When plans change (and I put my ranty pants on)
Friday, February 08, 2013
So, I think we're going to buy a home.
Not right this minute (although, it's tempting), but "No later than May, 2014" is a much more solid date than "Sometime in the next few years". It means that in less than 12 months, we're going to have to be well into the process, not just talking about it as a near-ish future dream.
I'm still not quite where I wanted to be. I was really hoping to go in with at least a 10% down payment, but since a decent two bedroom condo or town house is around $300 - $350k here, that's probably not going to happen. We will have the minimum 5%, but the further you get away from the ideal 20%, the more you have to pay in mortgage insurance (not to mention the mortgage itself).
The reason we've moved up the timeline is because my building decided to hit us with a 13% rent hike. We can afford it, but it's high enough to sting. While it's tempting to look at moving when our lease is up, that's not really practical. All of the rentals around here are around the same price and (lack of) quality, and we'd have to start looking on the outskirts of town to see a significant drop in price. Then there's the moving costs themselves and the hassle of packing up an entire household for a one year stay somewhere else. I moved seven times in 4.5 years when I first moved here, and I don't want to start doing that again.
So, we decided to suck it up, sign the lease for one more year, and get the hell out before they hit us with another increase like that in 2014.
This wasn't unexpected (although, we didn't think they'd go above 10%) - it's the reality of living in Calgary. Let me tell you a bit about renting in this city:
a) They don't build new rentals here, even though it has one of the lowest rental vacancy rates in North America. Why would you, when you can build a condo instead and sell it out within a couple months?
b) Secondary suites are illegal in most of the city. There are basement suites to be found, but there's no accountability or protection, and because of that many of them are slum-level and outright dangerous. A few years ago, three basement renters died when their one exit was blocked by a fire and they were unable to remove the bars their landlord had put on the windows. They burned to death in a cage in part because of the NIMBY attitude of people who vote legal suites down, assuming that allowing legal rental suites (or really, making sure safety standards are applied to the illegal suites that already exist in their neighbourhoods) would bring down property values.
c) Not only are no new rentals being built, but we lose rentals to condo conversions. While you have plenty of shiny new condos being built, you also have old apartment buildings being purchased and sold as condo units. For the nicer ones, they'll knock out a wall in a galley kitchen and put down some laminate flooring, but for many it's just the same basic old apartment, except now you need to have a down payment and qualify for a mortgage to access it. I got kicked out of my favourite apartment eight years ago for that reason. They sold my little unit for $320,000, and the building is now a complete dump that's been home to one murder, looks like a slum, and has units up for sale at half of what they sold for when they converted it.
d) There are nice rentals available, but you're going to pay for them. All those shiny new condos? Those get snapped up by investors who turn around and rent them at a premium cost. If I wanted to live in a condo without buying a condo, I'd be paying at least $2000 a month for a one bedroom or a tiny two bedroom. We're an oil boom city with lots of corporate head offices, so many of the nice rentals are reserved as corporate rental properties for executives on temporary assignments. My FiL was paying over $3000 for an older furnished apartment that wasn't much better than ours. When it's the big oil and gas companies footing the bill, rental corps can charge whatever they want.
e) Renters are treated as second class citizens. Even though the bar is high here for first time home buyers, people still assume that if you haven't bought, there's something wrong with you. It's assumed that we'll be shiftless, we'll probably smoke and trash the place, we can't hold down a job, we throw wild parties, we won't grow up. It's not just home owners who look down on renters, either - it's the landlords and property companies. I had to jump through multiple hoops just to get permission to paint my apartment a different neutral colour. Things are maintained to the bare minimum level because there's absolutely no reason to cater to your tenants.
f) Renters are stuck. Nick and I are lucky - we can buy a home. I have a good job and we've been able to save up a decent chunk of money over the last couple years. Many renters aren't so fortunate. They're paying artificially high rents that make saving almost impossible, and home ownership just isn't going to happen. And I'm not just talking low income or poverty here - Do you work retail? Good luck qualifying for a mortgage when a starter property is ten times your yearly income. Rents are high, but what's a tenant going to do? You take what you can get, because there simply aren't other options.
I'm tired of the game.
I'm tired of being a model tenant who actually cares about her living space - rental or not - as her home and then getting screwed over simply because the market allows it. I've been kicked out of my home so they could sell it as a condo. I had my rent hiked almost 50% over the course of three years when I was single and trying to get by on a retail manager's salary. I've put up with dripping taps and cheap cupboards that hit me in the head because they won't stay closed and overall poor quality, but been treated like I'm going to destroy the place when I actually want to make a tiny, temporary improvement. And the sad thing is that the longer we stay, the more screwed over we'll get. I'm not going to sit around and wait for next year's $200 rental hike as the quality of my home deteriorates and the amount I'm able to save to get out of this situation gets eaten up.
We're going to sign for a year (I'd do six months, but that brings the rent hike up even higher. The 13% is the 'discounted' rate if we do a year lease). We're going to save like crazy, pay off the rest of the line of credit so that there's no debt at all, and then go for it. I've kept a pretty close eye on the market for a few years now, so I have a good idea of what's out there and what we can expect to pay. I'm crossing my fingers that the right property will show up at the right time and we can pounce.
I want a home.