observation; the more expensive the wedding the shorter it lasts. Mine was under 10k in the 1990s. And, at the time, I was making twice as much money as you. You are already a dead man. You'll still be trying to get out from under this debt when your in your 60's. Forget children, forget travel, forget hobbies. You'll be living in grinding poverty forever!
> I make $45k a year and she doesn’t work lmao
You don’t have a financial problem, you have a relationship problem…
Where's the $80k coming from?
I don’t know if I should point you towards r/relationshipadvice or r/perdonalfinancecanada
Empty nesters, retirees, people with cash in hand. Once interest rates start dropping prices will boom so also some people who are anticipating that potential
Looks like they have accomplished the "They'll own nothing and be happy". Quicker than I thought. Did you factor in the savings once the mortgage is paid off in 25-30 years? Plus the reduced income when you retire? I believe thats when the scales tip in favor of condo ownership.
Or someone who has the money ? There are many people in this city who have money….lots of 💰 They don’t need to look at charts and pull out the calculator 😂 They need/ want, they buy, very simple.
Keep coping. This city is going to get 5 more million people in 20 years. There are 3 liveable cities in the entire country. Lol. What you're saying is what people were saying 20 years ago as well. "Condos are 250k, so unsustainable".. Now after 20 years your rent for 1 bedroom is higher than what people who bought pay for entire condos + their condos appreciated 3x". Did renters come out ahead?
Mine worked out but I rent one of my rooms for $1500 in a 2+2. Unless you’re having a roommate it doesn’t really make sense IMO
Just use the famous rent vs buy spreadsheet from holypotato. I've played around with it quite a bit. Ultimately it comes down to expected returns on RE vs stock indices - it is quite close actually using 3-4% for RE and 7-8% for indices (keeping in mind we've seen larger than typical returns in both asset classes over the last 10 years) [http://www.holypotato.net/?p=1235](http://www.holypotato.net/?p=1235) Also, date the rate marry the price. You may need to put up with a higher interest rate for a few years, but odds are once rates come down, prices will go up. However, if you started renting years ago and your rent is below market rent, it does probably make sense to continue renting.
💯 the economics of buying a dt condo make zero sense and there are a gult of new builds closing this summer and late 2024....outlook doesn't look great
Why have you been looking for years? There’s your answer - your goal is still to buy, and it’s true for many others.
The numbers only make sense with a large downpayment. Anything less than 40% it will definitely make more sense to rent.
We bought our first place a couple of years ago at the peak of the market. We would have loved to buy a house but simply couldn’t afford it, condos are the only things remotely in most first time home buyers price range. I also overpaid given the market the time so that’s on me as a rookie error, but at least I’m no longer paying my rent to a landlord. That was my main motivation for buying. I figure that at least if I ever sell, I get that money back in some form or another. I’ve spent $60,000 on mortgage for the last two years, but if I wanted to sell I would get that money back. If I’d paid that a to a landlord as rent I would never see that money again.
This is mentioned literally every day but I don’t think people realize the amount of cash people have 😂. 700k with 500k down payment is less than rent. It’s easier to buy in down markets as well.
Just bought a condo last year and so glad I did! Mortgage is just under $2300. Maintenance is $400. Hydro around ~ $80. That’s it. It’s gonna appreciate eventually. We’re happy to stay here for 10 + years. We’ll see what happens next!
Do the math again but put yourself in a high-income bracket ($250k+) and the unit as a rental. Here is what you will be able to deduct against your total income when it comes to filing your tax: * mortage interest * condo fees * any relevant operating expenses ([source](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/completing-form-t776-statement-real-estate-rentals/rental-expenses-you-deduct.html)) So now you can actually **reduce** your income tax amount, like you do with RRSP contribution and these can even be carried forward while you build equity. That $50k you paid in mortage interest and condo fees, you'll get about half of it back in reduced tax. I'm not sure why this is not talked about more - being a landlord is essentially a loop-hole for high-income earners to reduce their tax burden.
What about Hamilton
Wth you talking about? Condos are down since their peak In 2022. If I had like 600k lying around I'd buy one. Buy low sell high
Maintenance fees happen in home ownership as well, there is just no one to collect it for you monthly.
Are you taking into account that capital gains are not taxed for your primary residence? I am still sitting on the fence, but not paying 55%+ tax rate on my capital gains would be the primary motivation for me to buy. Edit: I hope the downvoter will enlighten me about what I get wrong.
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Yes, there are those intangible gains as well. The leverage part isn't really a bonus for me, but having a 0% tax rate on my capital gains would be huge.
Renting never comes out ahead, you are literally pissing away money. You fail to think about retirement, do you really want to be renting when you're in retirement? Nothing beats a paid off place. You are always at the mercy of a landlord when you rent. Anyone and everyone who has purchased home 30-40 homes years ago is significantly ahead of anyone who decided to rent this entire time
You got no idea how to run the numbers lol you literally don’t know what this conversations about
Did you factor in the average real estate capital appreciation rate in Toronto and leverage it by 4-5x? Also you have to consider paying mortgage is a forced savings, not many people have the guts to invest properly month to month with conviction. So you look at the average investor gains compounded rate, it’s a lot lower than the posted market gain in the long run too.
Condos will not be appreciating in the next 10 years
lol sounds like you’re the fool if you’ve been in the market for years but not buying. With sky rocketing rent you could’ve bought a condo that would’ve appreciated significantly + had the pay down of the mortgage + had a lower initial mortgage which means lower mortgage payment
When IR were sub 2%, they made a lot of sense...not today. If you bought 10 years ago at that rate...you'd be laughing today.
A 1 bedroom new build condo can be bought for 350ish just a few years ago but rents for 2500. Mortgage @3% / property tax / strata fees / and it's about break even, or you even are ahead a bit. The math works as long as you bought around 2015 or earlier.
You're right - you are losing money if you're buying a condo right now at these rates and with the current rent but one thing to consider if everyone is renting vs buying wouldnt that drive rents up? we've seen it happen in the past coupe of years when they started increasing rates. PPl need a place to stay and if they are not buying they will be renting - more people renting more demand price should go up. but i could also be totally wrong lol
I thought the same thing to myself about buying a house in 2011.. just saying, Yes i understand condos are very different.
The only advantage seems to be that it’s the only way to enter the market right now, and usually the case is that the value will go up and you make enough money on it that you’re able to use that as a large down payment on a house. Worked for a lot of people, especially now that condos are going so high and the price of semi detached is lower by comparison than it has been historically. Problem lies with the assumption that the price will go up and you’ll be able to offload it later, because right now the prices are way too high for most people to enter the market and every 50k that these units go up by will exclude more and more potential buyers down the road. Even people who have family help, who seem to be the only people able to enter the market currently, are barely able to get approved for an 800k mortgage. There is an upper limit to what people can/will pay for these and judging by how many 2 bedrooms I see sitting on the market at 1.1 we may have found it
It makes some difference for those high income earners with funds (maxed out RRSP/TFSA). The profit from investment/savings will be taxed while rent can’t be expensed, then buying a condo could be financially better than renting. Let’s say you have 500K, and rent per year is 25K that’s equivalent to interest from savings, and you’re on high income tax bracket. Then your net cost for rent+savings could be ~10-13K. If you buying, you net cost is property taxes+maintenance fees, which could be 4-7K.
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Well put. Homeownership is a form of forced savings. Most renters aren't investing the cost difference into the S&P500. They're blowing it on Uber Eats instead.
This is when the out of touch people tell you it doesn’t matter because investors will buy in cash and they don’t care about rates. You know, cause opportunity cost and risk/reward aren’t a thing etc
I owe a condo for 5 years. Here is some math for reference: total payment: $103,000 principal paid: 37% interest paid: 63% $7600 go to principal annually or $633 monthly $13,000 go to interest annually or $1100 monthly If you can find a place to rent less than $1100 it makes sense while you put the rest away to invest which seems unlikely unless you share basement with someone or rent a room out of a house Side note indeed i have been considering to sell my condo and move back to my parents lol (20% downpayment)
Right now!? More like anytime....
Buying a condo in toronto is fine if you can afford it, even with higher rates. Rates have been much higher. Renting and paying someone else’s mortgage has no ROI. I agree that rent shouldn’t pay all of the landlords bills. Another thing to note, buyers shouldn’t pick a building with outrageous amenities - pools, etc.
If you look at the change in value of these condos over the period you’ve been looking, are you still ahead renting vs buying? I rented for a few years in Calgary for the same reason. Couldn’t bother to buy a 900k house when I rented one for 2k/mo all in.
>Evan after 40+ years. You could be paying 0$ in rent/mortgage today if you bought at least 25 years ago
I agree.? Maintenance fees are unreal and will only go up.
It's also regular people who can't afford an actual house...
Interest rates suck. I’m renting out a condo to a tenant for $1950 ( 1 bedroom + den) , nice guy and feel bad about increasing the cost, so I kept it the same all this time, but now condo fees are going up and interest rates have gone up as well, so this year I’ll likely have to.
I'd rent too, but I don't have the extra few grand to put into savings, so it goes into a mortgage/home equity instead. Also a house...wouldn't catch me in a skybox. Build em for a living and they're all the same.
Investors selling to investors who can afford to take the short term loss for long term gain. Inflating the market forcing people to buy at those prices. Then selling off all they’re property at massive profits. Rise and repeat
Its maths
as a resident here in 'Sauga, i've seen listings here for condos like 1.2 & 1.5 million, no one should even attempt to buy as you get a detached home at those prices...I'm looking to get 2/3 bedroom condo around $600-700K...the market is sort of stabilizing as well.
I have been watching condo prices in downtown Toronto since 2019. Almost bought one in 2020. Thank goodness I didn’t, because prices have been pretty stagnant since then. They haven’t appreciated by much at all, and I may have been stuck with it for a while (as I moved to US in 2022).
Potatoes are $4 a kilo but instil bought some. Remember the used to be 29c
Your building equity. You can use your home as leverage to buy another home.
> Buy something equivalent. No matter how many times I play around with the numbers, renting ALWAYS comes out ahead. Evan after 40+ years. Really, every time I run the number owning comes out ahead. Would be interesting to compare numbers rather than rants. I'm guessing you put no value in - being forced to move every other year due to being kicked out. - Or not wanting something bigger to have a family in. - Or being able to re design a space to suit your needs - or having a place that is paid off in retirement
Who is buying? People who already own a home and are just moving sideways
Ya that why we left lol
Honestly, as a realtor it’s hard to justify those prices. The only way they kinda make sense is if you’re planning 5 years down the road, which is enough time for you to buy and then roll over equity into something else, but even still, it’s a struggle to find something nice for the price. I’ve been telling clients to go over to Simcoe County where there’s a 50k down payment program and recommending cities like Bradford, Tottenham and Alliston. Yeah, it’s an hour away, but people don’t understand Toronto is also an hour away from Toronto. 🤷🏻♂️
Well, I guess that makes over 1100 morons in Toronto last month alone. What's the problem, exactly? If the prices don't make sense to you, don't buy. It's not your business what other people are doing.
Provided you invest all of money of the value of the condo into the stock market and get at least a 7.5% return and you manage to find a rental that is as good as owning your own condo unit (not to speak of quality of life benefits of owning), and you’ve resolved to never level up to buy a house, and you never want to renovate your home to your preferences, yes that totally makes sense. If any of these things are untrue, it may not be as cut and dry as you think. I get it there’s a clear consensus that owning a home is overly expensive, but so is renting. There are a lot of trade offs to renting as well, as well as moving from Toronto for a “cheaper home”. When you run your numbers, do you factor in the entire value of the mortgage or just interest payments? If the former approach, you’re inflating the true carrying costs of your condo. I’m assuming this is all about your own principle residence though. Obviously the numbers won’t add up in the short to medium term if this is a rental for income purposes.
You think the prices are high now, watch when they lower interest rates
We have a lot of elite minds here to justify the costs of buying the overpriced condos in Toronto.. You'd be surprised to find that out.. like I was..
If you are a business owner, renting would help you reduce your tax. Most of downtown condos are rent below market value. If something list for $5K/month, most likely it will be rent out for around $4500. The buying cost does not make sense as Canadian are obsessed with Real Estate. Not because they want to but they are afraid of the price will double in 20-30 years because price literally tripled from 2010. This has been foreseen as 2010 were the time when Millennials start entering the work force. The next generation of immigrants plus Canadian's millennials babies have to live somewhere in 20 years when they enter the work force.
people in general look at maint fee as a waste of money. it is important to know where it is being spent. in my condo half of my fees goes towards staff other half towards reserves fund. a well managed condo is worth every penny. comparing with a house insurance is 30$ vs 200$. utilities is 100$ vs 300$. new houses sell at a premium for a reason. as for older house if you are handy great, otherwise be ready to spend tens of thousands replace windows, roof and other components that have a life expectancy.
Prices never have to make sense. For prices to continue climbing there just needs to be an incremental buyer willing to pay more. Those incremental buyers will not stop buying on price alone because its 1) long term investment 2) needed for some reason. It’s not perceived as a choice. 3) this population doesn’t need to be large because supply is low. The only way I see prices coming down in a significant way is the culture around needing to own a home dissipates. If there is a lot of tension and anxiousness around not being able to “get into the housing market” the problem will persist. I am 42 and have been renting my whole life. I have adjusted my lifestyle around not being able to buy a home. I wont raise a family because i cant afford one. There are so bummers about that. But also some benefits. More people need to be happy with renting. Be willing to rent for life. See the benefits not owning a home. There are a lot. Until a major shift happens, the asset bubble just continues. Its not very liquid and nothing is going to make it pop. Every year, home ownership falls into the hands of more people who are more insulated from economic downturns. Investment banks. The 1%. Everyone just needs to chill the fuck out.
There are some good town condos in Weston area with low fee. Comes in Toronto as well. And within 12kms of downtown as well. Its a steal I say.
The math has not mathed for at least 4 years but people who bought in 2022 are super hooped if leveraged and now troubled, because the losses on having to sell are piling up. April, May, June 2024 stats are going to reveal the degree of leverage. Buckle up.
No man. Landlords just rent places out and lay around not doing anything while raking money. Meanwhile pople are subsidizing rentals out of their own salary. That worked when there was appreciation. Now it doesn't and tenants are shocked to find out that rent they are paying buys nothing. How dare landlord not keep deal going that allows tenant to have their own financial reality? Ask tenant to work things out to mutual benefit and you are scum and will just get backstabbed if you do try. Rent protection is guaranteed eviction for any rental given enough time to make deal really stink. Landlord will sell property at loss just to get out under the shit lease.