Bidding Wars Still Present in Toronto, but not on Toronto Mortgages
At the very height of the boom that Toronto has been in lately, there were bidding wars on just about every home that was on MLS. Even the amenity-deprived and multiple-room-challenged homes would still receive offer after offer during the huge real estate boom that’s been occurring in Toronto for the past couple of years. Now, those bidding wars have all but dried up. At least, if you’re looking to take out a Toronto mortgage on a home. And while that’s good news for homebuyers, renters in the city are just starting to find themselves in the middle of bidding wars. And it looks like they will be for years to come.
It shouldn’t be a surprise to anyone to learn that the hottest bidding wars are coming in on condos in the city – properties that are the most sought after by renters and buyers alike. Just last month a condo on Mount Pleasant Road went for $700 over its asking price, leaving Carol Endicott wondering what to do as she searched for a place to live. Carol did what so many people – no matter their age – do when they’re stuck.
“I called my parents,” she said, after describing how frustrated she was, and wondering whether or not she should get caught up in the war on Mount Pleasant Road.
Her parents gave her some great advice.
“They said, ‘Don’t get sucked in. Do not offer more than $100 more,” says Carol.
It turns out, that’s all that was needed. She put in an offer of $2100, even though it was less than what other people were offering. To Carol’s surprise, that bid won her the condo. After looking over all the applications, the private condo owner decides that Carol and her roommate were the best fit. No, they may not have had the most money. But they had the most credentials, including good jobs, and a responsible reputation of taking care of the homes they lived in.
That shining track record means a lot – especially in a city that’s seen their 2009 vacancy rate drop to just 1.4 per cent in 2012. This number surprises many people in Toronto, as there’s been talk of oversupply – especially in the overheated condo market – for at least the past year.
But that oversupply has largely been in the buying sector of the market, not the renting. And while there may be far too many condos available for purchase, the numbers just aren’t there for the rental market.
This is because of that very oversupply problem. With so many condo projects still unsold, but yet to be built, Olenka Mallon, a real estate agent in the city, says that it will likely be another three to five years that renters have the hardest time in the city.
So what’s the answer?
“I tell all my clients, ‘Don’t even start looking until you have all your paperwork in order,” says Mallon.
She says that includes a good credit report, a letter from your employer stating your salary, and references from previous landlords. It’s these items, not necessarily the rental fee one is willing to pay, that landlords look at the most. Mallon says that landlords put a higher priority on having their place taken care of, than they do even what their rental profit is every month. That’s because they realize the huge benefits of having a rental-ready home, even after the past tenants have just moved out.
So what areas are you most likely going to have the most trouble finding a Toronto condo? Corktown and anywhere along the Bay Street corridor. Property manager, Sharon Golberg, says that it’s these areas that have the highest population of young professionals, and they’re the ones who are looking for a lifestyle that will allow them to be within walking distance of their office.
This increasing demand has pushed up rents on condos by 20 per cent across the city. This has forced many renters into taking on a roommate – even if they didn’t want to; and even if they’re staying in a one-bedroom condo. And unfortunately, the situation will continue to worsen over the next few years.