craigslist rental sample

The price to rent ratio remains elevated in Calgary and Edmonton. I suspect this is due to an irrational negative attitude toward renting in Alberta and very low interest rates. However, I do think that some part of the price difference between Alberta and the US is a real difference between the cost to rent (and build). Its simply more expensive to rent in Calgary and Edmonton than Phoenix and because of this prices should be comparatively higher.

Consider this selection of craigslist rental ads for $1250.

Edmonton

$1250 / 2br - Apartment For Rent at RentersOnline.com

Two -2- Bedroom, apartment condo , approx 900 sq ft with a nice sized west facing balcony in a 3 yr old west end elevatored building is available immediately. The suite comes complete with fridge, stove, dishwasher, washer and dryer.

The suite also features underground parking.

The unit is on the top floor so there will be no noise from above.

Heat and Water are included in the rent.

The master suite has a walk in closet and full 4 pce bathroom. The second bedroom has a large closet with sliding mirror doors. The second bathroom is next to the second bedroom and is a full 4 pce bathroom and also houses the upright washer and dryer.

The suite also has a full storage room and linen/storage closet.

The kitchen, with ample counter and cupboard space, is open onto the living/dining room and comes with an island.

The suite is located in an area that is close to schools, YMCA, parks, shopping, dining,transit , just south of the Whitemud and just west of 170 st.

Lease duration is negotiable but preference is given to a 1 yr lease.

Calgary

$1250 / 2br - Stylish 2 Bedroom Upper Suite in Killarney (Killarney / Inner City)

Beautiful and bright 2 bedroom upper suite in the desirable inner-city community of Killarney. Minutes from Downtown, Marda Loop and Mount Royal College. Located on a quiet tree lined street conveniently nestled just several blocks from 26th Avenue and 17th Avenue transit corridors. Close to Westbrook and Westhills shopping centres; Killarney pool; parks, and University of Calgary with easy access to Crowchild Trail and Glenmore Trail.

Crisp, clean, open concept suite with laminate and tile flooring and a brand new renovated bathroom. Features a private balcony, high ceilings and in-suite laundry. Street parking (a two car insulated garage is also available).

No smoking or pets. Please call for more information and to schedule a showing of this beautiful suite!

Phoenix (Mesa)

$1250 / 3br - 2Ba-Single Story-2160 SqFt-3 Car Garage-Inc Gardener (Mesa)

This is a Spacious near new 2160 SqFt 3br 2ba single story home. 3 car garage with electric garage door opener. Beautiful earthtone carpet, and tile through out. Large master bedroom with sitting area and a hugh walk-in closet, garden tub, and separate shower. Raised vanities, ceiling fans, separate laundry room and Faux wood binds throughout. Upgraded kitchen cabinets, gas range and microwave. Grass landscape in rear with rock landscape in front all irrigated by electric timer. 1 mile South of 60 Freeway close to schools and shopping. More pics and floor plan on request.

• cats are OK - purrr
• dogs are OK - wooof

BS Detector

The globe and mail article "Real Estate get the Obama boost" is an example of desperation in Toronto.

One quote set of the BS detector

She recently helped one client buy a house listed for $695,000. The client pays about $2,200 a month in mortgage costs but collects $3,000 a month in rent.

"They have someone else paying off their mortgage."

Wow! No consideration of the downpayment used, the other expenses such as taxes, maintenance or vacancy. For $695,000 how did they arrive at the $2200 payment? Here is one scenerio I came up with:

Purchase Price: $695,000
Down payment: $320,000
Mortgage: $375,000
Interest Rate: 5%
Amortization: 25 years
Monthly Payment: $2192.22

Really, any property can have a mortgage less than rent with a large enough down payment.

Update: Mike Fotiou, a Calgary REALTOR, has an excellent post about this article on his blog.

You Should Buy!

The faulty buy vs. rent calculator has showed up once again, this time on the RE/MAX of Western Canada site. This calculator always returns "You Should Buy!" no matter what inputs are used.

This calculator was covered in the first post on this blog and was originally found on mls.ca but has since been removed.

Here is an example of the calculator currently found on the RE/MAX site where I used some absurd numbers.



Press Calculate...

You should Buy!

It looks like you should Buy based on the assumptions you have given us.

Why? If you buy for $1940723.70 (the maximum you would qualify for) you will pay down your mortgage of $1690723.70 by $443034.79 over 10 year(s) with your Principal and Interest payments of $9833.33 per month, plus your property will increase in value by $0 for a total investment growth of $443034.79.

This total is greater than your total investment growth from renting, which is approximately $297690.39 after 10 year(s). This was calculated by growing the monthly savings from renting ($10000.00) plus your current downpayment of $250000.00 at a standard after-tax rate of 4% per annum.

Wow! According to this calculator buying a TWO MILLION DOLLAR house that will not appreciate is a better option than renting for free. The problem is the same as before the savings from renting are fully accounted for. Saving $10,000/month under a mattress will amount to $1.2 MILLION over 10 years.

Totally broken. Again.

What the MSM is serving.

The article Women lead revolution in home ownership serves up the 'conventional wisdom' of home ownership with little analysis.

Atkinson fits the profile of individual Canadian women homeowners who are single, financially savvy and most likely to purchase a condominium, according to a new national poll released Thursday.

"I never wanted to rent because I figured it was a waste of money.

Seven in 10 Canadian women homeowners bought their properties as a "good investment," with 29 being their average age when they made their first purchase.

Michelle Atkinson, 26, who entered the real estate market 21/2 years ago, is part of an emerging demographic of women who are single, financially savvy and opting for condominiums.

"With more and more Canadian women marrying later in life or remaining single, we're seeing the emergence of the young, financially savvy woman who's taking on the commitments, joys and responsibilities of owning a home," said Joan Dal Bianco, vice-president of real estate secured lending for TD Canada Trust.

"Right across the country, they are investing in themselves and in their futures by becoming homeowners, and in doing so are strongly reinforcing their financial and personal freedom," she said.

Do not let these empty assertions from the financial industry influence you. Try to separate information from catch-phrases and then do the math yourself.

MLS Rent vs Buy Calculator

The MLS rent vs. buy mortgage calculator has a fault in which it will always advise to buy. The most blatant error is it does not correctly calculate the amount saved by renting. This calculator can be found when viewing listings on the MLS.

Consider the following example:

Monthly payment $3000
Annual property tax $2000
Annual Increase in home value 0%
Down Payment $10000
Interest Rate 6%
Monthly rent $1000
Year comparison 10

You should Buy!

It looks like you should Buy based on the assumptions you have given us.

Why? If you buy for $452842.14 (the maximum you would qualify for) you will pay down your mortgage of $442842.14 by $105493.48 over 10 year(s) with your Principal and Interest payments of $2833.33 per month, plus your property will increase in value by $0 for a total investment growth of $105493.48.

This total is greater than your total investment growth from renting, which is approximately $40328.31 after 10 year(s). This was calculated by growing the monthly savings from renting ($2000.00) plus your current downpayment of $10000.00 at a standard after-tax rate of 4% per annum.

The main problem is in the amount saved each month renting. Even if this money is stuffed underneath your mattress it would add up to $240,000. Substantially more than the 40K determined by the calculator.

Thanks to poster lukecs from Alberta Bubble Blog for finding this.

Note: Even with $10/month rent it still returns the same result.