almost all of the rental housing available on the market is something like the following:
- a condo which was purchased by an investor and being rented out, in which case the renter is paying the owner's mortgage
- a house which was purchase by an investor and being rented out, in which case the renter is paying the owner's mortgage, perhaps split into multiple units, or rented as a rooming house.
the number of actual apartment buildings on the market is exceedingly scarce, and this would be a reflection of the insufficient supply. because we don't have enough apartments, what the market has produced is houses and condos for rent, instead. that makes sense on it's face.
except it doesn't and it can't because the purpose of renting instead of buying is that it is less than a mortgage and it can't be if the cost of rent is necessarily higher than the mortgage to ensure the rentier can turn a profit. if i can buy a house for less than i can rent it for, why would i rent it? the point is that i'm renting because i can't afford to buy.
now that interest rates are higher, we have a situation where people are not just complaining that they figuratively cannot afford to pay rent or are forced into paying more than 30% of income in rent but actually literally have costs that cannot cover rent. paying rent as mortgage + rentier profit is literally impossible. it's unsustainable. and, that makes sense. renters shouldn't be able to afford to pay the mortgage on the property they're renting, let alone the mortgage + profit for the rentier; that's why they're renting, and not buying.
rentiers are not supposed to have mortgages or two or three mortgages or reverse mortgages and profiting from rent is not supposed to be a form of primary income for middle class people that have their own bills to pay. rent is supposed to be a form of income by people that own their property without mortgages (like apartment building owners) or a type of secondary income for people that have extra space.
it makes no sense for people to buy houses with mortgages and expect to make a profit by renting them on top of paying the mortgage. that should have never been presented as a business model, but it has been, and it's the root of the problem.
we have this massive housing market built on an irrational concept and it has to crash. if we're going to have interest rates again, we need to get these small scale investors out of the rental market, build more apartments and (by removing the middle man) get the people that are renting the property from the small scale investors to instead be buying the property from the banks. these middle-man bourgeois investors were always parasites, but they're now breaking the market and need to get out. there's no place for a middle man in today's rental market. they're the cause of the problem right now.
with interest rates and inflation, renters cannot afford to pay their owners' mortgages, and the middle man needs to get out; otherwise, the market in the next few years is going to open up as people get evicted (because they can't pay rent, or the owners need to boost it to break even) and more vacancies will exist, but owners won't be able to decrease their prices enough to adjust to market demand because they have to pay the bank, and renters will simply not be able to pay the price of mortgage + profit that the small scale investor needs to avoid losing money. the result will be the irrational outcome of homelessness + higher vacancy rates, which is currently already present in the condo market, and which is a market failure, by definition. it may require the cmhc to step in to bail out small scale investors.
otherwise, the small scale investors will go bankrupt and need to sell to the people they are currently renting to, and that is a good thing and a healthy adjustment and correction. fuck the middle man. fuck the parasitic bourgeois class. yes, demand is outstripping supply, but it has exposed this issue as a secondary dominant problem that government needs to address. we need less small scale investors stepping in between potential buyers and banks and trying to extract profit from renters that should be buying those properties instead. government should enact policies to get the middle man out.
i can own a small house or condo on odsp if prices come down about 10%, interest rates come back down a bit and i can build up a bit of a down payment while i'm waiting this out. i can't wait it out. i don't think. i might be proven wrong.
a lot of these small scale investors are older and it will be interesting to see what happens when they die in the next ten years.