Well, 2017 is a few weeks away. For those of you starting to make your plans and goals for the new year, I thought that this would be a good time for me to offer some insight on the current leasing/rental landscape in Toronto and what we can expect going forward. Those of you who are real estate investors or who are currently renting, are very aware of how much lease prices have increased over the past few years. In a nutshell, if you own a rental unit I’ve got some good news for you for 2017. If you are currently renting or looking for a new space in the near future well…..
If you have looked at any of the Toronto papers or have read some of my recent posts on Facebook and LinkedIn (username: Brandt J Morris *shameless plug), rental rates across the city have been going up at an alarming rate. Why? Supply. Even though we have all of these condos being built - too many, says by the media - there is still a shortage of rentals available.
Lets face it, most Toronto residents have been or are being squeezed out of the housing market which leaves renting as the only option. Toronto has the lowest unemployment rate of ALL major Canadian cities. If you are a young 20 or 30-something, what other choice do you have?
The first chart shows:
The impact of the new mortgage rules.To qualify for a $600K condo which gets you about 700 - 800 sq ft depending on where in the city it is located, you will now need to make roughly $86K with 10% down to qualify.
Here we see how, due to lack of affordability, condo leasing activity has doubled over the last 5 years in Toronto
Although we are building more condos, the vacancy rate lies at 1.2% - the lowest it has been in the past 5 years. Factors for this are low unemployment rates, lifestyle preference and of course price. Plus, if you’re a 20 or 30-something, there is nothing better than hopping in an uber after a Wednesday or Thursday night of fun (how I miss those days)
Rents are rising and are only going to continue to. In my opinion, depending on where the condo is in the city and building $3.10 per sq is on the low side.
Want more proof? I recently took a client to look at a condo that has been on the market for only 1 day. My client loved it as it checked all of the boxes. They decided to put in an offer for $2000.00 per month plus utilities, which was the asking price, and what I felt was reasonable based on the location. To my surprise, when I called the agent to let them know I had an offer to lease I was offer number…...5!! Offer number 5 on a lease! All I could do is laugh, as I knew this unit was now going to go over asking and it did. The unit went for $2200 or 10% over asking.
This, folks, is the reality of today’s Toronto rental market. As I said earlier, if you are a landlord, I’ve got some great news for you and if you are a renter, well….