It’s a landlord’s market in Toronto once again. Condo rents hit a record high in the second quarter of this year, as soaring borrowing costs pushed residents into the rental market and more people flocked back to the city.
Across the Toronto region, the average monthly rent rose 17 per cent to $2,533 over the past four quarters, according to industry research firm Urbanation Inc., with rent for a typical studio condo climbing 25 per cent over that period.
Rental rates have been increasing rapidly since the Bank of Canada started raising interest rates to get inflation under control. The benchmark interest rate is up 2.25 percentage points over five months, making it harder for prospective homebuyers to qualify for a mortgage, cooling the real estate market and raising the spectre of an economic slowdown.
According to Urbanation calculations, condo owners shouldered an average monthly cost of $3,125 during the second quarter, when mortgages had an interest rate of about 3 per cent. The average rent for a similar condo unit was $2,533. That means the average monthly rent was nearly $600 less than the average monthly ownership cost. And that was before last week’s massive one-percentage-point interest rate increase.
Now, with mortgage rates near 5 per cent, Urbanation said condo owners are likely paying an average of $1,100 more a month than renters. “This will provide further fuel for the rental market as more first-time buyers become shut out of the ownership market,” the report said.
This relatively new group of renters is upping demand for rentals in a city that was already dealing with a shortage of affordable housing units.
“It’s an extreme challenge to secure even a semi-affordable property,” said Reuben Labovitz, a sales representative with real estate brokerage Fox Marin, who has brokered nearly 100 rental leases in the city so far this year. Mr. Labovitz said rental properties are fetching multiple offers and describes the situation as 100 per cent a landlord’s market.
In addition to buyers turned renters, postsecondary students are returning to in-person classes and employers are pushing their staff to return to the office.
Mr. Labovitz said a segment of his clients are people who fled to the suburbs when the city shut down during strict COVID-19 lockdowns in 2020. He said some of those workers are being told to come back to the office by the fall.
Condos owned by individual investors make up one part of the rental market. Apartment units, or housing that is purposely built for the rental market, make up the rest.
The vacancy rate for purpose-built apartment units fell to 1.4 per cent in the second quarter from 5.1 per cent a year ago. Urbanation said the new supply of apartments and condo units is set to decline because of rising construction costs and regulatory delays.
It has been predicted that the building of thousands of condo units could be cancelled because of rising construction and borrowing costs. According to Urbanation, about 5,000 preconstruction condo units were sold last year for less than $1,000 per square foot, which would make them economically unfeasible to build under current financial conditions.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.
Canadian Inflation Cools But Hot Core Keeps Up Rate Pressure – Bloomberg
[unable to retrieve full-text content]
- Canadian Inflation Cools But Hot Core Keeps Up Rate Pressure Bloomberg
- Canada’s inflation rate falls to 7.6 per cent CBC News
- Inflation in Canada slows in July, rising 7.6 per cent from last year Yahoo Canada Finance
- EDITORIAL: Inflation still hurting Canadians Toronto Sun
- CityBiz: Latest report on inflation in Canada, home sales slide again CityNews
- View Full coverage on Google News
Where to look for cheap rent in Canada, as prices soar, again – CBC.ca
As rent prices spiked over the past two months, affordable pockets of rental housing became harder and harder to find.
In July, the average monthly cost for rental properties across Canada was $1,934 — up 10.4 per cent over last year, according to the data of the property listing company Rentals.ca. A similar hike in June saw the average rent spike 9.5 per cent.
Analysts say the steep prices are being driven by more demand than inventory.
And that demand is being driven in part by some people fleeing larger cities, while others flock to them.
This creates a challenge for people like Joan Alexander.
The senior has rented homes across Canada, in St. Catharines, Ont., and Guelph, Ont., then in Castlegar, B.C., and for the past two years on Prince Edward Island.
Alexander and her partner chose Summerside, a city about 50 kilometres northwest of Charlottetown, for its small-town feel.
But rising rental costs and other considerations — like proximity to health care — are driving her to relocate.
“We really hoped that P.E.I. would be our last stop on our life journey,” she said.
Last year, rents on P.E.I. rose higher than they had in a decade. Plus rental places are scarce.
Finding affordable rental housing in Canada after a pandemic is proving a challenge for many, with spiking interest rates, inflation and limited rental stock.
Ben Myers, president of Bullpen Research and Consulting, a real estate advisory firm that tracks rental pricing in Canada, says if you are looking for a deal there still are some places he’d describe as comparatively “cheap.”
He suggests looking at Red Deer or Lethbridge in Alberta, or Saskatoon.
“You can get a two-bedroom for under $1,150 a month. It’s all about where you can work,” said Myers.
Alexander says she was able to find a few havens on the Prairies.
“It felt almost too good to be true. There seemed to be a few pockets where we could find what we were looking for. Pet friendly, affordable, safe housing,” said Alexander, who needs monitoring after donating a kidney and a place that welcomes her small, beloved dog — Beau.
Lloydminster — a city that spans Alberta and Saskatchewan — attracted Alexander and her spouse with affordable prices and a pet-friendly property owner.
They move in October to their new $1,200-per-month home.
Rentals.ca listings include detached and semi-detached homes, townhouses, condominium apartments, rental apartments and basement apartments. The company can’t provide an average rent for all cities. Some smaller communities don’t have enough rentals to get an accurate average.
So it’s worth hunting. There are some hidden gems.
Myers says that in a normal year, rent can fluctuate on average three to five per cent. But average rents grew 10 to 12 per cent in 2019, due to a shortage of supply, he says. Then the pandemic hit and rent declined, on average, 15 to 20 per cent.
“We are now adjusting back to pre-pandemic levels,” said Myers.
Renters on the move
Then there are the super-expensive anomalies — like Vancouver, which rebounded even faster from the pandemic, with a per month average rent of $2,300 in June 2022.
Myers says there have also been significant shifts to cities that used to enjoy low rent, as some people migrate to smaller places where they can get more real estate for their dollar.
Retiring Baby Boomers from the Toronto area are creating demand and raising prices in places like the Niagara Region and Halifax, for example.
“Halifax has gone kind of nuclear. Definitely a lot of Ontarians moved to Halifax during the pandemic,” Myers said.
Also, he says a lot of students stayed in their university towns like Victoria, London, Ont., and Kingston, Ont., when offices closed during the past two years.
“All the benefits of living in a big city were almost bad because you didn’t want to be around a lot of people during a pandemic,” said Myers.
Vanishing affordable rentals
But all this change has just put more pressure on the rental market that’s been seeing declines in rental options for low earners for more than a decade, according to housing policy researcher Steve Pomeroy.
He uses Canada Mortgage and Housing Corporation (CMHC) data to probe losses in the rental market.
Pomeroy, the senior research fellow for the Centre of Urban Research at Carleton University, estimates that between 2011 and 2016, the number of rental units that would be affordable for households earning less than $30,000 per year — with rents below $750 — declined by 322,600 in Canada.
That has an effect on the one in three Canadians who rent, according to 2016 census data.
Pomeroy says historically Quebec offered the largest rental stock available in the country.
“Quebec has always been culturally very different. Rent is much more culturally accepted. It’s a bit about European influence … You get these very scenic estates of two-, three-storey homes with the wrought iron staircase and with three units, and two are rented. So by definition, two-thirds of your population are renters,” he said.
He says perhaps it’s time for the remainder of Canada to consider a more European model, where renting is more accepted.
He says there are many cities, in France and Germany for example, where renters almost match owners in population.
North America historically has had a different culture, where owning is seen as better.
“Traditionally there has been very strong support for home ownership. Here in Canada we’ve had mortgage insurance including increasing access to credit for buyers … the political system has very much reinforced that belief system, that ownership is the right thing to do.”
But now, tenancy and anti-poverty organizations are lobbying for more renters’ rights. That’s something Pomeroy sees as a positive shift.
He also says he believes many younger Canadians see renting as their future. It gives them the freedom to pursue experiences, move for jobs and not remain tethered to a property that they can’t afford.
Pomeroy recently asked his graduate students — all employed and in their 20s — if they thought they could buy a home in the next five years. Would you want to?
He says he was surprised to hear for the first time, none of them believed they could.
“Nobody thought they could, and only about half actually wanted to.”
WTI Stops Slide As API Figures Show Major Gasoline Draw – OilPrice.com
Crude oil prices fell further on Tuesday, with WTI falling to its lowest benchmark price since January this year.
Crude oil prices began their fall on Monday, dragged down by China’s disappointing economic data that led to China’s central bank cutting lending rates.
WTI prices fell to $86.13 per barrel by 2:24 pm ET, down $3.28, or 3.67% on the day. Brent crude fell $2.98 (-3.13%) on the day to $92.12 per barrel—the lowest price since February this year.
Gasoline prices in the United States have been falling for months now led by falling crude oil prices. Today’s gasoline prices in the United States average $3.949 per gallon, according to AAA data, down from $3.956 yesterday. Over the last month, U.S. gasoline prices have fallen 60 cents. They are still 76 cents above where they were this time last year.
The weight of disappointing data out of China—the world’s second-largest oil consumer and largest oil importer—was compounded on Tuesday by developments surrounding the Iran nuclear deal. Just moments before the deadline, Iran sent its written response to the EU regarding the “final” nuclear deal text. In its letter, Iran suggested that it was closer than it had ever been to securing a deal, although there were a few sticking points—mainly that the U.S. guaranteed the deal couldn’t be changed by future U.S. Presidents.
Despite the current crude oil fundamentals that suggest the market is still tight, the market fear is that Iran could unleash on the market hundreds of thousands of barrels of crude oil per day if sanctions were to be lifted. Iran has said that it could ramp up production and exports within months.
By Julianne Geiger for Oilprice.com
More Top Reads From Oilprice.com:
Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.
In an ‘urgent’ situation, Blue Jays come up short yet again – Sportsnet.ca
Samsung's Galaxy Z Fold 4 and Flip 4 feature new 'Light' battery-saving mode – MobileSyrup
Silver investment demand jumped 12% in 2019
Europe kicks off vaccination programs | All media content | DW | 27.12.2020 – Deutsche Welle
News22 hours ago
Baskin-Robbins signs its largest franchise development agreement in 51 years in Canada
Health22 hours ago
Rapid Polio Spread In New York: All You Need To Know – TheHealthSite
Health23 hours ago
News22 hours ago
Hip Hop Icon Maestro Fresh Wes Takes Scarborough Back To School!
News15 hours ago
Canada eyes cash for critical minerals in Biden's big new climate bill – CBC News
Sports14 hours ago
Schneider: 'Everything is on the table' for struggling Kikuchi – TSN
News12 hours ago
Ageism: Does it Exist or Is It a Form of ‘I’m a Victim!’ Mentality? [ Part 3 ]
News17 hours ago
Canadian parliamentarians 'hoping' to make October visit to Taiwan – CBC News