(Bloomberg Opinion) — More than 40 % of Americans are working from home, and among them the urge to “work nest” is strong. My sister-in-law turned the family shed into a “shoffice,” with charming homemade curtains hiding the tools and a pillow for the pandemic puppy. Surging home prices suggest that many who are working from home and find themselves shedless are in the market for a bigger house.
I hope to put a big yellow “Slow” sign on home-buying in a pandemic. The housing market may be soaring because of bad information and short-term thinking. You don’t know whether bosses will make work-from-home permanent or who will be targeted for downsizing. You may come to rue buying at a time when inventory is so low and prices so high.
Regret is already in the air. LendEDU, a financial information website, surveyed 1,000 mortgage holders in August and found that most people who bought houses after March 2020 already regretted taking out a mortgage. The survey is not scientific, but the results make sense. Record low mortgage rates enticed new buyers, while urban hotspots for the virus drove people out of cities. In July, there was a 56% drop in Manhattan property sales and a 44% increase in the city’s neighboring suburbs. Home prices in nearby New Jersey counties increased over 11% while New York City prices fell 13% compared to last summer.
Buying in a sellers’ market is not a good move. Home sellers are taking their once-in-a-lifetime moment to sell their house substantially over asking prices, asking prices that were connected to rental prices in the neighborhood. Conventional financial advice suggests if a home costs more than 20 times the annual rent the home could fetch, the house is probably overvalued — a $400,000 home should rent for $1,667 per month or more. In times of low mortgage rates, the breakeven ratio can be a bit higher. But in this K-shaped recovery, rents are falling, occupancy rates are down, and your house might remain overpriced.
Because homeownership has always been messaged as a mandatory part of the American Dream and subsidized by the federal government, homeownership is always a bit overrated. Owning a home might be beneficial over the long run … if the house price appreciates more than a diversified financial portfolio, or if people don’t have to move for their jobs or family, or if marriages last, or if neighborhoods and financial situations don’t change much. In some areas, rental stock can be lower quality for the same carrying costs as homes. And some people list home repair as a hobby.
But, for most people, calling the landlord when things go wrong is a benefit, and many home buyers forget to budget for home repair and maintenance which typically costs 2-4% of a house’s value per year. Most homeowners at some point regret having to mow the lawn and clean the gutters on weekends. At many rental apartment complexes, luxuries such as professional landscaping and outdoor maintenance come standard.
Another advantage to renting is avoiding the down payment. If you put a chunk of money, say $50,000, into a down payment, you forgo earning higher risk-adjusted returns on a low-fee index fund, which is a lot more liquid and a lot less expensive to manage than putting all those eggs in one basket.
Renters also have more flexibility than homeowners, and flexibility is good for employees — especially with so many uncertainties, from the long-term fate of the economy, to the potential for a new federal stimulus, to whether bosses will require physical presence in the future. Renters can more readily move for a pay raise or a new job.
While there can be certain tax advantages to owning a home, these may not last forever. Economist Dambisa Moyo warns that government support for policies subsidizing homeownership (such as loan guarantees and mortgage tax deductions) may wane as future Congresses look for new revenue to forestall soaring deficits.
A pay cut or job loss might even lead homeowners to sell assets in their retirement accounts — sometimes at their lowest values — to pay the mortgage. This is a terrible financial setback; some of the worst-hit families in the Great Recession were those who lost their jobs and were stuck in their homes. But renters can simply move to a cheaper place.
My advice is to wait to buy a home until the economy, the virus and Congressional policies stabilize. Sharing a small space is tough. But paying for a bigger one can be even tougher.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Teresa Ghilarducci is the Schwartz Professor of Economics at the New School for Social Research. She’s the co-author of “Rescuing Retirement” and a member of the board of directors of the Economic Policy Institute.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
