There's also no reason you couldn't sell that house for 400k less. The value is just the value. It's going to be the same whether you're renting or paying the bank for the same property.

I also won big by buying prepan, but who's up or down in the Canadian housing lotto doesn't change the physics of paying a lord's mortgage costing more than if you were paying the bank's mortgage directly.

Nevermind that whoever gets to be lord keeps the equity.

[–] jj4211@lemmy.world 2 points 1 week ago (1 children)

I think the point is that properties on market are, as a rule, not very recently purchased with a 30-year mortgage. So the monthly cost now required to cover the owners costs may be based on financial conditions from 6 years ago. If the rental market has a lot of properties that have been held a while but house values have rocketed, then you have a critical mass of owners willing and ready to out-compete brand new mortgage rates even if they ignore their equity advantage.

In my area, that's what we see, real estate prices are dramatically up as are interest rates, so mortgage cost to acquire is a fair amount above the going rate to rent comparable properties. Someone getting a 30 year mortgage to rent out a property would be underwater for very many years in the current market conditions around my area, as they have to compete with more aggressive owners that have had their properties for many years.

[–] grrgyle@slrpnk.net 1 points 5 days ago (1 children)

Ah yes, I could see that situation arising, although frankly I'm as surprised to hear of landlords competing for tenants as I would be to hear of them selling their properties for under market value. Not that I'm doubting your honesty--it's just not been my personal experience.

I've heard too many personal anecdotes of landlords trying to hike up rates by seeking spurious evictions, or refusing to install climate control, for tenants who are getting a "good deal" at lower rates. Maybe there are rational markets out there, but I don't personally hold out much hope for landlords to be reasonable in the face of the dual pressures of fear and greed.

[–] jj4211@lemmy.world 1 points 5 days ago

So back when I rented, it was only two landlords and only three years and it was fine, so I was spared the slumlord experience. In fact, my second landlords were a very nice couple, and when I got laid off they actually waived that months rent to help me get sorted.

However those slumlords do exist, trying to evict in face of rent controls, being stingy with maintenance. They however still may be cheaper than a 30 year mortgage, especially if they have no tenant. A tenant might face an aggressive rate hike with the landlord betting they don't want to move out, losing the price advantage relatively quickly. Ultimately if a residence is empty, the owner is aware the tenants are likely cross shopping properties they could mortgage instead, so they have to be somewhat competitive then. So they are very happy when the real estate market holes prices because they can extract higher rents from the property they aren't having to buy in current market conditions. They aren't saints and may treat their tenants like crap, but they are subject to price competition, depending on the market they are in.