The over-development of condominiums in Toronto, it is argued, is causing a shift in the landscape for renters. Condos are becoming a more and more popular option for those looking rent a home in Toronto’s downtown core.
The numbers surely do demonstrate that a demand exists. The condo apartment vacancy rate, according to the Canadian Mortgage and Housing Corporation in Toronto dropped to 1.3% in Q4 2014, compared with 1.7% in 2013. Fewer condos were left vacated on the market, despite continuing rent hikes. The average condo apartment one-bedroom rent in Q4 2014 was $1,609, up from $1,498 in the fourth quarter of 2010. So just how many condos in Toronto and across the country are being rented out? A 2011 Statistics Canada report suggests that approximately 25% of the country’s condo units are leased out. One estimate, which seems a bit exaggerated, comes from Urbanation, suggests that condos account for a whopping 99% of new rental supply in the GTA
Two arguments can be made for the account for the growing popularity of condominiums as an affordable rental option for individuals and families. One argument suggests that the construction of condos has come at the expense of traditional rental apartments, which are being torn down to make way for these new modern accommodations. The second argument has to do with the profitability of rental units. Denise Balkissoon of The Globe and Mail, investors are increasingly becoming the new landlords, as they embrace the “slow but steady profit of property management over the riskier highs and lows of retail sales.” Balkissoon coined the term “rental renaissance,” arguing that the new trend is Toronto is the conversion of planned condo properties have converted into rentals, citing examples in Liberty Village and on Sherbourne Street.
Those of you reading this that are on the fence about whether renting a condo is a good idea, should be forewarned. According to provincial legislation, buildings in Ontario that were built, or came onto the rental market, after Nov. 1, 1991, are not subject to rent control. Which means, after your first year lease is up, you may see your rent skyrocket.
If this fact hasn’t swayed you in any way, Melissa Dunne of MetroNews has a few tips for you that may help you in your search. First, it is probably in your best interest to hire a real estate agent, because, as some agents will tell you, most google searches and listings websites will display 85% or less of the actual MLS listings that are available. Whether or not this statement can be substantiated with hard statistical proof is yet to be seen. Second, it is important to keep in mind that rental costs will fluctuate wildly depending on where you are located in the city. Third, it is important to be smart about the timing of a purchase, as well as to be aware of new constructions and market conditions, in order to take advantage of, and exploit, the laws of supply and demand. If you are aware of new condo developments being built that will add to the number of unsold units to the market considerably, price drops may in tow.