Blessed by the Potato

In 2011 I refined my ranting about high house prices and released the rent-vs-buy calculator, helping people to model the complex moving parts of comparing owning to renting: both have unrecoverable costs, both have cashflow needs, both have ways of building equity. A few key innovations were that it allowed someone to model what might happen if interest rates re-normalized, and it explicitly estimated the cashflow and net worth differences so people could see the counterfactual: how much equity a renter could build up in the stock market by investing instead of buying a house.

Moreover, at the end of 2011 I faced the same decision point myself: after finishing grad school, I was moving back to Toronto, with a baby on the way. Were we going to hold our noses, buy an over-priced, under-sized place… or rent? In addition to the advantageous financial projections, the choice to rent had a few other key pros. One is that renting being cheaper meant we could afford a larger home: instead of trying to make a cramped condo or townhouse work, or driving ’til we qualified (which would have taken us right back to the L-dot), we managed to get a lovely 3-bedroom detached house walking distance from the subway (well, Line 4, but a subway nonetheless). It would also make the path to upgrading a bit easier if we had a second kid: we could focus on the house size we needed now rather than try to jump straight to a “forever home”. Though we put in a lot of analysis, it was all a bit moot: at the time of the move, I didn’t actually have a grown-up job yet. I was still a post-doc, making subsistence wages, hoping to find a job after landing in Toronto; Wayfare was self-employed, with all the complications that brings to getting a mortgage. So we never really had the option of buying a house, as we would have never qualified to borrow the insane amount of money one cost at the time.

So we rented, had Blueberry, and had relatively secure tenancy: it was 11 years before the dreaded notice came. But the notice to vacate came nonetheless, and one of the risks of renting reared its ugly head: we were forced to move. The timing was bad but not the worst: it was the summer between grade 5 and 6 for Blueberry, so she was moving schools anyway. But it was the summer: we only had a couple of weeks to find and secure a new place to get her registered in her new school, or risk having to up-end her partway through the school year. It was a sucky, stressful experience, but we did secure a new place on the last day before registration.

Over those 11 years, Toronto real estate went from pricey through ludicrous right into plaid¹. Back in the early days of the debate, I used to say how crazy the bulls’ projections were: 6 or 7% appreciation per year was going to make it so the average house was over a million dollars in short order. A million! For a regular house you still had to commute an hour to downtown from! That was so much money to spend on a house. And it actually came to pass and people just normalized it and accepted it (and many even cheered it), and even in hindsight it seems crazy to me that this is the timeline we’re on.

Anyway, two years before we got notice to move, I did a ten-year check-in: Rent vs Buy: So How’d That Work Out for You? where we found out that after a decade, someone who chose to buy in Toronto came out ahead of someone who chose to rent. It was a lot closer than people who don’t do the math think: when a house goes from $750k to $1.4M, nearly doubling in a decade, it’s pretty easy to mistakenly think the homeowner was ahead by almost $650k (or more as many a person who has never mathed it out will be quick to chime in, “’cause the renter paid all that rent with “nothing to show for it””). But renting was cheaper from day 1, so there was cashflow for the renter to invest, alongside the downpayment. Rents increased in the city, accelerating around that time (and going ballistic in 2022 and 2023, then settling back down lately), but not actually that far off the predictions we started from (though condos and anything that could be converted to hotel rooms or rooming houses experiencing much worse rent inflation for a while, now outright deflation in the correction). A key point though is the stock market also had a hell of a decade with all that ZIRP money floating around. So while the buyer did come out ahead, at what in hindsight was just about the peak of the market, it was “only” by about half the headline house price appreciation: a hair over $350k.

So 2023 comes around, and we have to make the decision again thanks to that dreaded N12. Rents had a pop in 2022/2023, but house prices are just cresting the top, while interest rates are high. Again, buying a house is not in the cards — with the rates (nearly 6% in 2023!) and the stress test, we’d never qualify, even with hefty down payments from all that saving-and-investing the difference. The math says renting is expected to do better, and we want a detached house again regardless, so renting is the easy choice.

Here we are in 2026, and after just 3 years we are once again getting the heave-ho from the landlord: risk acknowledged a priori still sucks when it’s realized post hoc. But it’s a good time to check in: how’d that rent-vs-buy decision work out in the end?

Ben Felix has a video out called The Reckoning where he looks at the results using aggregate data across a number of metros up to 2025. But how did it actually work out specifically for a Toronto family-sized detached house?

Terrific, as it turns out. While things looked a little depressing in 2021, it has been all good news for the renting crowd since then. The stock market continued to go up: a basket of index funds is up roughly 80% over that time. House prices have come back down a hair: the $1.4M house at the peak is now about $1.3M. Aggregate stats for the city show more of a decline, but shoebox condos have been hit harder than suburban detached houses, and places like Brampton hit harder than North York or Markham, so for us in the north-east end of the GTA, it’s more of a slight decline/flatline than an outright market crash… this pocket also didn’t accelerate as badly in 2021/2022 in the first place.

But as I’ve said all along, The Big Misunderstanding^TM is that prices had to crash for renters to come out ahead. They don’t. They just had to stop going up like crazy. Indeed, right from the very start the rent-vs-buy calculator said if you used sane assumptions for house price appreciation, renting would come out ahead. If you tweaked the numbers to see what buyers were implicitly assuming to make them choose to buy over renting, they were baking in roughly 6%/yr appreciation — forever. It was astounding that they got 6%/yr for so long (and more in some years!), but now a few years of zeros following that growth has brought the average long-term growth to closer to 3.5%/yr.

Over the 5 years since 2021, the owner paid off a bit more of the mortgage to build some equity… but lost $100k to the slight decline in market value. Meanwhile, the renter had more cashflow to work with because the owner was shelling out more for interest. Oh, and that spike of . And insurance. The big thing helping the renter though is the stock market being up roughly 80%. The stock portfolio alone made something like $550k² for the renter, dwarfing the cashflow differences. The renter has rocketed from behind, and can now buy that now-$1.3M house with just a 5-figure mortgage³ if they so choose, while the owner is still looking at a mortgage balance of $260k, and another $65k or so of transaction costs if they also have to move.

To compare to Ben’s broader results, he presents it as a “wealth ratio”, which for Toronto was 1.37 in favour of the renter. That understates things: if the house price rocketed to $1.3M, with $1M of equity, that would imply the renter is $370k ahead, with a net worth of $1.37M (so our idiosyncratic results were worse, a wealth ratio of “just” 1.1, but house prices in North York/Markham have held up much better than those in the GTA aggregate). I think Ben really under-sold how impactful his results were with that table — those little decimals hide some pretty large effects and differences, especially with such high house prices. He’s also using a different period (25 years vs 15), though prices largely weren’t that expensive in 2005 so it’s amazing to see renters come out ahead at all in his example.

Anyway, there were of course some non-financial trade-offs. On the pro side, we didn’t have to worry about major house maintenance. When the ice storm hit and the pipes burst after the 7-day power outage, it was the landlord’s duty to fix it. I never had to call up a bunch of professionals, try to get a quote, then send 30 separate interac e-transfers for the job (which I’ve had to do to help my mom…). For a long part of our tenure, we didn’t even have to mow the lawn. Our cashflow needs were lower, so when Wayfare got sick we could still afford the house on one income (and weren’t facing a forced move/downsize on top of recovering from a rare disease). Those lower cashflow requirements also offered us the option of spending some of that surplus by getting a nice, fully detached house in a nice neighbourhood, which we never could have afforded if we bought. On the con side, there’s security of tenure: moving sucks. Moving because someone else is making you double sucks. Moving on a tight timeline because someone else is making you less than a month before school starts sucks triple. {scott_pilgrim_this_sucks.gif}

Framing it as a compensated risk makes it a little easier to handle. As much as moving sucked, and as much as I’m hating the search for a new place (esp. constrained to the same school district) and as much as I’m dreading the next move… we’re financially better off to the tune of $100k just for choosing to rent. Back then, $100k was considered a lot of money (now it’s just the extra a realtor will try to convince a buyer to throw at a place in a bidding war, barely a rounding error on today’s house prices). Outside the context of house prices, it’s still a lot of money. Moving was weeks of effort: nearly every moment outside of work was spent packing, tidying, shuffling things between houses, cleaning, unpacking, updating mailing addresses, updating bill payments… But for $100k ($50k/move), that’s the best-paid job I’ve ever had.

So to sum up, renting and investing the difference did leave a person in Toronto better off than holding their nose and buying. Prices are still way above where they started in 2011, but didn’t keep going at that white-hot 6-7%/yr rate, and with a bit of a correction ended up averaging out to just 3.5%/yr — only a hair higher than the long-term average assumption we started with. The stock market did amazeballs, and rents continued to take less cashflow than owning. As much as the big shift from being behind in the check-in 5 years ago to being ahead now was surprising, I’m really surprised this real estate market is still going: a tiny little correction, and no reckoning yet for the cap rates. After how far ahead the owners were in 2021, I’m shocked the scales flipped with just a soft landing. Zero blood in the streets and practically no industry bankruptcies.

Of course as nice as the vindication is, it’s highly bittersweet when sitting here with another N12 in our hands.

Still, let’s end the post on a high note: winner winner, chicken dinner! All the math and logic did eventually pan out!

1. I hate — hate — how Musk has tainted a perfectly good Spaceballs reference.
2. I had a fudge factor in there to account for paying taxes on the gains along the way, as some would be in a TFSA/RRSP/FHSA, some in a non-registered, but the gains are getting large enough that rough estimate likely isn’t enough, so maybe just $500k after tax.
3. Ok, a good chunk is tied up in RRSPs, so they’d need a larger mortgage in reality to actually buy a place.
4. And a rough penalty of a bit over ten thousand dollars in moving costs, but not accounting for the psychological toll of moving — that’s what we’re comparing the moving costs to.
5. I mean, whether the decision was good or not should be judged based on what was known when it was made, not the post hoc result, but after being a very, very tiny minority voice in an onslaught of housing bullishness, it’s very nice to have the post hoc result.

I don’t know if it’s just going viral because sometimes things do that, or if there’s a coordinated push from the various conservative social media accounts to attack Canada’s zero-emission vehicle (ZEV) mandate, or if I’ve accidentally trained The Algorithm into thinking I crave the absolute dumbest opinions on cars, but for whatever reason I am seeing a tonne of misinformation on social media about the ZEV mandate.

For those who don’t know, as one step toward meeting our climate goals Canada has set a sales target for a portion of new cars to be “zero emission”, starting next year (2026) with a 20% target, increasing each year until by 2035 gas-only vehicles are phased out completely and the market is 100% ZEV.

You Won’t be Forced to Drive an EV

This does not mean that you will have to buy an all-electric car: ZEVs include plug-in hybrids. So all the vitriolic takes about having to charge on long drives or running out of juice if stuck in traffic in the winter are nonsense misinformation based on misreading what the government means by ZEVs in the mandate. Most cars sold will continue to have a gas engine for extra range, heat in the winter, road trips, etc., they’ll just also have a battery to handle most local driving needs.

There are a bunch of PHEVs on the market today: a Prius Prime or Hyundai Ioniq if you want a mid-sized car; an Escape PHEV (like mine — as much as I criticize aspects of it, it’s a great driving solution) or Rav4 Prime if you want a regular SUV; a Pacifica if you want a van; an Outlander or Sorento if you want a giant SUV. And many more options that will be coming in time for 2035.

Almost 14% of cars sold in 2024 were ZEVs. Now, most of those were in Quebec where there are significant provincial incentives, but if all it takes is $7k to move the needle that much, then the national quota/credit system should help make it happen (and if not, driving a gas guzzler may become a Veblen good). To my surprise, despite a PHEV being the better solution, most of the ZEVs sold last year were actually full battery-electric vehicles (BEVS), about three-quarters. But IMNSHO, that was in part due to availability: the Rav4 Prime is still backordered to hell, the Escape PHEV was just starting to become available in 2024 and I believe the Hyundai options were largely in the same boat, the Prius Prime was still a brand-new model, and many other options were compliance frankenvehicles. As we move toward 2035 and the ZEV mandate starts to force sales towards ZEVs, I think we’ll see PHEVs take the lead over BEVs.

Charging Infrastructure

The next big misinformation point is for posters to wring their hands up and say there’s no way we’ll have the charging infrastructure for all those electric-powered cars in that time… without ever providing data or a calculation to back that fear-mongering up (“Can you imagine?”). Or assuming an unrealistically worse-than-worst-case scenario, like that all cars are full EVs and have completely drained their batteries at the same time and all want to do fast charging at once.

So let’s do a quick back-of-the-envelope exercise. ZEVs need very roughly 10 kWh/day — the PHEVs largely have roughly that much battery capacity, and they charge from a regular household outlet at about 1 kW overnight at off-peak times. The BEVs will have more capacity (call it 70 kWh for their total battery capacity), but the average demand will come in close to that (because most days they don’t drive their full range). They’ll have higher power chargers (level 2), but if we can handwave away that they won’t all be on at the same time, the population-level effect comes out to the same sort of order-of-magnitude of a kW or so for mostly off-peak times.

Ontario has just over 8 million passenger vehicles. Though there would be 10 years before the ZEV mandate kicks in, and more time for all those new cars to work their way into the system (the gas-only cars sold today would still be around then so we’d have two or three decades to fully add any grid or power generation needs), let’s assume the worst-case that a wizard has cursed us to all drive ZEVs tomorrow. 8 million cars times a kW each is 8 GW of power demand, mostly off-peak.

Ontario, on a typical day, uses about 19 GW on-peak, and 13 GW off-peak (NB: 10-year-old data), so we have something like 6 GW — almost all! — of that grid capacity sitting in our back pocket right now. Yes, it would be a problem if all those cars tried to charge on-peak on a hot summer day with peak A/C demand, but that’s not generally how people charge their PHEVs or even their EVs — they plug in after they get home, often with the car having a timer to wait until off-peak rates to start charging. And that’s our magic-wand scenario — the ZEVs will phase in more slowly, so there will be lots of time for the grid (and generation) capacity to grow.

Cost for Canadians

The last point of misinformation is that this ZEV mandate is going to make cars more expensive for Canadians, and that one does has a big grain of truth to it, but is more subtle and complicated than just comparing the sticker price of an electric car to comparable gas-only one. First off, a system of quotas and credits will generally mean the people driving gas-only cars subsidize the costs of those driving ZEVs. Indeed, in other markets Tesla sells its BEV credits to other manufacturers, so those BEVs are subsidized so much that in many quarters Tesla has more regulatory credit income than it does net income (i.e., the cars are otherwise sold at a loss). So yes, it will make gas-only cars more expensive, but the ZEVs should be cheaper as a result, benefiting the early adopters (with the trade-off that ZEVs are more expensive in the first place).

But the up-front cost is only part of what Canadians pay to drive their cars. Driving on electricity is cheaper than driving on gas for almost all ZEVs out there in almost all jurisdictions. Indeed, part of why I opted for the more expensive Ford Escape PHEV over a comparable hybrid or dino gas-only model is that I expect to save money over its lifetime. While social media may complain that the mandate is increasing prices on Canadians, and that’s largely true for up-front costs, there’s a good chance it will actually help them save money, by nudging them (or in later years, shoving them) into buying a car with a lower total cost of ownership — paternal and all that, but helpful for people that only consider the up-front cost of a car.

The Actual Good Point They Miss

However, that lower total cost of ownership will only apply for those people who are able to plug in at home, and that is not going to be everyone, even in a decade. Which is the one really strong criticism of the mandate: 100% is not necessarily the right number for the final step of the mandate. However, I haven’t seen any of the people who are angry at the mandate discuss the flaws in its specifics and how to make it better, they seem to be angry about the very notion of regulating the free market.

Some people won’t be able to charge (and some will steadfastly refuse to for various reasons and irrational personal preferences even when they can), so in those cases they will be paying more for capabilities they aren’t able to use — only having PHEVs/BEVs available with higher up-front costs really will increase their cost of ownership, as they pay for a battery they won’t use and just go to the gas station like they do today.

Now, an argument can be made that despite that, the target has to be 100%: if we make it say 75% to account for the ~25% who can’t realistically operate on electricity, there is no way the right 25% will end up buying the gas cars: lots of people with the ability to charge will just buy gas cars because they want to as long as they’re available (indeed, buying a gas-only car may become a status symbol; gas guzzlers already are). Manufacturers, when buying credits are an option, may just opt to buy the credits and pass along the higher costs rather than innovate. A partial mandate may keep the momentum and status quo going far longer than if we went for the aggressive, full ZEV mandate, and having some people pay for charging capabilities they will rarely use may just be the cost to get us to a more decarbonized future, some proponents may argue.

So 20% ZEV sales next year is a pretty decent jump from 14%, but totally doable. Some small pricing tweaks on both sides will help manufacturers hit their sales mixes, combined with greater volume availability on the models that are popular anyway. But those targets will get increasingly harder to hit without better adoption by Canadians, and better model offerings (and pricing) from manufacturers. And I’m not convinced 100% is the right stopping point, but also don’t know how to better set the right level, and regardless that’s a more nuanced conversation than “ZEVs bad, government forcing you to do bad things!”

Aside: Confused at Car Manufacturers

I’ve done a few deep dives into hybrids and EVs over the years, but my expertise is not in cars or production. However, I know the hybrid synergy drive used by Toyota and Ford (with some shared patents) has proven itself to be reliable, efficient, and smooth. To the best of my understanding of how patents work, that system is off-patent now (and has been for a little while). So why the hell are so many manufacturers trying to re-invent the wheel (or HSD) rather than just throwing that wonderful, proven system into ~all their models? Why does Hyundai use a regular automatic transmission with an electric motor bolted to it (and get sub-par city mileage)? Why has Honda gone through like three different versions of their hybrid transmission? Why does Volvo sin against nature¹ with its PHEV monstrosities? Why is it seemingly so hard to just take the thing that works, and then use it more? (For that matter, it took Toyota long enough to streamline even a tiny portion of its models to hybrid-only, and some models still don’t have a hybrid version at all).

1. I know explaining the joke doesn’t make it funnier but I feel like I should explain: a common criticism of hybrids is that they’re more complex than gas-only cars so they must be inherently less reliable. Which the data shows us is wrong (the various Prius generations own the reliability rankings, and the problem spots on the 3rd gen were the gas engine, not the hybrid system). But more to the point, it’s not actually true for Toyota/Ford HSD hybrids: you add a pair of electric motors, an inverter, and a big battery, but those motors and the power split device then replace the starter, alternator, transmission, and clutch (and I believe something else that is escaping my memory as I write this). Having that electrical generation capacity then lets you take out all the belts, so the A/C and other things can now be replaced with more reliable electric versions (and the power split and electric motors are way more reliable than a conventional automatic transmission). It’s actually fewer moving parts overall, with more reliable versions — it just sounds more complex. Volvo (and a few other manufacturers) are not using that system, they are in fact just bolting a motor and battery on to the car, and keeping all the old parts: conventional engine (indeed a turbo, not even an Atkinson-cycle which is where all the magic of a hybrid comes from and a huge part of why their fuel economy figures suck once the EV range runs out), conventional transmission, starter, etc. is all still there, plus a motor to run the other set of wheels and a battery and an inverter. All those tired criticisms of hybrids we’ve spent decades dispelling they’ve gone ahead and made manifest.

The Value of Simple site has been off-again on-again broken for over a month now. The culprit turned out to be WooCommerce, which in recent versions required more memory and to explicitly define the site’s base URL in the config file (which it hasn’t needed for the last 10 years… but whatever).

Now that’s finally up and running again, I figure hey, I have a few hours, taxes are in, I’ve already got FileZilla and my hosting management site up, maybe now it’s finally time to knock off something that’s been on the back burner for years: adding https to BbtP! (Plus the warnings from Chrome in particular were getting particularly obnoxious about it)

I don’t know how smoothly this is going to go: I have nearly 2000 posts with all kinds of embedded links and images that were hard-coded to non-secure links. Maybe the security warnings will only increase from here…

(I should also probably upgrade my theme to be responsive, but eh, it looks fine on my phone so that can probably wait another decade…)

And the winner of our ultimate cause of Horner’s is… vascular!

I figured once the CT report came back that I had a soft tissue thickening around my carotid artery that it was indeed a carotid dissection causing the Horner’s syndrome. I got to spend two nights in the hospital hooked up to monitors to catch if I had a transient ischemic attack (TIA, in other words a mini-stroke, which a dissection puts you at risk for) while they started me on anti-platelet drugs, and also as a way to expedite getting an MRI.

Then things took a turn for the weird: the MRI did not look like a dissection. There was a thickening there (it’s still the carotid as the culprit behind my Horner’s), but there wasn’t a little pocket of deoxygenated blood trapped in the wall of the artery like you’d expect with a dissection. The radiologist suggested vasculitis instead.

So they did a bunch of blood work looking for the immune markers of vasculitis… and nothing. There’s a few super-rare ones we’re still waiting on the lab to process, but after a lot of head-scratching they let me go with basically a shrug on the exact diagnosis.

I had a bad round of covid about a month before all this started (two months ago now), so the leading theory is basically “covid can do weird and bad things to blood vessels so I guess that’s it.” Maybe it’s a small dissection (which could have been caused by the extreme coughing I had), and maybe I’ve already mostly healed it by now which is why it didn’t have the characteristic appearance on MRI. Maybe it’s an inflammation from the covid itself.

Which leaves me with a bunch of shrugs from a bunch of doctors. We now know I don’t have a brain tumour, but I do have something funky going on in my carotid artery, and that’s causing my Horner’s syndrome. We don’t know exactly what’s happening in that carotid, or what caused it.

Will it get better? shrug.

Will it get worse? shrug.

Will my Horner’s go away? shrug.

They stopped the anti-platelet meds because now there’s no telling if those would help or harm. I’m back home and told to go back to regular life and just be a little extra vigilant for signs of stroke.

The one thing I do know is that this year I’m dressing up as a Zebra for Halloween.

Aside: Hospitals are Hell

I technically work in a hospital (though nowhere near patients), and have ever since I started grad school. I have a great deal of respect for the work that gets done there, the pressures the staff are under and have to juggle (patient comfort, safety, efficiency, etc.), and the limitations of funding and ancient buildings. I don’t mind being prodded, poked, imaged, treated, whatever has to happen there.

But it is impossible to sleep there. The beeps, the lights, the talking, the other patients (snoring, screaming, moaning, watching TV, talking on the phone), and in my case the shining a flashlight in my eyes to check my pupils and taking blood pressure every 2 hours. The first night was annoying but fine — I’ve pulled many an all-nighter, one more sleepless night was nothing I couldn’t handle. But the second night of not being able to sleep was torture.

There’s only so much we can do: while it would be great to build enough hospitals that are large enough for every patient that has to stay overnight to have a private room with a door that can close, that would be a huge investment and not anyone’s top priority for our limited healthcare dollars. However, I believe if I change the trajectory of my life to become an advocate with a single-minded mission to take all the fucking unnecessary beeps off every future piece of medical equipment, we could at least make it so that the wards get quieter as the various monitors get turned over. Indeed, alarm fatigue is a thing so it’s also bad for healthcare quality and safety.

I looked at myself in the bathroom mirror, and my pupils were different sizes. That’s gonna need a trip to the doctor, I figured, but it went away when I turned on the big light to get a better look, and again in the morning things seemed fine.

I stayed up late to see the lunar eclipse, and couldn’t focus both eyes on the moon at the same time. Took a few days until I figured out that one eye wasn’t dilating in the dark, but in well lit settings everything seemed more or less fine.

So I finally scheduled that doctor visit.

I wasn’t sure whether this was a GP issue or optometrist issue, so started with GP. She gave me reqs for a bunch of tests and suggested I see the eye doctor, who was able to identify it as Horner’s Syndrome — a collection of symptoms from an interruption in the sympathetic nerve on that side of the face. He asked if I also wasn’t sweating there, which sounded crazy, but I hadn’t been feeling well enough to work up enough sweat to notice. Sure enough, I hopped on the exercise bike afterward and only sweat on one side of my face, which somehow is even more viscerally freaky-deaky than mismatched pupils in the mirror.

Now the syndrome points to a common proximal cause for those symptoms — that sympathetic nerve block. But the ultimate cause of that block could be a dozen things… Most of them bad.

Tumours (brain, spine, neck, lung), vascular complications (esp. carotid dissection), MS (already an S-tier fear for me), or perhaps an upper lobe lung infection or abscess in the jaw or sinuses can all potentially be the cause.

Never thought I’d be rooting for the bacteria.

An MRI will go a long way to figuring out the culprit driving this, and nothing to do now but wait and try not to worry until I get one (it’s in the works).