Toronto Condos: Should you rent or buy? • Hacker News Board

Re: Toronto Condos: Should you rent or buy?

#51

Post by jarek » Wed, Jun 03, 2015, 7:27 PM UTC

seivan wrote: post #48

jarek wrote: post #7

Earlier quoted context omitted.

> (Depending on area), current rents are in about the same ballpark as payments on a new mortgate, Not in Toronto, which is like the whole point > 1) mortgage payments stay approximately the same over the life of the mortgage, whereas rents just go up and up Condo fees go up and up

Out of curiosity aren't condo fees based on the debt the condo coop has? In which it fluctuates based on current interests both on the loan as well as the condo fund?

Technically? Probably. In practice they depend a lot more based on the maintenance work that needs doing, and either increase as the building ages or the building standard is lowered. Most condo coops I'm aware of don't have an endowment fund.

Re: Toronto Condos: Should you rent or buy?

#52

Post by jarek » Wed, Jun 03, 2015, 7:29 PM UTC

sanswork wrote: post #30

jarek wrote: post #19

Earlier quoted context omitted.

The early-90s harbourfront towers by Bay and Queens Quay rent studios/1bds for $1500-1600 incl utilities or buy for $400-500k + maint fees $500-700/month + tax + util

1+1 in the area at the moment will go for around $1800-1900/month. Based on two places I've rented in the Pinnacle centre over the past 3 years(and looking for places in that complex and ones near by).

In the battle of anecdotes, my entry is a studio in the upper third of 99 Harbour Square, 120 degree lake view to the east, rented in July 2014 for $1500 including all fees and utilities. Has it gone up a lot over the past year?

Re: Toronto Condos: Should you rent or buy?

#53

Post by jarek » Wed, Jun 03, 2015, 7:34 PM UTC

kazinator wrote: post #45

hhw wrote: post #16

Earlier quoted context omitted.

Interest + Condo Fees + Home Repairs + Property Taxes + Property Transfer Taxes + Realtor Commissions are throwing cash away every bit as much as Rent. Mortgage payments are likely to go up the same way that rent does, or even more so. Interest reflects inflationary costs, so the same upwards pressures on rents would result in higher interest rates. Except with interest rates at record lows, just a small increase in…

Someone pays all these things if you rent, and you're foolish if you believe that it doesn't pass down to you.

Well yes, the fees are priced in. But in practice it is far from unheard for apartments to be rented for less than cost of mortgage if you were to buy today plus all fees. This can be influenced by the owner having bought a fair bit cheaper, or the owner counting on capital gains for the main income from the property, or the owner simply being unable to find a tenant that would pay more.

Ultimately the market decides the rent and landlords' cost is only one of the factors in the market price.

In Toronto and Vancouver condo markets it has been cheaper month-by-month to rent than to buy for a fair while. Which one will end up better 30 years down the line depends on a lot of future factors and is far from clear at the moment.

Incidentally, in 2011 I was offered lowered rent on my Toronto studio when I gave notice I would move out, in an attempt to get me to stay. I wanted to move out of the city so it was rational for me to refuse :D

(Sorry to see your posts downvoted, I upvoted you)

Re: Toronto Condos: Should you rent or buy?

#54

Post by sanswork » Wed, Jun 03, 2015, 7:38 PM UTC

jarek wrote: post #52

sanswork wrote: post #30

Earlier quoted context omitted.

1+1 in the area at the moment will go for around $1800-1900/month. Based on two places I've rented in the Pinnacle centre over the past 3 years(and looking for places in that complex and ones near by).

In the battle of anecdotes, my entry is a studio in the upper third of 99 Harbour Square, 120 degree lake view to the east, rented in July 2014 for $1500 including all fees and utilities. Has it gone up a lot over the past year?

I moved out of my last Toronto place a few months after that so I'm not 100% but I would say no given the rate of increases in the years before that I lived there. I can say that for a few hundred more a month you could almost certainly have a bedroom and a den pretty much across the street. Pinnacle has some of the better amenities in the area too.

Re: Toronto Condos: Should you rent or buy?

#55

Post by jarek » Wed, Jun 03, 2015, 7:40 PM UTC

g8oz wrote: post #35

The gold standard for this kind of comparison is the New York Times Rent vs Buy calculator. Note how relatively small changes in any one of many factors can result in very different outcomes. http://www.nytimes.com/interactive/2014/upshot/buy-rent-calc...

Note that it needs a few adjustments for Canadian market, the biggest ones being mortgage rates are usually not locked in longer than five years in Canada and mortgage interest is not tax-deductible

Re: Toronto Condos: Should you rent or buy?

#56

Post by jarek » Wed, Jun 03, 2015, 7:41 PM UTC

nasalgoat wrote: post #50

mfringel wrote: post #33

Earlier quoted context omitted.

That's true, but only in the most naïve sense. A house starts falling apart as soon as it's put together... and it keeps falling it apart, and you have to keep putting it back together. The distribution of expenses is lumpier with a house than with a condo, but it's certanly an ongoing cash outflow.

Toronto is mostly made up of 100-year-old brick houses, so the maintenance is mostly soft stuff like painting, gardening, etc. unless you do major renovations. My last house I did, essentially, zero maintenance over a 10-year span except for a drain replacement ($2K). Every other expense was month to month expenses like heating and electrical. When I finally decided to sell, I replaced the crappy carpet, painted the…

> Toronto is mostly made up of 100-year-old brick houses

That's true for inner Toronto but not for the suburbs as manishsharan suggested. Newer developer-built-subdivision wood-frame rules out there.

Re: Toronto Condos: Should you rent or buy?

#57

Post by sanswork » Wed, Jun 03, 2015, 7:42 PM UTC

manishsharan wrote: post #10

Neither. I had to do it all over again, I would buy a detached house in the middle of boondocks ( like Mississauga, Brampton , Vaughn ,Markham , Richmond hill etc. ) . The supply of detached houses is limited whereas condos in Toronto are growing like weed. The detached houses have grown more in value and they are not encumbered with maintenance fees.

Most of those places are no longer really the boondocks(4 of the 5 are a 30 minute drive to the core) and are priced accordingly. You're going to have to go out to north of Whitby or north of Stouffville these days if you want a cheaper place.

Re: Toronto Condos: Should you rent or buy?

#58

Post by nasalgoat » Wed, Jun 03, 2015, 7:46 PM UTC

jarek wrote: post #56

nasalgoat wrote: post #50

Earlier quoted context omitted.

Toronto is mostly made up of 100-year-old brick houses, so the maintenance is mostly soft stuff like painting, gardening, etc. unless you do major renovations. My last house I did, essentially, zero maintenance over a 10-year span except for a drain replacement ($2K). Every other expense was month to month expenses like heating and electrical. When I finally decided to sell, I replaced the crappy carpet, painted the…

> Toronto is mostly made up of 100-year-old brick houses That's true for inner Toronto but not for the suburbs as manishsharan suggested. Newer developer-built-subdivision wood-frame rules out there.

Yeah, fair point. Mississauga mostly dates to the mid-70s and has some truly terrible construction.

Re: Toronto Condos: Should you rent or buy?

#59

Post by BrainInAJar » Wed, Jun 03, 2015, 9:02 PM UTC

kazinator wrote: post #47

BrainInAJar wrote: post #14

Earlier quoted context omitted.

But that's the myth. The delta between the total costs of renting and the total cost of ownership is wide enough that you can invest it in something that has much better returns than a condo. Even owning 50% of your mortgage payment gets thrown away at interest, plus your maintenance fees, taxes and the whole bit are also lost to the sands of time.

Rental buildings also pay taxes and maintenance, and have mortgages with interest. These costs are passed down to the renters. All the blood-sucking leeches are there (the government, banks, and the building itself) plus one more blood-sucking leech: the landlord.

That's fine, someone's getting the money, but the total cost of living there still ends up much lower than the total cost of living in an owned condo.

Re: Toronto Condos: Should you rent or buy?

#60

Post by kazinator » Wed, Jun 03, 2015, 10:42 PM UTC

BrainInAJar wrote: post #59

kazinator wrote: post #47

Earlier quoted context omitted.

Rental buildings also pay taxes and maintenance, and have mortgages with interest. These costs are passed down to the renters. All the blood-sucking leeches are there (the government, banks, and the building itself) plus one more blood-sucking leech: the landlord.

That's fine, someone's getting the money, but the total cost of living there still ends up much lower than the total cost of living in an owned condo.

If that is so, it means that whoever owns it is subsidizing you to live there. That owner lives somewhere else (paying a cost of living there), and also pays to make up the difference between your cost of living in the rental unit and the true cost. If so, that's a temporary situation. The rent will creep up to eventually close the gap.