this post was submitted on 21 Nov 2023
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[–] [email protected] 4 points 1 year ago (5 children)

Not really. Rent is based on demand and landlords will take as much as the market will bear. It's pretty much independent of mortgage rates.

Case in point, rent in Southwestern Ontario exploded in 2020 & 2021, when interest rates were low and have stayed pretty level since, even with the significant increase in rates.

[–] Ironfist -1 points 1 year ago (4 children)

The price of everything is based on demand and offer. The price of production affects the offer.

[–] [email protected] 1 points 1 year ago (1 children)

Not really. In a system where demand is fairly inelastic (everyone needs somewhere to live and the only real flex is having roommates/living at home/homelessness or renting two apartments) and where the supply is currently extremely constrained, expenses are going to have next to no impact on rental prices.

For example, I was fortunately able to buy a townhouse two years ago (when interest rates were low) to live in. My mortgage is ~ $1,200/mo. Other units have been going on the rental market pretty consistently for ~$2,000/mo. Even with the increased interest rates, new landlord's would still have a net positive of ~$500/mo between the rent they receive and their mortgage payments. There might be a loss of profit, but with profits already so high, it's not going to affect rates on a macro scale.

[–] Ironfist 2 points 1 year ago

the area where you live sounds like the exception, not the rule (and this is an article from last year): https://www.cbc.ca/news/business/rising-rent-housing-market-canada-1.6525075

Interest rates are rising and the house-buying market is cooling off, putting more strain on rentals

The cost of rental housing is rising throughout Canada, according to Rental.ca. Analysts say rising interest rates are part of the problem.

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