Renting out a property is not easy right now. Last week, I talked about how an entire pre-construction condo got leased in only 3 weeks – that’s over 500 units! If you missed that Insight Article, you can read it here: CLICK HERE. This week, I’m going to continue to elaborate on the strength of the rental market and you’ll continue to see why there is a huge lack of supply that is driving these prices up.
We Made It! Toronto officially just became the MOST expensive city in all of Canada for renting a 1-bedroom unit, including all apartments and condos, at $2,254 per month, according to rentals.ca. That beats out Vancouver! Can you believe it?! We just hit a new milestone folks.
Despite a fairly stagnant and flat quarter-to-quarter movement of only 1.8%, Toronto somehow made it to #1. If you’re reading this Insight Article post, you’re probably either a real estate investor or potential real estate investor. In any case, this is all good news for you.
The Spikes – Over the past two years, we’ve seen over 10% increase in rental rates. If we keep up the 1.8% per quarter increase mentioned above, we won’t hit double-digit rental rate increases again. However, one thing you should keep in mind is that rental rates tend to spike quite violently in the spring and summer time when everybody is moving.
As of right now, the chart below shows the average rental rates by quarter in many of the major cities in Canada.
Bigger is… Less Expensive – You can see that Vaughan has hit the top end because the unit sizes for condos in Vaughan are on larger end. Toronto condos units tend to be on the smaller end relative to units in the surrounding suburbs.
When we further break down unit types in Toronto, you can see exactly how each unit performs in the downtown core. Similar to purchasing a unit in a pre-construction project, the smaller the unit, the higher the per square foot cost tends to be. Rental rates work very much the same way.
My Recommendation = Your GAIN – Now for those of you who have been following my recommendations to buy in the downtown core (in areas close to major employment hubs), here is an even further break down by postal codes of how rental rates fair in each area (pictured below). If you have taken action on my recommendations, you’ll be fairly happy with your investment knowing the rental rates right now.
Taking the next step and breaking down the numbers even further, everyone who has invested in the Entertainment District with me in particular can see that rental rates in newly-finished buildings are the highest out of all pre-construction condos.
As you can see in the graph above, 4 out of the top 5 buildings are in the Entertainment District. I swear, I didn’t have a crystal ball – just some good ol’ statistical analysis and a wealth of real estate knowledge!
The Wrap – Every year, I hear that there is too much construction and too much supply but every year, I continue to see the demand outpace the supply. I suspect we’ll see something similar to what we saw last year but just a bit less aggressive on the appreciation front. If you’re looking for the next best area to capitalize on the real estate market, give me call or shoot me an email and I’m sure we can plan your next strategic move.