I've lived in Toronto (Scarborough) for 19 years now. In the same apartment. In that time, we've had few improvements (except the lobby, which they seem to do every year). We got new balconies and new toilets. I also got lower kitchen cabinets (which do not match the sagging uppers). In all fairness, aside from the cabinets, I haven't asked for repairs. I don't trust management/maintenance in my home. That came about when the new owners, CAPREIT, bought the building. We had some sort of issue--a leaky bedroom I think--and had asked for them to fix it. Never mind that it took two years to figure out and try to repair it, when they did come try something they only painted one wall and half the ceiling. And it still bubbles the paint, so I know it isn't fixed. But I digress. One day I woke up, in my bedroom in bed, only to find the maintenance guy standing there. Two violations here--no 24 hour notice of entry as required by law, and no knocking on the door. Since then, I have installed a doorbell (just in case he did actually knock on the outside door) and been very vigilant with the building's series of supers. I don't remember when they bought the building, but it's been over 5 years.
In those nineteen years, our rent has consistently gone up. Additionally, they removed the pool that was here and fully functional for many years after we moved in. That was not taken into consideration (I see it as property value) when the rent increases came. It has increased maybe an average of 2% each year.
When CAPREIT bought the building, one of the first things they did was make some money saving changes. When people move out, the next tenants have to pay for electricity and water on their own. So long as we are here, it is included in ours as originally leased. They tried to make us change that but were not offering a significant reduction in rent so we refused. They have also tried adding amount meters but to my knowledge that hasn't been successful. We pay an moderate additional amount for one underground parking space. All in all, the increases in rent have probably increased it about $200 a month in 19 years. We pay a little over $1500 for our three bedroom, utilities included, 8th floor corner overlooking some green space and a major street. Our building is one of four in a sort of cul-de-sac, each housing about 600 people. We are incredibly lucky.Lucky at $1500 a month? Definitely. Toronto real estate has lost it's collective mind. You cannot purchase a property in the city limits for less than $770, 000. And at that price, it's mostly one bedroom condos with about a 30 minute commute. Most homes, really basic ones, list for over a million. The house across the street from us is for sale, as is at just the value of the land, for $1.3 million. Mortgages over one million start with a down payment of a minimum of two hundred thousand dollars.
I can buy a three bedroom house on the beach in Wilmington, NC for less than a down payment on a 2 bedroom, one bath home at the edge of the town limits. I also wouldn't be paying $3 for a loaf of bread, $5 for a gallon of milk, or $4.50 a gallon for gas. I also probably wouldn't get shot, stabbed, robbed, or run over as a pedestrian, so I'd likely sleep better. I would desperately miss the great sales, amazing live theater, and terrific multicultural experiences, but it would be worth it. I can always vacation in Toronto.
I'm going to have to bite the bullet and ask for some repairs.
Hubby has at least five more years before retirement, and even then isn't on board with moving to North Carolina (yet!). I've looked at other rental options, and we'd definitely have to downsize to two small bedrooms, lose our half bath, and likely pay our own utilities. With rents on the criteria that we have to have access to transit in such a way that Doug can make it home from work in an hour or less, and that the property must have an elevator if we live above ground level, it just isn't worth moving. That would also be contingent on finding something available as well, and that's not easy. If it were found, we'd be looking at about $2500 per month (plus utilities).What brought this on was a tweet by Prime Minister Justin Trudeau. Now, I like Justin, he's an OK PM (despite what my husband says) but this tweet set me off like a rocket.
Want to take the next big step in life & buy your first home? The First-Time Home Buyer Incentive will make it more affordable:
🏠Helps with your down payment
🏠Lowers your monthly mortgage by up to
$286/month
🏠Offers a shared equity mortgage worth up to 10% of your home's value
— Justin Trudeau (@JustinTrudeau) July 25, 2019
So I thought that sounded actually doable! Even if we have to do a "shared equity mortgage" , IE the government would own part of our home, it would be worth it. As potential first time home buyers, this sounded like heaven.
I had a look at the program, and the link is below. They start taking applications, Canada-wide, on September 2, 2019. Here's the bones:
- you need to have the minimum down payment to be eligible
- your maximum qualifying income is no more than $120,000
- your total borrowing is limited to 4 times the qualifying income
- If you meet these criteria, you can then apply for a 5% or 10% shared equity mortgage with the Government of Canada.
Let's break that down. For example purposes, let's assume a 1.25 million dollar home and a combined household income of $100,000. A "qualifying down payment" would be 5% of the price, so you'd need a down payment of $62,500. For most lenders, the down payment is 20%, or $250,000. The governmental part of the mortgage would contribute ten percent, or $125,000. Your mortgage would be on the balance, or $1.062.500, with a monthly payment of about $6200 per month (based on 5% down). If you were able to put put 20% down, your payments would be just under $6000. Every. Single. Month.
There are problems here, right off the bat. First, under the plan you can't borrow more than $400,000 total, or four times your yearly income. It's not clear if that amount would have to include any existing debt like lines of credit or credit cards. That simply isn't possible in Toronto--or any of the nearby suburbs. But hypothetically, when you sell, assuming you sell for more than you purchased your home, you would pay the government ten percent of the current sale value. In other words, if you sell your home for $1.5 million ($250,000 more than you paid for it), you would then pay the Government of Canada $150,000 and they profit $30,000, or 24%. You profit 20% ($250,000). If you pay the government out of your profit, you actually only get $100k--which is probably about how much interest you've paid on your mortgage. Basically, you're no better off than you were at $1.25 million.
There are problems here, right off the bat. First, under the plan you can't borrow more than $400,000 total, or four times your yearly income. It's not clear if that amount would have to include any existing debt like lines of credit or credit cards. That simply isn't possible in Toronto--or any of the nearby suburbs. But hypothetically, when you sell, assuming you sell for more than you purchased your home, you would pay the government ten percent of the current sale value. In other words, if you sell your home for $1.5 million ($250,000 more than you paid for it), you would then pay the Government of Canada $150,000 and they profit $30,000, or 24%. You profit 20% ($250,000). If you pay the government out of your profit, you actually only get $100k--which is probably about how much interest you've paid on your mortgage. Basically, you're no better off than you were at $1.25 million.
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| (That's Justin, for you Yanks) |
Down payment rules in Canada are such that you pay 20% on mortgages of a million dollars or more. So you would be looking at a mortgage in the neighborhood of $6000 regardless. You have a net pay of $6000 per month. (Tax rate for 100K is 28%). Your insurance costs about $300, your drug and dental plan $200, electric $100, $30 for water and sewer. You now have $-630. Commute to work (transit or driving) will cost at least $150 so you are down to $-710--not even doable if you live alone. If you have a spouse and just one child (for which you get less than $200 per month "baby bonus" at that income) You have daycare so you both can work, and that costs at least a thousand a month. You're in the hole over $1500 and you haven't even purchased groceries, let alone saved for retirement or taken a vacation.
I'm guessing the beggars on every corner aren't homeless, but rather home owners. They'd be better off homeless.
More Reading:
https://www.caprent.com/apartments-for-rent/toronto-on/
https://www.caprent.com/apartments-for-rent/toronto-on/
https://www.caprent.com/apartments-for-rent/scarborough-on/225-markham/
https://www.cmhc-schl.gc.ca/en/nhs/canada-first-time-home-buyer-incentive
https://www.canada.ca/en/financial-consumer-agency/services/mortgages/down-payment.html
https://neuvoo.ca/tax-calculator/Ontario-100000
https://www.canada.ca/en/services/taxes/child-and-family-benefits.html
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