In the business, we joke about PR math. This is when marketers use real data to create an unreal impression. The beauty of PR math is its supposed ethical soundness. Real numbers don’t lie. Similarly, President Clinton “did not have sexual relations with that woman, Ms. Lewinsky.”
Realtors gladly use PR math. Today’s post shows an example from a westside agent. Because many realtors are running ads like this, I’ve concealed the realtor’s identity so that she’s not unduly singled out. The ad asks “why rent?” and compares rental prices to mortgage payments for an average downtown condo.
I threw the numbers over to Mohican at Housing Analysis, who kindly responded that they are correct. But there’s a caveat and it’s a biggie: You have to factor out taxes and strata fees and have interest rates remain at record lows. Here’s the word:
Thirty-five years amortization is the short answer. One-year mortgages are now at 3.5 per cent and a payment of $1,275 can get on the hook for a cool $310,000. Sounds like a bad idea to me but what do I know, I’m only a financial planner.
I rent downtown, at a place assessed around $300,000, and my rent is very close to the realtor’s example. But my landlord pays the strata, taxes and insurance out of my rent. It’s probably $500 a month. The ad does not mention these costs and for good reason. It’s bad PR math! Own for the price of rent plus 40 per cent or more. Yikes.