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Comment by tamimio | Hacker News Reader

Rents are high because landlords are greedy and are paying already inflated house prices.

Owning is expensive because banks are greedy, pumping out the created credit for mortgages, which is an imaginary number based on no actual value, because somehow banks are allowed to create money!

Here's the plot twist: you spend 30 years or even more (in Canada that has reached 70 years!) to pay the mortgage only to find out that you actually don't own the house and you're on a perpetual rent called property taxes.

And unless the root issue is resolved by banning banks' Ponzi fraudulent schemes, and implementing a policy to change housing into a depreciated asset just like Japan did, nothing will change substantially and will only change marginally to prevent people from going out rioting in the streets.

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70 years? That's just plain false.

This website from the government of Canada here says the max term is 25 years, or 30 if it is your first property: https://www.canada.ca/en/financial-consumer-agency/services/...

Edit: ah, I missed one part. You can have longer terms if you have more than 20% cash down. TIL.

They didn't say 70 year mortgages, they said 70 years to pay off a mortgage, which is still a bit exaggerated (maybe), but would come from the contingent of people who got themselves into variable rate fixed payment mortgages for comically expensive properties, and that had a significant amount of interest remaining before the feds started cranking up interest rates.

If rates go up from 2% to 6+% while you're holding onto a $2m detached house, it's a bad situation to be in.

https://www.bankofcanada.ca/2022/11/staff-analytical-notes-2...

> If rates go up from 2% to 6+% while you're holding onto a $2m detached house, it's a bad situation to be in.

I find it mind boggling that banks will lend money to people that cannot sustain a 4% increase to their mortgage rate. Rates have been over 10% in the 80's!

Well, as far as I understand, in Canada we do have relatively conservative lending practices, such that you do need to be able to pass an income stress test of some amount, you're only able to lock in terms of 5-10 years instead of a fixed 30yr, and if you qualify for and choose a 5% down payment you'll have to fork out for CMHC mortgage insurance, so from a lending perspective it's more stable. That said, it's crazier to me that people will take on that liability rather than the fact that lenders will lend it.

As soon as someone hits what they think is a high salary, they'll borrow as much as possible, not thinking they'll ever lose that job or interest rates will increase. This changed a bit in the last 5 years, hopefully for the long-term, so places like Toronto are seeing 90%+ decreases YoY in certain realty segments.

Canadians' household debt numbers are absolutely wild and millenials without wealthy parents are and will continue to experience an increasingly tenuous financial future.

As an example, there's an older guy down the street from me who's long since paid his house off. For property tax assessment purposes, his house is worth $40k CAD, while the land is worth $1.6m CAD. It's just a standard plot in what used to recently be one of the poorest neighborhoods in the country

"Rates have been over 10% in the 80's!"

House prices relative to income were much lower back then.

People refinance to take lower rates or pull equity out of the property and that resets the clock.

Nope, it’s true and even hit higher, this is one example of many: https://files.catbox.moe/rpp5fp.mp4

Yeah, it’s a scam, the whole thing is one giant scam, yet it’s legal and normalized and everyone is ok with it!

> Rents are high because landlords are greedy

I understand the frustration, but it’s probably unfair to single out landlords specifically. Greed isn’t unique to landlords: it’s a universal human trait. We’re all greedy.

History reminds us of at least one person who famously preached against greed, and humanity’s reaction was to nail him to a cross.

Are you telling me that places with low rents don't have greedy landlords and banks?

I guarantee with 100% certainty that if you were in a landlord position, you would be asking the highest rent that would keep your units occupied. You call it greed now, but landlords it’s simply business. You negotiate the highest salary you can, right? And the lowest car purchase price? And go to the cheaper of the two gas stations? Why is okay for you to be discerning but not a landlord?

This article suggests rents are high because we make it difficult to build homes. Are Denver landlords less greedy than landlords in Seattle?

Prices going up is corporate greed. Prices going down is corporate generosity. Basic economics.

As someone that rents I have little sympathy for people paying property taxes annually that are less than what I have to pay in one month.

There should of course be sanity in the system. If you’re retired and can’t the afford property taxes on your home it’s not okay to squeeze you for that little bit of money.

You're not making any sense. Someone paid for a house, they fully expect to pay a lot less than renters do. That's the point of buying a house.

The point of buying a primary house is to be able to do what you want with it. And to know you can live there as long as you want.

Economics dictates how valuable those things are and what premium they have over renting.

What I realized when I bought a house was for an owner occupier buying a house is the only way to 'invest' the money you'd otherwise spend on rent. You'd never make such a low return illiquid investment otherwise.

You, as a renter, are paying the property tax.

The cost is passed on to the end-user.

Of course. And rents should be lower. House prices should be lower. But I don’t care for the cries of people who think they are wronged by property taxes. Most of those home owners are benefiting from those taxes.

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