By Steve Ezeude
“It is a common knowledge that Toronto has the most expensive
rent in Canada.” – Toronto Storeys
The federal election has come and gone. The uncertainties surrounding the elections are gradually getting behind us but one thing is certain that the Liberal Government will have to deal with a minority leadership this time around. With the Liberal Government continuing in power, it is expected that it will vigorously pursue the implementation of its housing policy that is aimed towards the provision of affordable housing to all. Only time will tell if the measures put in place will achieve the set objectives.
The Canadian rental market
is driven by Government housing policy and immigration is having a huge impact
on the market. It’s a known fact that Canada is one of the most desired
destinations for migrants and Canadian home ownership is one of the highest in
the world with a 68% rate and one out of five home buyers is new to Canada. Housing
tops the most needs of the populace but not without its challenges. Inadequate
supply, stress test that is limiting purchasing power and increased immigration
No doubt that the city of Toronto is growing. We are continually seeing job growth that is supporting the population growth however the supply of housing is not in sync with the growing population and new construction is not built fast enough to keep up with the demand. On the other side of the coin, some landlords, in preference to Airbnb, do not open up their properties for long term leases. Worst still is the herculean task of meeting the rental requirements these days. Searching for rental homes is now more difficult than buying a home. The situation is absurd and outrageous.
As a realtor, assisting prospective tenants find rental accommodations these days is like pulling teeth. There are more people looking for rental accommodation than the number of rental units available in the market. Besides the inadequacy, the units available are getting expensive and the requirements for finding rental accommodation are too difficult to satisfy. The situation is more severe on the new immigrants who form part of this teaming population. Although the main requirements that include the ability to pay first and last months’ rent, provision of credit report and employment letter, most landlords now look for tenants who can pay more than the usual two (2) months rent and some even request for an upwards of six (6) months and up to one full year’s rent. Although more than 2 months is illegal, the landlords do not care as he who has the gold makes the rule.
One new migrant couple getting frustrated with the situation queried why the Canadian Government is not helping out. To them, they were like, “why would Government bring in people without making adequate housing provisions for new immigrants.” Haven gone through three (3) rejected lease offers, they couldn’t hold it anymore as they had to move to another temporary accommodation which is quite expensive considering they daily rates. And the search goes on endlessly with a lot of rent seekers experiencing horrible similar situations.
With this trend, increase in rents should be expected more so with the Government’s guidelines on rent increases annually. Spencer Maxwell of REC taking a look at the 3rd quarter of Toronto’s rental market report, reported a dramatic rise in rent considering that in the last one year, rents have “increased all over the GTA in all types of rental units.” According to the source, “bachelors went up by 2.7% from $1,854 to $1,903, one-bedrooms went up 4.5% from $2,163 to $2,272, two-bedrooms went up 4.2% from $2,822 to $2,941 and three-bedrooms went up 13.5% from $3,304 to $3,749.” When compared with surrounding areas of Toronto, Spencer noted that “all rental transactions and leases for apartments and townhouses within the city remain higher and have increased more than any of the surrounding areas, which include the Peel, Durham and York regions. Through this areas we also see a booming increase in rentals and leases which dictates a rise in prices.”
In all this, seeing how the rental market is behaving, would you (as an investor) rather buy and hold or buy and sell in the shortest possible time? For us at REC, we advocate buy and hold.
_____________________________________________________________________________________________Steve Ezeude is a Real Estate Broker with Royal LePage Signature Realty. For questions and/or feedback, please send email to email@example.com or call 6478608304. www.mitorontohomes.com