[hhw]

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 interest can wipe out an owner's equity while a small increase in rent (which is also controlled in many markets) isn't going to impact a renter nearly as much. Also, rent generally reflects incomes more specifically than inflation in general, and incomes have been increasing at a much slower rate than inflation for decades.

Debt leveraging is debt leveraging. Doing it on housing isn't automagically safer than doing it on financial investments. Yes, variance on an individual stock can be higher than real estate (also depends on the particular stock), but a sufficiently diversified portfolio can reduce the variance to be in line with real estate or to possibly be even more risk adverse. Not sure why people think debt leveraging is automagically safer with housing; it simply is not.

[kazinator]

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

[jarek]

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)

[kazinator]

Basically if it's cheaper for a renter to live in a place than for an owner to live there, then the owner must be coming up with the difference, thereby subsidizing the renter.

That is the basic condition that makes renting more attractive: can I rent a place for lower total monthly payments than buying a similar place in the same area.

That owner who doesn't live in the rented unit has to live somewhere else, and faces living costs there, on top of subsidizing the renter.

That situation can hardly persist for long; landlords may be willing to take it on the chin for a while (e.g. to get into the rental business), but not over the long term.

The rent will have to go up eventually to close the gap, or else the landlord will kick out the tenant and move in to save money. Or even sell the place (whereby the new owners may kick out the tenant).

[jarek]

> That situation can hardly persist for long

Something like 10 years and counting in Toronto. Markets can stay irrational for a long time.

> The rent will have to go up eventually to close the gap

Or, property purchase prices unable to be sustained by rent or buyers' income will fall.