Real Estate

Toronto rent skyrocket after new regulations reduce supply and increased demand

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  • Jan 29th, 2018 9:34 pm
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Rising interest rate = more valuable CAD for foreign investors. When other countries are actively devaluing their currencies (JPY, RMB, EURO) etc where do you think the money will flow?
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I agree with the 3 points you stated. Historically, during renewal the property value is already up like 30-50% from original appraisal. So now since the owner has so much equity in the property, lender will have no problem renewing the mortgage.


Jungle wrote:
Jul 10th, 2017 4:41 pm
Yes a lot of rentals been seen unloaded as landlords don't want to deal with fair housing plan, and made a fortune off housing lottery.

The problem (and a loop hole IMO) with renewal is that many amateur landlords have kinda side stepped regulations that were supposed to make the financing of rentals safe. For example to buy rental property, you must have 20% down as it's perceived risker than straight ownership, due to tenant and vacancy risk. Speculators have bypassed this by:

1. Buying for personal use using 5% down, then upon closing not actually occupying unit and just renting it out to tenant.
2. Using HELOC to finance 100%, avoiding 20% down or CMHC fees, then just renting it out
3. Debt service ratios and pre-approval not being assed on 50% rental income-because it's not being disclosed its a rental

In these cases banks will not know it's a rental. Problem is, it's being used by one and the framework regulations for such are not being following. This creates risk on the mortgages and lenders. I believe this risk is much bigger and systematic to the financial system should a correction occur.

So upon renewal it will be interesting if we see this being looked at along with proper measures and debt service ratios based on actual rental income, not investor failing to disclose use of property.
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Sep 24, 2006
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I always thought that a lower CDN lower was attractive to foreign investors?
traderjay wrote:
Jul 11th, 2017 10:31 am
Rising interest rate = more valuable CAD for foreign investors. When other countries are actively devaluing their currencies (JPY, RMB, EURO) etc where do you think the money will flow?
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hank755 wrote:
Jul 11th, 2017 11:08 am
I always thought that a lower CDN lower was attractive to foreign investors?
Its all relative, if your own country's central bank is actively devaluing currency, the investors or savers will try to find other appreciating currencies.
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traderjay wrote:
Jul 11th, 2017 11:37 am
Its all relative, if your own country's central bank is actively devaluing currency, the investors or savers will try to find other appreciating currencies.
And they will prefer CAD over USD because?
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NuclearBlast wrote:
Jul 11th, 2017 11:42 am
And they will prefer CAD over USD because?
Diversification and when it comes to physical asset - geography and local environment.
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traderjay wrote:
Jul 11th, 2017 11:51 am
Diversification and when it comes to physical asset - geography and local environment.
What physical asset, I thought you were talking about currency investment. If you are talking about real estate, then rising CAD means the same house is now more expensive in the respective foreign currency so I don't see how this is more attractive.
Are you saying that in the opposite case (declining CAD), Canadian real estate is less attractive to foreign investors even though it's cheaper for them to buy?
Or are you saying that both rising CAD and declining CAD are attractive for foreign real estate investors (even though those 2 scenarios are completely opposite to each other)?
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romeocanada wrote:
Jul 11th, 2017 10:55 am
I agree with the 3 points you stated. Historically, during renewal the property value is already up like 30-50% from original appraisal. So now since the owner has so much equity in the property, lender will have no problem renewing the mortgage.
I think those properties that are getting foreclosed are owned by buyers who joined the party late. Why foreclose when they can sell a little lower and still make money? Even if one were highly leveraged, if he was early to the party, he wouldn't want any of his properties foreclosed.
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Jungle wrote:
Jul 10th, 2017 2:23 pm
Rents had gone up way before the fair housing plan came into effect. The GOV only did rent control, to try and DO something.
Speculating, flipping, foreign buyers, empty homes, abuse of leverage to blame for increasing rents buyers became amateur landlords
Lack of investment in new apartment grade complexes did help either
Of course it had been going up in awhile but not the spike around the announcement. I have been following a building I used to rent around yonge n eglinton and it spiked up beyond anything seen in 7 yrs before that. I know if I was a landlord, if I knew I was limited in flexibility, and you see prices around spiking, of course I'll spike it more than usual. And there is less velocity of movement as renters now know they're protected and therefore aren't moving around as much so less supply. It's the new renters or those trying to move around that will get 'screwed'.

That's how it was back in the day if anybody remembers. People would purposefully stay in their units because they knew that moving would incur a higher new rental rate. Today's situation will end up similar.
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NuclearBlast wrote:
Jul 11th, 2017 1:20 pm
What physical asset, I thought you were talking about currency investment. If you are talking about real estate, then rising CAD means the same house is now more expensive in the respective foreign currency so I don't see how this is more attractive.
Are you saying that in the opposite case (declining CAD), Canadian real estate is less attractive to foreign investors even though it's cheaper for them to buy?
Or are you saying that both rising CAD and declining CAD are attractive for foreign real estate investors (even though those 2 scenarios are completely opposite to each other)?
A high net worth family/investors usually diversify their holdings into multiple asset classes, RE is just one of them either for themselves or their children and family. FX fluctuations is just one of their consideration but not the deal breaker. If their home country currency is depreciating, the sensible next step would be to convert their non-liquid assets into liquid FX and invest it elsewhere.
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rjg4235 wrote:
Jul 7th, 2017 12:22 pm
The really ironic thing is I have never increased rent on any of my tenants. They usually don't stay more than a couple years and I know I can get market rent later or increase it if they stay too long. Now with the limit in place I feel obligated to do it every year at the max incase they stay many years and it goes way below market value. For the first time ever I increased rates to current tenants and it's only because of rent control.
My thoughts exactly! I will be increasing rents every year now, whereas I used to only increase in between tenants. Wynn is so dumb thinking that she's protecting tenants. This is a terrible thing for tenants!
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Surprised this hasn't been mentioned yet, but when so many brand new units are brought to market, of course rents are going to skew higher simply because the units are shiny and brand new. The condo units being delivered today are not 50-year-old units with everything worn out, they're pretty high end buildings. This alone will change the distribution of rents.

From what I've seen in the GTA, tenants have very good bargaining power with their landlords these days, and rent increases are few and far between. So don't get too caught up on some aggregated numbers which do not take into account the change in what exactly the 'average' rental unit is.
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traderjay wrote:
Jul 11th, 2017 10:31 am
Rising interest rate = more valuable CAD for foreign investors. When other countries are actively devaluing their currencies (JPY, RMB, EURO) etc where do you think the money will flow?
Lol. First it was, "A low dollar is good because foreign money will think our houses are so cheap compared to their currency". Now it's the opposite with the same end result (Our dollar is higher which make houses even more attractive)? Lol always the same with you people.
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Ohmare_Q wrote:
Jul 12th, 2017 7:07 pm
Lol. First it was, "A low dollar is good because foreign money will think our houses are so cheap compared to their currency". Now it's the opposite with the same end result (Our dollar is higher which make houses even more attractive)? Lol always the same with you people.
lol he has no idea. canada is only raising rates because of US.

people will be getting USD not CAD.
Delete account because there are way too many idiots on rfd
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mathiewannabe wrote:
Jul 12th, 2017 7:19 pm
lol he has no idea. canada is only raising rates because of US.

people will be getting USD not CAD.
What?

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