To rent or not to rent? No, it’s not Hamlet, but that is the question for many people. For some renters, they haven’t saved up enough money to buy some thing just yet, or they simply prefer a lifestyle where the flexibility of renting feels like a better fit. Sure, you don’t build equity, but you have less responsibility. Then there are those renters who follow the sales of real estate market more closely than most homeowners. They are waiting for that magical moment they believe will come, any day now, where the market tanks. Then they can rush in, snap up the deals, and laugh at all those foolish buyers who bought at the peak. Mwaaa ha ha ha! Some of these renters have been waiting for the past 20 years when a pleasant home in Toronto could be bought for a couple of nickels. Well, maybe not that cheap, but you get the idea.
Believe it or not, though, this latest blog really isn’t about whether renters should buy or rent. I’m a real estate salesperson. So, I am admittedly biased on the subject. But I do think so much attention has been given to the buying side of things and the cost of buying a home, that the residential rental market and how it works has been largely ignored. Too often, renting is considered a safe practice while you wait to buy. But here are a few things that you may want to consider when renting in Toronto:
1. SHIFTING STANDARDS: The standard for rentals are shifting. Most of Toronto’s rental stock is old. We don’t build very many new residential rental properties any longer. Most new rental properties are individual condo owners who rent out their unit. So, the desire for nice things like granite counter tops and front load washers and dryers have increased. In turn, those crustier, older rentals are more and more in a rush to upgrade their facilities and throw around a little fairy dust to pretty up the lobby. Renters want nicer places with stainless steel appliances and a tub that is not 40 years old. Of course if enough renovations and upgrades take place, there usually is a big increase in the rental price as well, if the renos happen between tenants.
2. GOVERNMENT INTERVENTION. Because the new rules from the federal government makes it more difficult to qualify for a mortgage, there are fewer first time buyers and more people staying in the rental pool longer. And this adds more renters to the the rental pool in Toronto. So, more renters means a tighter rental market and a tougher time finding a place. To be honest, I’m not sure if this government intervention has that much influence, but even the rising prices of buying property have left some renters in the rental market longer than they would like to be in it.
3. RENTS ARE GOING UP TOO. It’s not just home prices that are going up. Rent is too. Maybe not quite as fast, but at a pretty healthy clip, as far as I’m concerned. The vacancy rate is about 1% in most of Toronto. 1% is considered too low. It causes landlord to raise rents and even leads to bidding wars. Yes, I said bidding wars. They are not the sole terrain of real estate purchasers any more. Luckily, there will be a lot of newly built condo units coming to the market in the next two years. So, for your renters who believe you simply won’t be able to find a rentable place in Toronto, relax, there is more supply on the way!