Olympic rental market ‘oversupplied’
This article is a few days old, but still interesting and worth discussing. It seems that if you haven’t rented out your home or condo yet for the winter games, you may be facing a lot of competition and have to ramp down your expectations of getting rich off the games.
Metro Vancouver homeowners desperate to rent their properties to Olympic Games visitors have scaled back their golden expectations.
An abundance of Games-time accommodation rental options has forced asking prices down and increased the likelihood that many properties won’t attract any Olympic renters.
“Don’t base your food budget on the prospect of renting your home,” said Mark Szekely, site administrator for listing service rent2010.net. “It’s still a realistic possibility but if you’re outside downtown Vancouver or Whistler, you might not find a renter. It’s an oversupplied market.”
Anyone out there subletting their owned or rented house or apartment for the games (or trying to)?
Some Successful Olympic Rentals: “I know of a nice west end home around 4000 sqft that went for around $2000 per night for 35 nights.” « Vancouver Real Estate Anecdote Archive Says:
January 15th, 2010 at 4:21 pm
[...] Olympigs 14 Jan 2010 10:49 am – “A unit at 555 Jervis advertised in Craiglist for the past year has been asking from $3,500 to $5,000 and now $3,000. It was previously rented for a paltry $2,000 p.m.” [...]
January 15th, 2010 at 12:00 pm
@Purp – The problem with permenantly higher arguments is that RE doesn't operate in an economic vacuum.
We can't have 60% of income monthly housing cost long term and have a healthy economy! People need to pay for other things for the economy to work. We can have pockets of gentrification and expensive cities compared to income, for sure, but after a point – when the credit needs paying and is not an increasing influx stimulating the economy – you cannot keep climbing. We're spending more than we make. Someday, we're going to have to make more than we spend in order to service that debt.
Of course, in some developing nations RE sits at 60% or 200% or whatever. So, sure, if we're aiming that direction. End of the first world and the middle class – all of us living in shantytowns? I think it an unlikely scenario in the near term.
There is a finite pool of money+credit. Credit's been growing. Money hasn't. We're spending more than we make. Unless incomes suddenly and shockingly reflect productivity gains for the middle and working classes, and there's no sign of that happening, a contraction of some sort is a mathematical certainty. Because demand will drop for everything.
There's a kink in the demand chain when people are spending too much on housing. It's only been possible re: credit.
January 15th, 2010 at 9:47 am
absinthe- re jacking the rent and house sits vacant-
I have rented for the last 4 years in both Ireland and Canada in 2 different houses. I get the feeling there are a lot of amateur landlords out there based on the prices I see them asking.
My current landlord undercharges me by a few hundred a month- which is a wise strategy.
Ever heard of "work to rule?" If he jacked the rent on me I would be all over him about every little thing that needs fixing.IT would not take much of my time or energy, but it would make his life miserable, and that would be the point. For the extra $200 a month he got from me I would extract $500 worth of pain in the neck.
But because he undercharges me, I let it slide or fix it myself, and I don't leave because he knows I am paying less than anywhere else.
I look at the prices landlords are asking and wonder what they are thinking… do they actually get these rents or do people talk them down? I'd like to find a bigger house, but landlords are still asking too much IMHO. I generally offer 85-90% of the asking monthly rent. some refuse right away, some think about it- none have accepted yet.
Anyone have any experience/anecdotes on the asking vs agreed rents?
January 15th, 2010 at 9:45 am
@Dave — Thanks for the link to the RBC report. I'm not sure it really makes your point about affordability though, quote from the Vancouver section (pg. 4) — "This near frenzied tone to the market is occurring despite still historically poor, and now deteriorating, levels of affordability….even though the affordability measures fell substantially during 2008 and early 2009, they remain well above long term averages."
Interestingly when you lay the 'affordability' graph overtop the 'price/income ratio' graph for Vancouver you get pretty much the same shape. Both have long term increasing trends. It's obvious this trend is not sustainable long term, but the question is what is the new 'normal'? I doubt we will revert back to the days of 4x income and <30% income anytime soon. Wishing away the CMHC and cheaper money is probably not going to work, so where do we end up, 7x income, 60% affordability?
January 15th, 2010 at 8:29 am
@oneangryslav2: Seafield Apartments – their building was bought a couple years ago now and right after the new landlords came in, they wanted to increase people's rents by something wild like 78%. Housing Analysis featured the RTO decision … um, in the spring? I don't really know. The RTO allowed some rents to be increased. Anyway, the Supreme Court overturned that decision yesterday because of too few comparables. Sounds like the tenants had comparables, too, that the officer didn't look at.
January 15th, 2010 at 4:45 am
http://www.calculatedriskblog.com/2010/01/manhatt…
But that can't happen here, because we're a "world class" city and we're running out of land.
January 15th, 2010 at 3:36 am
@Dave:
Why don't we forget about "affordability", which is based on conjectures about which households with which incomes are buying which properties, and just look at price/rent for a given property, and its reciprocal, yield, which are completely objective?
Price/rent for any kind of property in Vancouver is comparable to the highest priced markets in the US in 2006. And net yield, i.e. (rent – expenses)/price, for any property in Vancouver is below borrowing costs, which today are at historic lows.
If that's not a bubble, I would like to know what is.
January 15th, 2010 at 1:20 am
@Absinthe:
Would you care to clarify? Which landlords? I'm curious. And who has been suing whom?
January 15th, 2010 at 12:54 am
@Drachen: Ach, don't let Dave get to you! He's just the slightly more well spoken version of richasian.
We know Dave's thoughts: monthly affordability. And he's right on the most basic level, insofar as People Are Buying Houses right now, and they're doing that because they can afford (right now) the monthly payment. Where "afford" means not miss their payments and still have enough combined cash and credit left over to feed themselves.
That's fine. We've heard that argument and seen the disproof in places all over the planet. (Or at least, I have heard the argument – I've been watching the states since 2003, and this is a very tired old saw.)
Even IF home prices never dropped here, it wouldn't be because Dave's argument makes sense.
He appears to have another argument – we don't have lots of land. And I suppose the corollary: developers and government here are too goddamned stupid to make rowhouses or family sized condos at a reasonable price point or employ any other density-necessary solution as used the world over. Doesn't work because condos are overpriced too – moreso, in fact – & all those new builds commanding premium prices are starting to get shabby starting yesterday.
And the nail in that coffin: I'm renting a house. Moved in during the summer – market prices at the time. So the SFH is not such a rare and precious bird as to be out of reach for the working stiff… Bloody goofy argument. Like those landlords downtown losing in court and saying it's unfair because the renters are paying only half their carrying costs. Hint: it's not their fault you paid too much.
Jack the rents, the vacancy rate goes up, and you linger with empty suites.
January 15th, 2010 at 12:38 am
Apparently the banks are following up hard on people who inquire about mortgages, with the old "what can we do to get your business" calls. I guess that's when they offer you the 7% cash back on the 5% 35 year mortgages.
I assume that the big 5 banks will all have booths at the PNE next summer— strategically located between the Pink Solution and Shamwow.
I can hear it now:
"STEP RIGHT UP!! Get your government guaranteed mortgage. Loans up to 5 times your income.
Is a 5% down payment too much? Well, this is what I'm gonna do for ya' today: Not only will I give you back 100% of your down payment, I'll through in an extra 2%!!!
Yes that's right— you heard it here first. But this offer wont last long, so you better take advantage of it while you still can.
What sir, you don't have a job…No problem, did you know that the fastest growing group of workers are self employed? Our mortgage broker will take care of all that for ya' with a few strategically placed smudge marks— if you know what I mean.
So come on!! Whatta' ya' have to lose. The tax payers are willing to take 95% of the risk, and we'll pick up the rest. So whatta' ya' say, that $350,000 studio apartment doesn't look so expensive now, does it!!!
January 15th, 2010 at 12:12 am
Apparently the banks are following up hard on people who inquire about mortgages, with the old "what can we do to get your business" calls. I guess that's when they offer you the 7% cash back on the 5% 35 year mortgages.
I assume that the big 5 banks will all have booths at the PNE next summer— strategically located between the Pink Solution and Shamwow.
January 14th, 2010 at 10:20 pm
@Purp:
I think RBC uses a good measure. It uses a 5 year fixed rate, 25% down, 25 year mortgage and average household income.
http://www.rbc.com/economics/market/pdf/house.pdf
January 14th, 2010 at 9:58 pm
@Dave – how are you defining affordability, monthly payment vs income? What would you consider the range of historic norms for affordability?
January 14th, 2010 at 9:55 pm
@browntown: Drachen also owe big chunk of money from the bet he lost to his fellow bloggers, size of that payment is equal to 25% of then required payment almost $350,000. 25% value of the house that drachen is currently renting,Oh yeah if you don't believe me you could ask Drachen about his prediction that went otherway around,Down side UP.
January 14th, 2010 at 9:01 pm
oh yeeaah nutslaps! OHlympics almost here! lets hope LOUngo's not goaly for shootout! Drackens' wife say
"browntown i want to party like its' 1988"
January 14th, 2010 at 8:06 pm
It's so great to watch greedy Vancouverites get totally screwed.
January 14th, 2010 at 7:34 pm
@Dave:
"Missing a bet and being incorrect are different. My prediction was correct, my ‘bet’ was not."
What planet do you come from, seriously? You MADE the prediction THEN Freako made the bet that you'd be wrong (and I believe I took you up on it after him). How can you possibly claim that even though you lost the bet you weren't really wrong. I'm seriously beginning to wonder about how your brain is wired, there's some loose connections upstairs.
You're starting to go into your bizarre-erratic mode again, it usually comes up when you're in the middle of being conclusively proved wrong or a liar (or, as in this case both). Are you going to be like this when you lose our current bet too?
January 14th, 2010 at 6:32 pm
In general, what will the qualify you at? a 5 year fixed?
January 14th, 2010 at 6:19 pm
@SD92129
You are correct, the advertised rate is 2.15%. That is the rate of the loan, not the rate used to calculate if you qualify for the loan. You will have to qualify at a higher rate since its variable and can go up as the prime rate increases.