Real Estate

Anyone having a hard time renting their Toronto condo?

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  • Sep 7th, 2020 1:34 pm
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[OP]
Newbie
Dec 7, 2019
11 posts
19 upvotes

Anyone having a hard time renting their Toronto condo?

My name is Max and I'm a journalist in Toronto. I'm noticing a huge uptick in the number of Toronto condos that are going up for rent on MLS in the last month or so. I've attached a graph with data going up to June 15th.

I'm curious how this affecting condo owners. Are you having a hard time renting out your condo due to the flood of supply? Are you concerned that decreasing rent prices will put a dent in condo resale values?

GTA (esp Toronto) condo prices have been pretty resilient in recent years (see other attached graph). Currently condo prices are still rising, while rents are falling, which seems unsustainable to me.

Feel free to reach out to me directly at [email protected] or 437-993-4309
Images
  • condo-rentals.PNG
  • condo-sales.PNG
Last edited by TomRFD on Jul 24th, 2020 10:31 am, edited 1 time in total.
Reason: updated title
48 replies
Sr. Member
May 3, 2010
688 posts
336 upvotes
Not sure where the data is coming from but I keep checking the area where my rental condo is and the prices have kept increasing there to the point, my condo, at current rent is severely cheaper in comparison.
Sr. Member
Sep 16, 2009
685 posts
475 upvotes
GameChannel wrote: Not sure where the data is coming from but I keep checking the area where my rental condo is and the prices have kept increasing there to the point, my condo, at current rent is severely cheaper in comparison.
thats not what he said....
Deal Expert
Feb 29, 2008
19068 posts
17389 upvotes
Tarrana & The Ri…
Look forward to seeing the story global is going to run on this. I can almost write it word for word right now.

Rents should actually be quite a bit lower than mortgage payments. That is how things were when the market wasn't insane. I will stop people from trying to reach for home ownership when they clearly can't afford it. Condo prices will come down a bit, but I expect them to be fine longterm.

How did the parking spot story go?
169k-parking-spot-toronto-2337930/#p31851683
Sr. Member
Nov 25, 2009
641 posts
376 upvotes
Vancouver
oasis2002 wrote: thats not what he said....
He also provided a bunch of graphs without sources of the data so...
Member
User avatar
Oct 31, 2019
435 posts
563 upvotes
Can't give experience but I was actually thinking of starting a thread about this. Every couple of weeks I'll spot check recent rentals just to see where things are. From about two months ago to about two weeks ago (last time I checked) rents were consistently hovering between 2017-2018 levels. But it looks like over the past few days things have fallen off of a cliff for bachelor and 1brs, but have surprisingly held steady for 2br+. There are some counter examples but for the most part, 0/1brs seem to have fallen well below even 2017 levels. This rental, in particular, really made my eyes pop (high unit at 12 York)....but there are many others like this over the past couple of days.
ToTheCore.png

The only way that I can rationalize this is student housing getting crushed, but that still doesn't explain why 2brs seem to be doing ok (I wouldn't expect most students to live alone).

Prices can theoretically hold still if the market truly believes that the dip is temporary and no one is forced to sell. If student housing is really the culprit then it's reasonable to expect rents to return with a vengeance in 2021 if COVID-19 gets under control and things return to the way that things were. Those 1500-1600/sf precons though.....tough to imagine those paying off in 3-4 years given the environment.
Deal Expert
Feb 29, 2008
19068 posts
17389 upvotes
Tarrana & The Ri…
VanByTheRiver wrote: Can't give experience but I was actually thinking of starting a thread about this. Every couple of weeks I'll spot check recent rentals just to see where things are. From about two months ago to about two weeks ago (last time I checked) rents were consistently hovering between 2017-2018 levels. But it looks like over the past few days things have fallen off of a cliff for bachelor and 1brs, but have surprisingly held steady for 2br+. There are some counter examples but for the most part, 0/1brs seem to have fallen well below even 2017 levels. This rental, in particular, really made my eyes pop (high unit at 12 York)....but there are many others like this over the past couple of days.

ToTheCore.png


The only way that I can rationalize this is student housing getting crushed, but that still doesn't explain why 2brs seem to be doing ok (I wouldn't expect most students to live alone).

Prices can theoretically hold still if the market truly believes that the dip is temporary and no one is forced to sell. If student housing is really the culprit then it's reasonable to expect rents to return with a vengeance in 2021 if COVID-19 gets under control and things return to the way that things were. Those 1500-1600/sf precons though.....tough to imagine those paying off in 3-4 years given the environment.
Perhaps because 1 beds are flooded. Thry make up like 70% of each condo approx. 2 beds are not as abundant. Also, you can add up to 4 people in a 2 bed. A couple is right in a 450 sqft 1 bed.

No doubt rents are coming down and I don’t see a problem with that. I never did I just didn’t like government interference. This is a natural decline due to COVID and the Airbnb situation doesn’t help. The question though. Is it long term and to sellers/buyers see it that way. I do not.
Newbie
Oct 24, 2009
37 posts
58 upvotes
Toronto Condo market is in for a big shock soon:

Not my work, but I pulled this from reddit

1. Airbnb property owners who don't want to rent will sell (all city events have been cancelled and our biggest tourists (Americans) won't be allowed in for a long time. There are 13k units now available for rent for those that did try to rent check bungol, padmapper. https://www.cbc.ca/news/canada/toronto/ ... et-plunges https://torontostoreys.com/gta-vacancy- ... nation-q2/

2. Mortgage deferrals - For those airbnb investors and landlords overleverage (which might not be many) will have to sell once mortgage deferrals are up by end of september. https://betterdwelling.com/this-weeks-t ... ages-boom/

3. Rentals - now that the bill for fast evictions passed many tenants will be evicted which will free up the units into a increasing vacancy situation. Up to 15% of renters didn't pay a month or 2. https://torontostoreys.com/bill-184-off ... w-ontario/

4. Post secondary renters - Many courses will remain virtual. International students told not to come. https://www.thestar.com/news/gta/2020/0 ... ifted.html

5. Immigrations is down by 60% many of which buy or rent into the market https://betterdwelling.com/immigration- ... n-over-60/

6. New purpose build rentals up.

7. New units coming into the market

Not a good time to be a condo investor
Deal Addict
Mar 3, 2018
3017 posts
3380 upvotes
GTA
MaxH79968 wrote: Currently condo prices are still rising, while rents are falling, which seems unsustainable to me.
Not sure where you are seeing condo prices rising. If you compare the Feb to June 2020 TREB Reports you will see Toronto condos (416) average sale price has declined from $722K to $672K or $50K. Dropping each month since covid started.
[OP]
Newbie
Dec 7, 2019
11 posts
19 upvotes
lawonga wrote: He also provided a bunch of graphs without sources of the data so...
Source for the graphs is my own analysis of MLS data
[OP]
Newbie
Dec 7, 2019
11 posts
19 upvotes
DaveTheDude wrote: Not sure where you are seeing condo prices rising. If you compare the Feb to June 2020 TREB Reports you will see Toronto condos (416) average sale price has declined from $722K to $672K or $50K. Dropping each month since covid started.
True they are below the peak in February, but prices are still trending upwards based on a 12 month moving average. The May Market Watch report published by TRREB has GTA condos up 6% year over year, and they have risen since then: http://trreb.ca/files/market-stats/mark ... mw2005.pdf
Deal Expert
Feb 29, 2008
19068 posts
17389 upvotes
Tarrana & The Ri…
DaveTheDude wrote: Not sure where you are seeing condo prices rising. If you compare the Feb to June 2020 TREB Reports you will see Toronto condos (416) average sale price has declined from $722K to $672K or $50K. Dropping each month since covid started.
Outside of the core they are rising. I posted the data. In the core they are not. People do not need to move close to work. They don't want to take public transportation, Universities have gone online.

People are way too short term-ish. The planet is basically on lock down mode...things will be different short term. They will return back to normal. Those who panic and treat real estate like the stock market will get crushed. Good, let them. Those who still view RE as a long term investment will be fine.

Not all condos are dropping. As I've said countless times...Mine have either stayed the same or increased quite a bit. But I have units in excellent locations, excellent layouts.

BlogTO is such a terrible source, there are better sources that are at least objective....and they're all saying the same thing...rents are coming down....some will of course sensationalize this info.
Deal Addict
Mar 2, 2017
3213 posts
6155 upvotes
Toronto/Markham
Based on landlords I know with units downtown it's a mixed bag and there are a few points to consider. Majority who bought their condos a while back have substantial equity in their units and are not worried about sitting on a vacant property. In fact many are opting to sit on them vacant rather than take on anything less than a perfect tenant - but they do maintain the MLS listing as active. No one wants to be part of the 90,000 application backlog for evictions due to non payment. Then there are the ones that still believe if they wait long enough they will get their asking price despite every comp going for 100-200/less a month and renting out immediately, the thinking here is that the cheap units will be gone and people will pay market rate again.

Will this have a dent in resale prices? Who knows, we can only speculate, but there has already been a dent so to speak in some areas, but it has stabilized. If I was to guess based on what I am seeing it's probably less than 10%, maybe even less than 5% of people that are on the verge of being owners of a distressed property. Credit is cheap, parents will bail kids' investments out with their own home equity, etc. There is no panic.

Factor in that recent pre-con units are selling out fast like pre covid, cheaper resale units are being considered by investors on the sidelines.
Realtor®
Deal Addict
Mar 3, 2018
3017 posts
3380 upvotes
GTA
MaxH79968 wrote: True they are below the peak in February, but prices are still trending upwards based on a 12 month moving average. The May Market Watch report published by TRREB has GTA condos up 6% year over year, and they have risen since then: http://trreb.ca/files/market-stats/mark ... mw2005.pdf
That is interesting as I would have thought you would be more interested in what is happening right now to prices not last year. Basically how have condo prices been affected since covid caused the Airbnb and rental collapse.
[OP]
Newbie
Dec 7, 2019
11 posts
19 upvotes
DaveTheDude wrote: That is interesting as I would have thought you would be more interested in what is happening right now to prices not last year. Basically how have condo prices been affected since covid caused the Airbnb and rental collapse.
It's the timing of it all that has me questioning whether the Airbnb and rental collapse are driving down condo prices. If you look at the graphs you'll see that condo prices drop steeply between Feb 2020 and mid-April. This is the case for all property types. Which makes sense to me since it's the start of the pandemic, everyone is in lock-down, sellers are potentially panicking. But since mid-April condo prices have been rising. They haven't risen as much as other types of housing, detached homes for example have already moved beyond the Feb 2020 price, but they are rising.

By contrast rental listings only start flooding the market in May and especially June / July, after resale prices had begun to rebound. If rental market flooding was the cause of the condo price drop, I would expect increase in condo rental listings to precede or at least coincide with price drop.

Here's another source for the rental listings data so you don't have to take my word for it:
Deal Addict
Jan 5, 2020
1047 posts
1511 upvotes
MaxH79968 wrote: It's the timing of it all that has me questioning whether the Airbnb and rental collapse are driving down condo prices. If you look at the graphs you'll see that condo prices drop steeply between Feb 2020 and mid-April. This is the case for all property types. Which makes sense to me since it's the start of the pandemic, everyone is in lock-down, sellers are potentially panicking. But since mid-April condo prices have been rising. They haven't risen as much as other types of housing, detached homes for example have already moved beyond the Feb 2020 price, but they are rising.

By contrast rental listings only start flooding the market in May and especially June / July, after resale prices had begun to rebound. If rental market flooding was the cause of the condo price drop, I would expect increase in condo rental listings to precede or at least coincide with price drop.

Here's another source for the rental listings data so you don't have to take my word for it:
Hey Max,

In my opinion, we have yet to see anyone panick selling. All the people that sold their condos right after covid (I.e. mid March and April) already planned to sell their condo even before covid happened. For example, they may be closing on another property and just had really bad luck with timing.

Also, people who buy real estate buy for the long term. I think most people see the current situation as temporary and are confident that government's massive money printing will keep asset values from dropping.
Deal Addict
Jan 5, 2020
1047 posts
1511 upvotes
VanByTheRiver wrote: Can't give experience but I was actually thinking of starting a thread about this. Every couple of weeks I'll spot check recent rentals just to see where things are. From about two months ago to about two weeks ago (last time I checked) rents were consistently hovering between 2017-2018 levels. But it looks like over the past few days things have fallen off of a cliff for bachelor and 1brs, but have surprisingly held steady for 2br+. There are some counter examples but for the most part, 0/1brs seem to have fallen well below even 2017 levels. This rental, in particular, really made my eyes pop (high unit at 12 York)....but there are many others like this over the past couple of days.
ToTheCore.png

The only way that I can rationalize this is student housing getting crushed, but that still doesn't explain why 2brs seem to be doing ok (I wouldn't expect most students to live alone).

Prices can theoretically hold still if the market truly believes that the dip is temporary and no one is forced to sell. If student housing is really the culprit then it's reasonable to expect rents to return with a vengeance in 2021 if COVID-19 gets under control and things return to the way that things were. Those 1500-1600/sf precons though.....tough to imagine those paying off in 3-4 years given the environment.
I can see several reasons to why 2bed rents aren't dropping.

-The rents for 2bed units are usually split between 2 to 4 people. This makes 2bed units more affordable and more attractive during these hard economic times. For example, someone who lived alone may now decide to move in with a roommate in a 2bed.

-2bed units usually have more stable household, such as families with kids.

-2bed units are usually not short-term rental so they are fairly immune to the effects of airbnb

-It's pretty clear that people now want more space. Not everyone wants/can live in a freehold in the suburbs so a 2bed unit may be a good option.

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