Apart from recent increases in interest rates by the Bank of Canada which Tembo predicted in our last blog, a big piece of recent real estate news deals with the rental market in Toronto, which is going through important changes which this blog post will outline.
Prices are increasing significantly
The Toronto Real Estate Board (TREB) just announced that average monthly rental costs for a one-bedroom condo in Toronto hit just under $2,000.00, up 10% from last year. Two-bedroom condos come in at just over $2,600.00 a month on average. Interest rates going up will make borrowing more expensive for first time buyers and will gradually force developers to decrease costs and improve profitability. Affordability will be even less of a concern than it is now.
Rental vacancies at record lows
Low supply of rental units is fuel to the fire of higher and higher prices. The rental vacancy rate in Toronto is around 1%. Many people are being systemically priced out of the city because there are too few affordable rental units left. Condo apartments are out there but getting one is difficult, competitive, and required a solid income.
Government measures aren’t helping
The Ontario Fair Housing Plan was supposed to bring improve the affordable housing situation by protecting existing tenants in the city, instead rental control is proving to hurt supply because developers do not want to build now highly regulated and protected rentals that are not as profitable in the short to medium term as major condo construction is.
Condo market is hot, and supply is insufficient
New legislation and controls from all levels of government will add pressure to developers and will impact supply. Demand remains strong because of a stable economy and higher immigration. All of these factors will continue to affect the supply constraints within the market considerably in a way that adds to the problems.