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"LRTs displace all the poor people"?
#31
(11-06-2015, 05:12 PM)mpd618 Wrote: After you've paid out the mortgage, you own the property outright. Even if your rents didn't cover the full costs along the way, and even if there's zero capital appreciation, it seems to me that this can still be a financially reasonable thing to do. Or am I missing something?

I would personally say it's not. In Owen's example of a would-be investor purchasing a condo unit for $250,000 with a mortgage payment of $930 a month, that's a 25 year amortization at historically low interest rates (2.84% is what he figured) with a short term for which the rate is fixed. A lot of rate risk, in other words. If the unit owner is cash flow negative, it's true that he's eventually going to pay down the mortgage, but it's not paid down for 25 years (which is the same period over which the property can be depreciated to zero- and there's no land involved). Eventually, rents will hopefully rise at least in nominal terms, but it seems like a tonne of risk- risk that maintenance costs will go up (and with condos, many of those costs are outside of your control), risks that rents will stagnate. I can't see it making sense to take that on for a property on which you will continue to shell out cash month after month, just in the hope that the mortgage will over the (I would say quite) long term be paid off, and you can sell the property and incur capital gains tax (if you ever had occasion to claim CCA on it).
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#32
Exactly. Sure, you have the asset, but in that example you're burning cash each month (or biweekly) for that ownership privilege. Instead of being cashflow negative each month, you can invest that cash stream into an income earning alternative, say a tax sheltered (TFSA or RRSP) ETF or REIT or what have you.

The opportunity cost of that lost cash flow, over 20-25 years, can be quite substantial.
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#33
(11-06-2015, 05:25 PM)MidTowner Wrote:
(11-06-2015, 05:12 PM)mpd618 Wrote: After you've paid out the mortgage, you own the property outright. Even if your rents didn't cover the full costs along the way, and even if there's zero capital appreciation, it seems to me that this can still be a financially reasonable thing to do. Or am I missing something?

I would personally say it's not. In Owen's example of a would-be investor purchasing a condo unit for $250,000 with a mortgage payment of $930 a month, that's a 25 year amortization at historically low interest rates (2.84% is what he figured) with a short term for which the rate is fixed. A lot of rate risk, in other words. If the unit owner is cash flow negative, it's true that he's eventually going to pay down the mortgage, but it's not paid down for 25 years (which is the same period over which the property can be depreciated to zero- and there's no land involved). Eventually, rents will hopefully rise at least in nominal terms, but it seems like a tonne of risk- risk that maintenance costs will go up (and with condos, many of those costs are outside of your control), risks that rents will stagnate. I can't see it making sense to take that on for a property on which you will continue to shell out cash month after month, just in the hope that the mortgage will over the (I would say quite) long term be paid off, and you can sell the property and incur capital gains tax (if you ever had occasion to claim CCA on it).

I agree -- I think it's a very risky strategy to rent at a negative cash flow, especially at current interest rates.

That said, the condo corporation does own the land, so each condo owner does indirectly own a (small) piece of (highly valuable) land.
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#34
(11-06-2015, 04:39 PM)Andy Wrote:
(11-06-2015, 04:25 PM)tomh009 Wrote: I have walked a lot trough Cedar Hill (only in daytime, mind you!) and I find the neighbourhood to be generally quite tidy and well-maintained.  A few mid-rise apartment blocks and House of Friendship on Charles, sure, but I would say 80% or more of the houses are tidy (if not expensive) and well-maintained.  If I were looking for a house near downtown, Cedar Hill would certainly make the list for me.

It made the list for me too. But not my wife :/ . It definitely has a different feel at night though (I mainly walk around charles/king, can't really speak on behalf of the more residential area). I can see the bad safety perception for a woman on her own.

I was watching the mls pretty religiously over the past year, and relatively speaking I never found an expensive house in that area. I think the area will improve quickly if the two blocks from Cedar->Cameron between King Charles are developed.

I think Church St, for example (the next one over from Charles) is quite nice.  I may have some feedback from my wife soon as we're moving next door to Cedar Hill in a week!
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#35
(11-07-2015, 10:12 AM)tomh009 Wrote: I think it's a very risky strategy to rent at a negative cash flow, especially at current interest rates.

And in the midst of a real estate bubble, especially along the LRT route. If/when that bubble bursts it could take a decade or two for real estate prices to recover to pre-burst levels.


Quote:That said, the condo corporation does own the land, so each condo owner does indirectly own a (small) piece of (highly valuable) land.

Highly valuable but whose value may be highly inflated.

Consider the number of apartment and office buildings going up along the LRT route. Once the LRT begins service will intensification happen fast enough to fill up all that vacant space?
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#36
(11-07-2015, 10:15 AM)tomh009 Wrote:
(11-06-2015, 04:39 PM)Andy Wrote: It made the list for me too. But not my wife :/ . It definitely has a different feel at night though (I mainly walk around charles/king, can't really speak on behalf of the more residential area). I can see the bad safety perception for a woman on her own.

I was watching the mls pretty religiously over the past year, and relatively speaking I never found an expensive house in that area. I think the area will improve quickly if the two blocks from Cedar->Cameron between King Charles are developed.

I think Church St, for example (the next one over from Charles) is quite nice.  I may have some feedback from my wife soon as we're moving next door to Cedar Hill in a week!

My comments are mainly around the LRT stop (Cedar/Charles), which at the moment is pretty barren. I really want to see someone develop the empty lots between king/charles. I think just having more people around will help shake the perception of that area. I imagine the further away from this corner, the nicer/safer it gets. I really like the neighbourhood location, and I'm sure it's a lot better towards Church. Especially around the lofts. Victoria Park is nice and close too. That's why I picked this stop in particular to only go up in value and "gentrify".
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#37
(11-07-2015, 02:33 PM)Andy Wrote: My comments are mainly around the LRT stop (Cedar/Charles), which at the moment is pretty barren. I really want to see someone develop the empty lots between king/charles. I think just having more people around will help shake the perception of that area. I imagine the further away from this corner, the nicer/safer it gets. I really like the neighbourhood location, and I'm sure it's a lot better towards Church. Especially around the lofts. Victoria Park is nice and close too. That's why I picked this stop in particular to only go up in value and "gentrify".

I agree ... I think it's getting nicer, but houses in the neighbourhood are typically selling for under $300K, when on the other side of Victoria Park, $400K is more typical.  A nice neighbourhood and a good chance of solid long-term appreciation.
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#38
I hate the title of this thread only because RoFo and DoFo were the only two people who have ever used the term "LRTs" with an "s" on the end. It's LRT or Light Rail.
For daily ion construction updates, photos and general urban rail news, follow me on twitter! @Canardiain
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#39
Apparently Carolyn Parrish is a third.
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#40
I had a friend who rented in a house on Church St, but moved to Preston due to rents a couple years ago. However he didn't work in the core but rather at various auto-oriented locations in Cambridge and Breslau.

All in all though, I don't think there will be too much gentrification in K-W. Waterloo Region doesn't have big city traffic/commuting problems like the GTA, and it's relatively decentralized, it's not like all the good jobs in Waterloo Region are concentrated in Downtown Kitchener. So compared to Toronto, the demand for living near good transit is going to skew much more towards people looking to save money on transportation rather than people looking to save time commuting. Housing costs might go up, but the increases will be largely compensated for by the reduced transportation costs.

Even in Toronto, gentrification is not happening everywhere that has rapid transit. Rapid transit isn't necessarily enough, you also need a certain kind of housing stock, maybe a certain kind of retail experience and vibrancy or sometimes more potential for exclusivity as opposed to being mixed income. The Dufferin & Bloor area in Toronto is only just beginning to gentrify, after having the subway for 50 years. Marlee Ave area is still not really gentrifying. The areas near the Danforth subway from Main St to Eglinton East still aren't really gentrifying and in fact many areas have declined while having subway access.

Regarding Sheppard East, I think that area has always had a mix of incomes but much of the SFH areas have skewed upper-middle class for a while no? Is a doubling in prices really unusual in Toronto? Housing in many parts of Toronto has been getting more unaffordable, I'm not sure if Sheppard East has been seeing greater than average increases. Also this is more difficult to notice, because it's a gradual process, but has the older apartment stock filtered down, for example around the Peanut and Parkway Forest? The thing to keep in mind is when a developer buys up some older affordable apartments and townhouses and replaces them with more expensive high-rise condos, or an affordable and/or run-down building gets fixed up or modernized, that's a change that happens very suddenly, but only impacts a certain portion of the housing stock. Filtering down would typically affect most of the housing stock, but happen over a period of decades. Looking at income maps of the Sheppard East area, incomes have been fairly constant overall, although maybe things will change after the latest (2010) data.

All in all I would say it depends on
-Is transit more about saving money or saving time
-How many high paying jobs become accessible thanks to the transit line
-How much of the city's housing stock is covered by transit of comparable quality
-More qualitative characteristics of built form, housing stock type, what the neighbourhood is like

I think that as long as new housing is allowed to be built in decent quantities in K-W, which means not just allowing high density on a few sites but also moderate densities on a larger amount of sites*... and also parking requirements are relatively low, then there won't be too much gentrification. More well-to-do people will move into the new condos and nicer historic homes, but older apartments will remain affordable and the formerly expensive housing built 0-10 years ago will begin to filter down.

For Hurontario, there's might be some shifting around of incomes between individual neighbourhoods, but I'd expect that incomes in the corridor overall will stay about the same. The Hurontario LRT is not going to be providing a direct link to Downtown Toronto, which is rather far away LRT or not, or even a direct link to the biggest white-collar job centres of Mississauga. The data suggests incomes have actually been declining along this corridor in the last few decades, so perhaps all the LRT will do is prevent them from declining further.

*IE construction costs per sf are generally lower the shorter the building. Allowing development to spread out across more land means it doesn't have to be as high to meet demand. Many of the lots in Cedar Hill for example are quite deep so you could built backyard cottages, rear-extensions and such. The older neighbourhoods of Fredericton are like that for example.
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#41
(11-29-2015, 12:17 AM)Memph Wrote: Regarding Sheppard East, I think that area has always had a mix of incomes but much of the SFH areas have skewed upper-middle class for a while no? Is a doubling in prices really unusual in Toronto? Housing in many parts of Toronto has been getting more unaffordable, I'm not sure if Sheppard East has been seeing greater than average increases. Also this is more difficult to notice, because it's a gradual process, but has the older apartment stock filtered down, for example around the Peanut and Parkway Forest? The thing to keep in mind is when a developer buys up some older affordable apartments and townhouses and replaces them with more expensive high-rise condos, or an affordable and/or run-down building gets fixed up or modernized, that's a change that happens very suddenly, but only impacts a certain portion of the housing stock. Filtering down would typically affect most of the housing stock, but happen over a period of decades. Looking at income maps of the Sheppard East area, incomes have been fairly constant overall, although maybe things will change after the latest (2010) data.

I lived in the area for some 25 years and have followed real estate in the area during that period as well as since. There's no doubt that Sheppard E has been greatly redeveloped since the subway went in. There's no doubt that property prices have increased at above average (for Toronto) rates. From what I've seen house/condo prices in C15 used to lag Toronto averages. Now they lead. (I can't speak for the lower end of the market like Peanut Plaza and Parkway Forest because I never paid much attention to it.)

Now note that while I said this happened since the subway went in it doesn't mean a causal relationship exists. It could be that C15, especially Bayview Village, simply became trendy after many years of relative obscurity. It could also be a form of reversion to the mean, i.e. after years of lagging prices the area became relatively underpriced compared to adjacent areas, e.g. south of the 401 or closer to Yonge, thus attracting the attention of shrewd buyers who began to drive up prices.
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#42
I think one of the biggest things causing people to worry about this issue is the growth in the tech sector specifically in downtown Kitchener, which is causing people to make comparisons with San Francisco.

(11-29-2015, 12:17 AM)Memph Wrote: I think that as long as new housing is allowed to be built in decent quantities in K-W, which means not just allowing high density on a few sites but also moderate densities on a larger amount of sites*... and also parking requirements are relatively low, then there won't be too much gentrification. More well-to-do people will move into the new condos and nicer historic homes, but older apartments will remain affordable and the formerly expensive housing built 0-10 years ago will begin to filter down.

And this is what is key, IMHO. We're not doing a bad job right now with the ability to increase housing stock at reasonable costs, but we could still be doing much better. KW should be learning from Northdale about what's possible in terms of mixed-use zoning and parking ratios.
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#43
Yeah, Northdale development is getting better now, there's still some developments that aren't as nice, but at this point a big part of the next step will be the public realm - notably nicer, wider sidewalks and street trees.
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#44
(11-29-2015, 05:33 PM)Memph Wrote: Yeah, Northdale development is getting better now, there's still some developments that aren't as nice, but at this point a big part of the next step will be the public realm - notably nicer, wider sidewalks and street trees.

My point with Northdale is about the current zoning - which applies to a large grid of streets, allows dense urban mixed-use development, and only requires 0.25 parking spots per bedroom. It's transforming a low-density suburban area into a very high-density, walkable, urban area with reasonable rents.
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#45
I imagine the parking situation is a bit unique in Northdale though due to the greater proportion of students. I think it's reasonable to require more parking further away from the universities.
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