Photo: Anthony Majanlahti/Flickr
Would-be homebuyers who have already been priced out of the Greater Toronto Area’s white-hot real estate market may be feeling the pinch when apartment hunting, too, a new report suggests.
Increasing home prices are feeding demand for condo rentals as some put their ownership aspirations on hold, and this is driving rents up, according to Urbanation’s first quarter 2016 rental market report.
“The rental market is benefitting from strengthening fundamentals, such as employment and population growth, but also quickly eroding affordability and intense competition in the ownership market,” said Shaun Hildebrand, the real estate consulting firm’s senior vice president, in a statement.
The average price of a condo — generally the most affordable housing type and a common way first-time buyers enter the market — in the GTA last month was $389,319, up 4.3 per cent from the same time a year earlier, according to the Toronto Real Estate Board (TREB).
Meantime, in the first quarter of 2016, the average monthly rent for a condo unit hit $1,891, an increase of 6.8 per cent from that period in 2015.
The number of condo units rented through TREB’s MLS system during this period surged 25 per cent to 6,163, according to the Urbanation report, and it appears builders are taking note of this tenancy trend.
From January to the end of March, the number of applications developers submitted for purpose-built rental projects in the GTA soared 40 per cent over what was seen in the last quarter of 2015.
This giant leap accounted for 4,284 proposed rental units, which joined the 14,753 units developers had previously expressed their intentions to build across 42 GTA projects.
Urbanation points out that in 2015, contractors began work on 3,476 purpose-built rental units, the highest level in 25 years.
“Even with record numbers of condos coming up for rent by investors, conditions have tightened, supporting increased rental development,” Hildebrand added.
Those hoping to avoid bidding wars in the rental market may be disappointed. Some 417 units were leased for more than they were listed, up 59 per cent from the previous quarter.
Not surprisingly, units are taking less time to rent, with the average number of days on the market dropping from 27 to 23.
In all, 3,989 additional condo apartments were put up for rent on TREB’s MLS in the past quarter, with 36 per cent ending up leased by the end of March.
Not a bad time to be a landlord in the GTA.