Real Estate

Toronto rent skyrocket after new regulations reduce supply and increased demand

  • Last Updated:
  • Jan 29th, 2018 9:34 pm
[OP]
Banned
Dec 5, 2015
1338 posts
443 upvotes
Thornhill, ON

Toronto rent skyrocket after new regulations reduce supply and increased demand

Not surprised at all when govt tries to meddle in basic supply/demand

https://www.thestar.com/business/2017/0 ... eport.html
Toronto tenants are facing a tighter squeeze at the first of the month and a tougher hunt for apartments in the wake of Ontario's new Fair Housing plan, which expands rent controls.

The average rent on apartments listed on the Multiple Listing Service (MLS) in the second quarter of the year, rose 11 per cent year-over-year, past the $2,000-a-month mark, according to a report from condo research company Urbanation.
161 replies
Deal Addict
Feb 22, 2011
4470 posts
4162 upvotes
Toronto
This is no joke, prices in the building I rent out have sky rocketed. I hadn't even reviewed the rates in a year or so, I though the $1750 I was getting was amazing but now I see units, without parking, getting $2200. That's a $450 or 25% increase in a couple years.

What people who criticize ownership fail to realize is rent can go up exponentially. Rent control doesn't help people after they move or are evicted. All it takes is for your residence to be sold or the owner wanting to move in and you are out and at the mercy of the market.

I can't even imagine what it will be like once half the people in the city get a 25% raise to the minimum wage.
Deal Addict
Feb 22, 2011
4470 posts
4162 upvotes
Toronto
The really ironic thing is I have never increased rent on any of my tenants. They usually don't stay more than a couple years and I know I can get market rent later or increase it if they stay too long. Now with the limit in place I feel obligated to do it every year at the max incase they stay many years and it goes way below market value. For the first time ever I increased rates to current tenants and it's only because of rent control.
Deal Fanatic
May 1, 2012
7518 posts
4089 upvotes
Markham
rjg4235 wrote:
Jul 7th, 2017 12:22 pm
The really ironic thing is I have never increased rent on any of my tenants. They usually don't stay more than a couple years and I know I can get market rent later or increase it if they stay too long. Now with the limit in place I feel obligated to do it every year at the max incase they stay many years and it goes way below market value. For the first time ever I increased rates to current tenants and it's only because of rent control.
Rent control has never shown to work anywhere. This whole thing was a charade.
Deal Addict
Aug 12, 2004
3956 posts
1232 upvotes
Calgary
Surprise surprise shortsighted socialist measures backfired, news at 11.

This is also the same reason why higher minimum income promotes unemployment if done arbitrarily. In the end, Canada is still a capitalist society where supply and demand is the ultimate driver of the economy. It is a delicate balance, and if disrupted can cause the opposite intended effect. In the case of rent control and new measures, all these new measures not only cause a hindrance for landlord and discourages renting, but it promotes yearly rent increases simply to combat the loss of control in raising prices when needed. Lower supply, higher cost. Really hard for the socialist Liberals to grasp such a basic concept, but hey, it looks good to voters.


"Hey let's ban 3 year phone contracts, that will show those corporate pig companies who's boss. What's that, you are raising my plan by 40$ a month and I now have to pay 200$ more for my phone?"
Deal Fanatic
User avatar
Sep 8, 2007
5891 posts
4149 upvotes
Way Out of GTA
rjg4235 wrote:
Jul 7th, 2017 12:22 pm
The really ironic thing is I have never increased rent on any of my tenants. They usually don't stay more than a couple years and I know I can get market rent later or increase it if they stay too long. Now with the limit in place I feel obligated to do it every year at the max incase they stay many years and it goes way below market value. For the first time ever I increased rates to current tenants and it's only because of rent control.
I think we saw a lot of supply in May hit the market that was from landlords where it was just the last straw with further erosion of their asset rights. Say if 3-5 % of supply evaporated with the "Fairness' plan.

With the new rules if you get someone who is a prospective long termer (5 year plus) vs a shorter termer (1-3 years) you simply choose the shorter termer as you at least get a chance for a rate reset. Or if you decide to sell after a shorter term tenant has given you notice then you don't have to bribe them with the month of rent plus the need for the new buyer to have to occupy the place themselves...or the renter can continue living there...rent controlled. Shorter termer Give you more opportunities to set rent to market, get in to do repairs and maintenance on turnover, potentially more upward motivated tenants in the shorter term pool also.

Once well intending landlords get stung by a bad tenant, find out how's stacked the RTA is against them many times the sale sign goes up. Over and done. It's not for the faint of heart.

With the minimum wage increase similarly...many jobs will hit the road. So you will have a smaller number of people making more with more unemployed. Unemployed people usually can't afford more rent or any rent for that matter.
Deal Expert
User avatar
Apr 21, 2004
45461 posts
11908 upvotes
Rents are going up to whatever the market will bear. There are only a few landlords who are altruistic when setting up rental rates.

With or without rent control, this is bound to happen with people complaining about the negative cash flow and after having bought at higher and higher property prices.

If renters want to pay an average $2k/month, it is their choice.
Deal Fanatic
May 1, 2012
7518 posts
4089 upvotes
Markham
alanbrenton wrote:
Jul 7th, 2017 1:21 pm
Rents are going up to whatever the market will bear. There are only a few landlords who are altruistic when setting up rental rates.

With or without rent control, this is bound to happen with people complaining about the negative cash flow and after having bought at higher and higher property prices.

If renters want to pay an average $2k/month, it is their choice.
Back in 2008 I paid $1400 to sublet an apartment infested with roaches in the Upper East Side of NYC.

2k a month for a 2 bedroom sounds really cheap.
Penalty Box
User avatar
Jul 11, 2008
4368 posts
1478 upvotes
Away from RFD idiots
What are typical profiles of people who rent condos at $2k/month?

bachelor earning 80$K/yr?
couples earning combined 100$k/yr ?
Delete account because there are way too many idiots on rfd
Deal Addict
Feb 22, 2011
4470 posts
4162 upvotes
Toronto
mathiewannabe wrote:
Jul 7th, 2017 1:42 pm
What are typical profiles of people who rent condos at $2k/month?

bachelor earning 80$K/yr?
couples earning combined 100$k/yr ?
The one tenant I have who pays this much has a master's of engineering and a CFA. He makes well over 6 figures.
Deal Addict
Feb 22, 2011
4470 posts
4162 upvotes
Toronto
cartfan123 wrote:
Jul 7th, 2017 1:02 pm
I think we saw a lot of supply in May hit the market that was from landlords where it was just the last straw with further erosion of their asset rights. Say if 3-5 % of supply evaporated with the "Fairness' plan.

With the new rules if you get someone who is a prospective long termer (5 year plus) vs a shorter termer (1-3 years) you simply choose the shorter termer as you at least get a chance for a rate reset. Or if you decide to sell after a shorter term tenant has given you notice then you don't have to bribe them with the month of rent plus the need for the new buyer to have to occupy the place themselves...or the renter can continue living there...rent controlled. Shorter termer Give you more opportunities to set rent to market, get in to do repairs and maintenance on turnover, potentially more upward motivated tenants in the shorter term pool also.

Once well intending landlords get stung by a bad tenant, find out how's stacked the RTA is against them many times the sale sign goes up. Over and done. It's not for the faint of heart.

With the minimum wage increase similarly...many jobs will hit the road. So you will have a smaller number of people making more with more unemployed. Unemployed people usually can't afford more rent or any rent for that matter.
You can think jobs will hit the road and that's fine but to state it as fact is a bit arrogant. There are many markets where min wage has increased and unemployment hasn't increased. All these companies complaining about increased personnel expense will also have increased revenue as their consumer base has more disposable income. Not to mention min wage salary expense is probably a low portion of most companies overall expenses. The consensus at my company is basically indifference as it was a long time coming.
Deal Addict
Oct 21, 2012
1189 posts
381 upvotes
Toronto
mathiewannabe wrote:
Jul 7th, 2017 1:42 pm
What are typical profiles of people who rent condos at $2k/month?

bachelor earning 80$K/yr?
couples earning combined 100$k/yr ?
my tenants who pay $2500 are in health care and consulting were making around $125k a year a couple years ago.
Deal Fanatic
May 1, 2012
7518 posts
4089 upvotes
Markham
mathiewannabe wrote:
Jul 7th, 2017 1:42 pm
What are typical profiles of people who rent condos at $2k/month?

bachelor earning 80$K/yr?
couples earning combined 100$k/yr ?
One of my old friends rents downtown at 2.2k a month for a 2 bedroom 700sqft. Him and his wife probably make around 130-150k combined. The only reason why they're renting is because he thought he was smarter than everyone else and waited for a RE collapse to buy on the cheap. Needless to say, this has severely backfired. Not only that but his wife gives him crap about this regularly.
Deal Expert
User avatar
Apr 21, 2004
45461 posts
11908 upvotes
Anikiri wrote:
Jul 7th, 2017 1:40 pm
Back in 2008 I paid $1400 to sublet an apartment infested with roaches in the Upper East Side of NYC.

2k a month for a 2 bedroom sounds really cheap.
If they see themselves living in Toronto at least in the medium term, they can buy similar condo units ($400-500k) and be paying less in mortgage payments, condo dues and property tax.

But at that price, I'd rather live in a ground level unit and take the expensive Go Train or buy somewhere else. I understand living in downtown Toronto is a lifestyle and choice. I would just rent cheaper along the subway line if I don't regard my leisure time at $50/hr RFD rate. People will still likely have a metro pass anyway.

That's if they think BoC is bluffing and will be increasing interest rates by 1% at the most over the rest of the decade. There was an article a week or two ago on a major paper that said increasing rates will result in increasing government debt load and likely lower spending on public services.

It's really an assessment of where interest rates are going now that some speculators are listing their properties for sale.
Deal Guru
User avatar
Mar 31, 2008
10066 posts
1444 upvotes
Toronto
Firebot wrote:
Jul 7th, 2017 12:55 pm
Surprise surprise shortsighted socialist measures backfired, news at 11.

This is also the same reason why higher minimum income promotes unemployment if done arbitrarily. In the end, Canada is still a capitalist society where supply and demand is the ultimate driver of the economy. It is a delicate balance, and if disrupted can cause the opposite intended effect. In the case of rent control and new measures, all these new measures not only cause a hindrance for landlord and discourages renting, but it promotes yearly rent increases simply to combat the loss of control in raising prices when needed. Lower supply, higher cost. Really hard for the socialist Liberals to grasp such a basic concept, but hey, it looks good to voters.


"Hey let's ban 3 year phone contracts, that will show those corporate pig companies who's boss. What's that, you are raising my plan by 40$ a month and I now have to pay 200$ more for my phone?"
Yupp. Now those that stayed will benefit but those new looking to get in or those looking to move, good luck. Landlords saw how restrictive and controlling the rules were, they said "screw this.. we're jacking our rents up if we're going to be stuck on that fake inflation number potentially forever". They'll probably come up with some other rule to try to combat this situation.

I used to rent in a building at Yonge n Eg, and have seen the rental rate skyrocket since the announcement.

That $15 wage will cause far less hiring, reduction in service, more self-serve. Then you're going to have people complain how they're not getting enough shifts.

Top