Rental Rates?

[ckangarloo]

Thought I would throw this out there. Food for thought.

I live in Kelowna and my wife and I recently decided to look for a new place to rent.
About a month ago when we talked to our property manager about an unrelated matter, he said he would lower our rent by $150/month to $1250 (currently at $1400). I never complained or asked for a decrease in rent, he simply just said he would lower our rent. Bonus! Even with the decrease, we wanted a different location so off we went to craigslist, kijiji and castanet (Kelowna news website).

Compared to just eight months ago when there was absolutely nothing to choose from, we found ourselves faced with the opposite problem: too much choice.
That said, we noticed another occurrence: a huge number of new "landlords" with completely unrealistic price points and units totally unprepared for renters. We saw many brand new town-homes and homes where the owners told us their intention was to sell but they couldn't find a realtor that was willing to list it at the price they were looking for. So instead they thought they might try to rent out 800sqft, 2 bedroom, on the main level of the house beside a bunch of crack addicts for $1600. No thanks. Good luck. Honestly, some of the places asking around $1300 have made it hard for me to sleep at night. How can someone expect to pay that much and live in such filth??
Everynow and again we would come upon the one landlord that has been around the block and understands the situation upon them. This ain't 2007 anymore. This isn't a seller's market, it isn't even a buyer's market.

In Kelowna its a renter's market.

What is the situation back in my old home town of Calgary? I assume similar but not to the extend of Ktown just yet.

[BigMass]

the place i'm going to rent lowered tenants rents before their leases expired so they wouldnt be tempted to go somewhere else. Many places are also offering parking and SD incentives. So it's turning into a renters market here too.

[turbotrip]

I had to renew leases with 3 tenants in the last few months and decided to increase rent by $50-$100. They all complained and claimed others are dropping prices but every one of them also signed back on for another 1 year lease so I think the rental market is still doing okay here. On average I see prices around just over $1/sq foot for SFH's in newer areas.

[Boat]

Just curious why you and your wife are renting. Is it not feasible to take a mortgage? Being in a renters market helps you in the short run, in the long run you are just sinking money on a month to month basis.

[eblend]

Originally posted by Boat
Just curious why you and your wife are renting. Is it not feasible to take a mortgage? Being in a renters market helps you in the short run, in the long run you are just sinking money on a month to month basis.


beats sinking money into interest payments

[95civicgsr]

ya except once your done with your "interest" payments you own the place you live.

[ckangarloo]

Originally posted by Boat
Just curious why you and your wife are renting. Is it not feasible to take a mortgage? Being in a renters market helps you in the short run, in the long run you are just sinking money on a month to month basis.

So far, the average house in Kelowna is dropping about $370/day (!!!!!!) in equity (based on OMREB monthly stats and peak pricing of April 08). This alone is reason enough not to buy. Right now it does not make sense (for us) to buy. We only have about 15% for a downpayment right now and we don't want to waste our money on interest payments when we are loosing equity. I have crunched the numbers hundreds of times, each time, renting makes more sense.
I owned a condo in Calgary for 1.5 years, sold in April 08 and in that time I paid off less than $1k in principle. The bank was my landlord. That said, I made a lot in market appreciation. I'm very lucky indeed.

Edit: sorry, prices are dropping $370/day not $370/month. Freudian slip.

[cmyden]

Just curious why you and your wife are renting. Is it not feasible to take a mortgage? Being in a renters market helps you in the short run, in the long run you are just sinking money on a month to month basis.

A lot of people make the mistake of thinking that, financially, it is always smarter to be an owner than a renter.

If you had bought an average home in Calgary in July '07 (the peak) for the average price ($506,000), you would now be the proud owner of a piece of property worth $410,000 (if you could find a buyer).

So, after 19 months, your property has dropped in value by approximately $5052 per month. Throw in property tax, house insurance, general maintenance, and you're looking at about $5500/month minimum.

"But", you say, "house prices always go up! They will go up again!"

Yes, historically, over time, housing prices do go up, but it could be well over a generation before you see a return on that July '07 investment.

The renter that waited 4 years, and bought that same property in July of 2011 for $280,000 will be much better off.

[Aleks]

Originally posted by cmyden


A lot of people make the mistake of thinking that, financially, it is always smarter to be an owner than a renter.

If you had bought an average home in Calgary in July '07 (the peak) for the average price ($506,000), you would now be the proud owner of a piece of property worth $410,000 (if you could find a buyer).

So, after 19 months, your property has dropped in value by approximately $5052 per month. Throw in property tax, house insurance, general maintenance, and you're looking at about $5500/month minimum.

"But", you say, "house prices always go up! They will go up again!"

Yes, historically, over time, housing prices do go up, but it could be well over a generation before you see a return on that July '07 investment.

The renter that waited a year, and bought that same property in July of 2011 for $280,000 will be much better off.

July 2007 to July 2011 is 1 year? :dunno:

[cmyden]

July 2007 to July 2011 is 1 year?

Sorry, brain cramp, not enough caffeine yet. Edited.

[atgilchrist]

Where are you getting that price of $280k for July 2011?

[masoncgy]

Rents are still higher than they should be, according to prospect tenants that have come my way.

I put up my 1400 sq ft 4-level split in Temple on Kijiji, renting for $1250/mo and it was rented out in less than an hour, to an older married couple who wanted to step up to their own house from a basement suite and gladly signed a 1 year & cut a deposit check without issue.

Then again, I understand $1250/mo is cheap for my house, but I prefer to have tons of applicants to pick from than a trio of crack addicts or something!

[cmyden]

Where are you getting that price of $280k for July 2011?

Just my best guess :)

That's assuming that the average rate of decline in Calgary property values actually *slows* down.

If we were to continue declining at $5050 a month it would actually be $268k.

Historically we should probably be at 300k by 2011, but I think the market will overshoot historical price points by a bit, as they usually do.

Again, these are just my estimations, nobody has a crystal ball, and the example was just to illustrate that it is certainly NOT always smarter to buy into a market rather than continuing to rent.

Over the long term, I definitely do believe in home ownership, but I also think there are certain periods in history where one should really think long and hard about whether this is a smart time to be entering that market. Immediately after signs of a housing boom going bust being one of them.

[kenny]

Originally posted by cmyden
A lot of people make the mistake of thinking that, financially, it is always smarter to be an owner than a renter.


Its a sense of pride for some people to say they own their homes. Its not too different from people saying they moved out as soon as they were 18 instead of living with their parents for a few more (or 10) years.

Being able to say "I live on my own" vs. "I live in my parents basement" and "I own my home" vs "I rent a basement suite"... in both of those examples, you aren't really better off by owning your own place or living on your own.

[cmyden]

Being able to say "I live on my own" vs. "I live in my parents basement" and "I own my home" vs "I rent a basement suite"... in both of those examples, you aren't really better off by owning your own place or living on your own.

Yep, definitely true. It's just a question of what dollar value you place on being able to make these statements.

For some, it's priceless.

[Mys73ri0]

this isn't the rent vs buy thread...

I'm currently renting in Gateway South Centre right now and I've noticed that rent for units in this building has not come down at all...
1 br's are still going for $1200+ in GSC

i've looked around on rentfaster at some of the other buildings that I was looking at last year and also noticed prices are pretty much the same

[BlackArcher101]

The only prices that have dropped here in Red Deer were the ones where the landlord was assraping in the first place. Basement suites that did cost $1300 before are now a more respectable $800-$1000. Apartments though have pretty much stayed par for course. As more people cannot afford their homes, vacancy in apartments will go down.

[HiTempguy1]

My apartment rental went through the roof in Edmonton (good thing I decided to live somewhere else for school next year). They raised rent from $1250 (basically everything including parking) to $1450 a month PLUS they almost doubled the parking rate from $75 to $120. It doesn't effect me until renewal, and like I said I'm not renewing. Too much god damn money :banghead:

[Xtrema]

:repost:

[thrasher22]

I've been looking at rental sites almost daily since Sept and haven't seen much of a change in prices at all. Mind you this is only with houses, I don't watch condos.

I'm actually kinda disappointed, I thought there would be a lot more people who couldn't sell and were desperate to fill their empty houses.
It sounds cold, but I'm not exactly rolling in money either these days :dunno:

[Boat]

To the OP: Everything sounds fair to me I was just wondering what your thought process was, glad to hear you have lots of options in the west!

Currently I'm locked down on a lease for a 4 bedroom duplex for 1475 a month till Sept. September 2008 there was plenty of renting selection, and I'm sure there is more now.

We are looking to take out a mortgage after that, but September is a ways away.

[ckangarloo]

^ no worries. Everyone's situation is unique but four bedrooms for $1475 sounds reasonable at this time. Remember, just because you are locked into a lease doesn't mean that you can't negotiate anything. I was locked into my current place 'till August but was able to get out of it no issue as long as a new tenant took over. Luckily my wife is really good at home staging and we found a new tenant in two days.
We ended up finding something one block from the lake for much cheaper than we would have ever imagined (its still expensive though!).
Just noticed the town-house right next to us is for sale for $500K and is offer a 2009 BMW 128i with the sale! Craziness.

[88jbody]

I pay 1295/mo for a 3br up 1 br down 2 bath bungalo in thorncliffe but no garage, accross the street from my kids school, at this price it is ideal, I realisticaly can only afford to spend about 1500/mo on rent or mortgage.

prices are still going down, but I don't think you will ever see that 500,000 house down to 280's

[cmyden]

prices are still going down, but I don't think you will ever see that 500,000 house down to 280's

Nobody thought they'd ever see that 280's house go up to 500 either :)

At least, not in one year!

[ee2k]

Originally posted by ckangarloo
...

What is the situation back in my old home town of Calgary? I assume similar but not to the extend of Ktown just yet.

I have lived at my current apartment for 11 months now, with the end of lease coming up at the end of next month. Like you, I found it challenging to find a suitable place last year with low vacancy rates and the sense of feeling rushed to get a place: get it or it's gone.

For the past few weeks I have been keeping an eye out on rentals, and have been seeing a lot more places within my current rental's price range. What's better, at least when it comes to apartment rentals, is that some are in far greater shape than the current place I live in.

Now there are the condo owners that want to rent at crazy prices. Perhaps the wanted-to-flip-but-got-flipped types that just took possession. Newer condos are much smaller, some even out in the boonies, are they are asking $1400 for a 1BR. I can get a mortgage for less than that (if the mortgage broker I spoke with ain't lying that is). This one condo owner gave me the rental amount, and also said that the condo fees will be extra.


Originally posted by BigMass
the place i'm going to rent lowered tenants rents before their leases expired so they wouldnt be tempted to go somewhere else. Many places are also offering parking and SD incentives. So it's turning into a renters market here too.

This is so funny! My landlord sent an increase notice to the point that the increase I am faced with is greater than the Kijiji ad they run on a daily basis. They are banking on me remaining here for the sake of avoiding the inconvenience of moving, but that ain't happening. With the difference, I could pay a moving company to conveniently move my belongings and pocket the rest, AND get into a better building.

Reality has not set in for some.