Toronto Star- Market turning to favour renters?
September 28, 2024
The long-standing tight supply of rental units in Toronto is turning around, with more units becoming available.
That’s good news for tenants who now have more choice and the likelihood of lower rents as apartment owners compete for tenants’ rental dollars.
Meanwhile, condo investors need to be diligent in leasing a unit and make sure the unit is priced at competitive levels.
Those are the observations of Gerry DiLeo, vice-president of Toronto-based The Rental Lifestyle Group, which specializes in leasing, management and maintenance of residential suites on behalf of owner-investors.
DiLeo says that, since late September, 2001, the market for residential rentals has turned much softer, with rental rates for both furnished and unfurnished condos moving lower and units taking much longer to lease.
“We’ve seen vacancy rates in apartment and condominium rentals start to loosen up — there’s more availability week by week,” notes DiLeo.
“The incidents of Sept. 11 brought a lot of uncertainty in the market and the economy,” he adds, “and in response, the government started lowering rates and we now have the lowest mortgage rates in 40 years.
“Combine the low mortgage interest rates with a boom in condominium construction that’s helped keep purchase prices down, and you can now buy a condo and carry it for not much more than you were paying in rent. That’s prompted a lot of people to leave their rented apartments and buy a condo.
“We’ve experienced a softening — a lowering — of rent prices in virtually all units, and it’s taking longer to rent units out. We see it as a temporary condition, likely lasting another year or so.”
DiLeo notes For Rent signs are remaining up longer and the classified ad sections for residential rentals in major newspapers are getting bulkier. And it’s taking longer to find a qualified renter in the current market.
“Over the next few years, as more ‘under construction’ condominium buildings become ready for occupancy, we believe there will be a slight but continued increase in the overall rental supply in Toronto. The tremendous sales volume of new homes and condos over the last few years is greatly responsible for creating what we see as the start of a renters’ market in the Toronto area. According to a report by Urbanation, over 21,000 new condos will be completed by 2003, and that’s a lot of units to absorb.”
DiLeo adds, “the CityPlace development, which adjoins SkyDome land, will have some 1,300 units available for occupancy by this summer. We understand that the investor component in this massive development is significant. Expect a flood of condo rental suites coming out of this location.”
He expects the condo rental market will be strong over the long term.
“With the projected increases in our local population — an estimated 100,000 people moved into the Greater Toronto Area in the last year — the demand for quality condo rentals will continue. Non-condo rental construction, while increasing, is still not sufficient to keep up with estimated future demand.”
DiLeo says it’s all a remarkable change from last fall, when Canada Mortgage and Housing Corporation reported the vacancy rate in rental condominiums in the Toronto CMA was 0.1 per cent, down from 0.5 per cent the previous year. “I think we’ll be in single-digit vacancy rates for at least the next year,” he says.