Vancouver Property and Affordability
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If you are a residential vancouver property manager you must be aware of energy use. This applies to heating and lighting. However, there is also the issue of financial sustainability, and a residential property manager must know about that as well.
Canadian homeowners know about sustainability. They have taken the initiative in making homes more sustainable in terms of lighting and heating. High energy prices have prompted them to save money on heat through higher efficiency and insulation. This has likewise motivated more efficient electrical lighting usage.
Homes built over the last 30 years are some of the most energy efficient in the world. They leave a smaller carbon footprint and are much more efficient than their predecessors. This is the case even as houses have grown in size.
However, sustainable home ownership includes something other than energy use. Real estate has to be financially sustainable as well. The term often used is "affordable housing".
Its important to understand that the higher the value of an asset the lower the return, assuming rents are constant. As house values rise returns on them drop. This is because rent can't be financed by mortgages, while purchases can be.
This creates a conflict between the cash flow generated by tenant paid rent and the purchase price of the underlying asset. Real estate purchase prices can be much higher than their underlying cash flow justifies. Rents don't rise enough to keep up with the increase in purchase prices, so the cash flow on rental properties becomes unrealistic.
Property owners, especially ones who have been in the market a while, accept these poor returns because the value of the property rises by enough to justify it. They also hold because they like the asset class. They also hold on because selling brings high transaction costs and tax implications.
Theoretically this shouldn't really happen. If rents do not justify purchase prices, rents should increase. When they cannot increase further, property prices should drop. Prices don't fall.
The result is that real estate owners accept poor cash flow returns. Owners get low returns. Still, tenants get a great deal when compared with what it would cost them to own.
If you are a residential vancouver property manager you must be aware of energy use. This applies to heating and lighting. However, there is also the issue of financial sustainability, and a residential property manager must know about that as well.
Canadian homeowners know about sustainability. They have taken the initiative in making homes more sustainable in terms of lighting and heating. High energy prices have prompted them to save money on heat through higher efficiency and insulation. This has likewise motivated more efficient electrical lighting usage.
Homes built over the last 30 years are some of the most energy efficient in the world. They leave a smaller carbon footprint and are much more efficient than their predecessors. This is the case even as houses have grown in size.
However, sustainable home ownership includes something other than energy use. Real estate has to be financially sustainable as well. The term often used is "affordable housing".
Its important to understand that the higher the value of an asset the lower the return, assuming rents are constant. As house values rise returns on them drop. This is because rent can't be financed by mortgages, while purchases can be.
This creates a conflict between the cash flow generated by tenant paid rent and the purchase price of the underlying asset. Real estate purchase prices can be much higher than their underlying cash flow justifies. Rents don't rise enough to keep up with the increase in purchase prices, so the cash flow on rental properties becomes unrealistic.
Property owners, especially ones who have been in the market a while, accept these poor returns because the value of the property rises by enough to justify it. They also hold because they like the asset class. They also hold on because selling brings high transaction costs and tax implications.
Theoretically this shouldn't really happen. If rents do not justify purchase prices, rents should increase. When they cannot increase further, property prices should drop. Prices don't fall.
The result is that real estate owners accept poor cash flow returns. Owners get low returns. Still, tenants get a great deal when compared with what it would cost them to own.
posted by admin at
11:18 AM
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