People looking to rent in Canada’s biggest city could be facing some unique challenges in 2019.
Apart from the cooling property sales market, which experts expect to remain “fairly balanced over the next month” as prices and sales stabilize, industry watchdogs are training their eyes on one of Canada’s most precarious rental markets: Toronto.
“The rental market in Toronto is definitely something to watch in 2019” said Scott Ingram of Century 21 to BNN Bloomberg.
One recent report from the Canada Housing and Mortgage Corporation (CMHC) revealed that tenant turnover rates have slowed considerably – more and more renters are staying in their units. Couple the low turnover rates with steady population increases in the city, and you have a strained rental market with less to offer at higher prices.
According to CMHC, Toronto’s rental vacancy rate is 1.1% -- one of the lowest in the country. On the west coast, in Vancouver and Victoria, vacancy rates are similarly choked at 1% and 1.2% respectively.
The average vacancy rate across Canada comes in at 2.4%, more than double the rates found in markets seeing the most pressure. In 2017, vacancy rates across the country were 3% higher, when supply was outpacing demand.
Other real estate experts are noting the latest employment boom in the tech sector as another major factor squeezing the already-tight rental market this year.
“There’s a lot of tech-related growth – these are well-paying jobs,” said Lauren Haw, Zoocasa CEO.
“The people that are migrating here for these jobs [are] affecting not only the purchase market, but obviously also the rental market. So really, the average earner in Toronto is not buying the average house in Toronto. They are either renting or commuting a little bit further to be able to afford the home that they want.”
“The job market will continue to put pressure on the rental housing market – but that job market is actually going to continue to fuel potential buyers into the Toronto [region],” said Haw.
Another real estate expert, John Pasalis, told BNN Bloomberg that Toronto’s dependence on condos can be a bit concerning to some.
“I think especially if you’re looking in the downtown core, renting isn’t necessarily a very attractive alternative to buying because it’s also expensive, especially if you’re looking into renting a condo,” he added.
Toronto has some of the highest rents in the country. October’s average price for a two-bedroom unit was $1,467 per month, around $200 less than Vancouver, the country’s most expensive rental market.