Investor greed and inflated prices were named by CREW readers as the top reasons that many of Canada’s urban centres often have higher rents than mortgage payments. The poll found that 38 per cent of respondents blamed landlord excesses for this phenomenon, while 25 per cent of respondents said that exorbitant multi-family prices were to blame, which led to renters carrying the costs for the landlord. Nick Bachusky, a mortgage agent in Ottawa, says: “Many landlords of mine look to at least break even on mortgage payments, property taxes, utilities and maintenance – and then they look at the other market rents in the area and will adjust accordingly. If it is not favourable for them they will usually keep looking until it is favourable.” In downtown Vancouver, for instance, investors can get away with asking for a very high rent because the location is so favourable. Kelly Hudson, a mortgage professional at Dominion Lending Centres, describes a familiar scenario. Her friends pay $2,300 a month to rent a two-bedroom apartment in Vancouver’s popular neighbourhood of Kitsilano. “They will never be able to afford [to buy the property] unless they win the lottery,” she says. “But they are willing to pay a high rent for the location and, due to high demand for some locations, the landlords can command a high rent.” Another 23 per cent of respondents to the CREW poll said that the scarcity of rental units was the top reason rents are often higher than mortgage payments in Canada’s urban centres. “This, in part, is a very simple equation that has been around forever,” says Phil Butler, a mortgage broker at Centum. “Supply and demand; supply is short and demand is great, so people will pay higher rental rates. “To me, it is very much a no-brainer that people should look into affordable housing geared to their income rather than just go on paying someone else’s mortgage payment for them through rent. “Of course, some people dont want to own a home or be responsible for the upkeep of a home, so apartment living is a very popular alternative. This is also probably the reason for the popularity of condominiums as well.”
Posted on: Mon, 17 Nov 2014 20:58:19 +0000