Report: With Easing Pandemic, Toronto Rental Market Could Recover Soon

The pandemic has affected renters far more than homeowners, and the rental market in the Greater Toronto Area could soon recover if the virus is brought under control. 


That’s the message in the Canada Mortgage Housing Corporation’s (CMHC) Spring Housing Market Outlook, which said that employment losses have been concentrated among younger Canadian workers, most of whom are renters. 


Other drivers of renting have also been affected, like international migration, which has slowed significantly, according to the report from Canada’s national housing agency. Another big portion of renters are students, most of whom have been learning online. 


For students, remote learning meant they could relocate to lower-priced areas of town, or move in with their parents, lowering the demand for rentals in the process. 


At Alto Properties’ five-story apartment building, 859 Kennedy Road, we saw that slowdown firsthand, and the likely causes outlined in the CMHC report make sense. At the same time, we’re also already seeing an uptick in business at 859 Kennedy Road, especially as Toronto and Canada have started to slowly reopen from the worst of the pandemic. 


The report also noted that new rental units under construction may face longer lease-up periods in a slower market. 


Usually, new projects require as much as 12 months for full lease-up. But with reduced tourism and short-term rentals restricted to principal residences, some condominium apartment units will be converted into long-term rentals, which should increase supply and potentially impact rent growth, the report said. 


Many rental projects may be put on hold as a result of the economic uncertainty, which could continue to result in a low supply of rentals. However, this potential slowdown of new rental construction will likely be concentrated in downtown, where new rental projects need to command high rents to be financially viable, the CMHC report said.


At the same time, the rental and condo markets both began a return to normalcy toward the end of 2020, as the promise of vaccines brought optimism back to downtown Toronto, according to the CMHC report. 


Partly driven by the huge price increases for ground-level homes, buyers have been returning to the condo market.


Highlights from the report on the Greater Toronto Area:


  • Rental demand will begin to recover once the pandemic recedes.

  • Resale home sales and price growth will remain strong in 2021 before slowing down in 2022. 

  • Steady housing starts activity will continue from 2021 to 2023, with more starts expected in the 905 areas. 


By the end of the first quarter of 2021, vacancies for buildings in the Greater Toronto Area rose 6.6 percent, a 1 percent increase from a year ago and a 5.7 percent increase from the end of 2020, according to Urbanation. 


In the first quarter of this year, Toronto experienced an 8.8 percent vacancy rate, compared to 1.5 percent in the other 905 communities surrounding the city.


The number of vacancies means there are many properties for purchase or rent. According to Storeys.com, there were 2,886 new condominium units sold in Toronto in the first quarter of this year. That’s more than 2.5 times higher than the quarterly average for most of 2020 and much higher than the pre-pandemic level of 2,829 sales in the first quarter of 2020, before the pandemic hit. 


In the same time period, the number of units leased in the first quarter of 2021 reached a new high of 11,928, which is a 70 percent year-over-year increase. New listings of condo rentals fell 12 percent. 


“COVID-19 has had unprecedented impacts on Canada’s urban centres,” CMHC chief economist Bob Dugan said in the Spring Housing report. “While large parts of the economy have struggled to adapt to pandemic conditions, housing activity has recovered reflecting pent-up demand, adjustment of working practices by many to pandemic conditions, and lower mortgage rates.”

Popular posts from this blog

Improving Safety Measures to Fight COVID

 As the Toronto real estate industry continues to boom and the pandemic continues to impose restrictions on daily life, it’s crucial that both landlords and the City of Toronto improve health and safety measures in residential buildings.   City officials have already urged Condo Boards and Landlords to adopt additional measures to protect Toronto residents from the spread of COVID-19. These new measures are aimed especially at large residential buildings that have a large number of units.   “During this unusual time, patience and understanding from landlords is necessary to help stop the spread of COVID-19,” according to the City of Toronto website . “The City encourages all property owners to check in on their vulnerable residents and if necessary, connect them to the appropriate local agencies and supports.”   The RentSafeTO program was implemented several years before the pandemic, but remains another important part of fighting the spread of the virus while raising standards
Read more

Owning a Property: Building Maintenance Checklist

Owning rental property can be quite a task, especially if you are new to the real estate investing industry. Afterall, tenants want to rent a place that they are proud to call home. As a landlord or property manager, you must be on top of strategies that will ensure your investment is in its best shape at all times. Part of that means knowing what to take care of. Here is a quick rental property maintenance guide you can follow. Pest Control One sure thing that will turn tenants away insects and seasonal rodents.   Even though insects are a relatively common hassle, especially during the spring and summer months, it is important to hire an exterminator or pest control company to spray around the perimeter of the property periodically to keep insects at bay.   Even though this will cost you some money upfront, it can save you money in the long run. Same applies for rodents, seasonal as well, however you should have an accredited pest control company on a maintenance contract for you
Read more