Wanting to Rent in Toronto? Whether it’s Wise will Depend on Where You Are
Rental activity and condo construction is starting to go hand in hand in Toronto. But whether you’re looking for a unit to rent, or one to rent out, and how easy it will be to do, will all depend on where in the city you’re looking.
For the first time in the city’s history, there were a total of 5,315 rental leases signed during the latest quarter of this year, says Urbanation, making that the first time Toronto has topped the 5,000 mark for the number of leases. When compared with the second quarter of last year, that’s a 20 per cent increase from 2012′s 4,439 signed leases during that quarter alone.
But on the flip side of the real estate coin, the number of newly constructed condos sold during the same quarter saw a decline of 18 per cent, down from 3,903 from just one year before. The number of condos that sold overall was also down to 4,689, a 7 per cent drop from last year.
“The total number of leases over the past four quarters reached a historic high of 17,166 units – higher than either the condominium apartments sales in the resale market and new home market over the same period,” said Urbanation in their report.
With more condominiums than in anywhere else in North America, the number of unsold condos in Toronto has now inched towards 19,300. Urbanation says that sale numbers have remained steady, but certain economists say that doesn’t take into account the number of hits developers are taking. Because sales are down, these developers have had to resort to things like offering free furniture with the units, or waiving maintenance fees in order to draw buyers. One developer said that because of these incentive programs, new condo sales have probably dropped by about 15 per cent.
These numbers mean that more investors are turning towards condos as rental units rather than traditional apartment buildings or single-family homes, unheard of in the Toronto area. Those investors buying condos to rent out, along with the number of renters currently in Toronto, also mean that rents are going up – now costing $2.35 per square foot, an increase of 4.1 per cent within the last year. Rents meanwhile are going up slightly more slowly, averaging $1,847 a months for units that are around 785 square feet.
“Smaller rental units in newly registered projects are now visibly impacting the market,” Urbanation also noted in their report.
But it’s the units in the downtown core that are taking the biggest hit. Rental rates per square foot only increase by 1.6 per cent when compared with last year. And Urbanation says that’s because of the lack of apartment buildings being built to keep up with the supply of renters.
“Several downtown submarkets experienced a surge of listings from new projects, keeping rental rates competitive despite higher demand,” says Urbanation. “Quarterly variations in index rents can often be seasonal and driven by supply; however, in aggregate index rents have shifted higher across the market spectrum.
“The growth in condo rental activity reflects a greater movement of younger households into the core, and a lack of growth in traditional rental supply.”