Quote:
Originally Posted by GenWhy?
I would also caution on assuming those that own homes or households that are strata (doesn't mean they are not rented out) that their inhabitants have been here on average longer than renters or are less entrenched or tied to their local communities. Stats and data can be read many ways, and I always take this with a grain of salt. Read between the lines - don't be a fanatic, but be cautious in the wording (or lack of wording).
Notice in the Metro report that mostly all new rentals are "expensive" (too high for the average renter's wage), and that rents have greatly outpaced wage increases. In my work this is largely explained by land cost, and that's the issue as well with the bonus of large gains off selling property recently that it makes all new homes (bought or rented) more expensive. Good and bad. No one tool in the tool box. A few of my friends rent here and bought property in their hometowns for "cheap".
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I agree rents are crazy high. But I don't see this as being caused by land costs but rather by crazy costs put on new development by the government. In the end you need to make about 5+% of the value of your unit in rent yearly to break even which works out to $5,000 a year for every $100,000 a home is worth. Lets say the average new condo at 600sqft costs $400,000 to build before the government steps in. Then you add in $375 a sqft in DCE ($222,000), DCE can be higher depending on where. Then you add in another $200 in taxes, permits, fees, etc ($120,000). In total that condo now costs $742,000. Rent then goes from 5% of $400,000 ($20,000 annual) to ($37100 annual). The government of course then blames speculators, developers, etc for the high rent and gives some of that money back to renters to buy them.
In the end we can build gigantic rental towers with comparatively low land costs when you spread them out over all the units. But the government contributions you pay per a sqft are a killer for making rental profitable.
To get around this we have two options, to either reduce the government contributions, or to reduce sqft of units. I strongly support both, we should be making buildings that are massive with many studio units similar to Japan and New York. This would greatly reduce rent although the units people rent would get smaller.
With rising interest rates rental will just become less profitable so we need to take quick action now.
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