Rental prices for condos in the Greater Toronto Area have hit a record and the price squeeze is likely to continue, a new report from research firm Urbanation says.
Homebuyers in the GTA have for a long time vented about the high cost of homes in the region, where you’re hardpressed to find a single-detached house for less than $1 million. Renting a home or condo had become a more affordable alternative for many.
Rental prices shot up nearly 12% last quarter — a record for the GTA
Average condo rents shot up by 11.7% year-over-year in the fourth quarter, the highest rent increase ever recorded by Urbanation. This time last year, rents had increased by 4.2%.
Urbanation said there’s one big reason that rental prices are on the upswing: shrinking supply. Despite a slew of new buildings being erected in Toronto, landlords are selling their units as housing prices have shot to dizzying new records. Why continue to rent out to a tenant when you can net an immediate profit selling?
Urbanation notes that total rental listings fell by 8% in the fourth quarter — despite a 34% surge in final closings for newly complete condos.
Rental listings now average only 13 days before they’re taken
Not only are renters contending with higher prices, they’re also faced with having to make lightning-quick decisions about a rental property. The average time a rental unit stays on the market in the GTA is now only 13 days. This time last year, a rental unit averaged 20 days before it was scooped up.
“With resale prices for condos up 15% over the same period, more owners have become enticed to sell their units as opposed to holding onto them as rentals,” said the report. “At the same time, existing tenants have become less willing to move due to the high cost of renting in the open market.”
Average one-bedroom rent in Toronto tops $2,100 a month
The average price of a unit is now up to $2.77, meaning that a 719 square foot unit costs you $1,990 a month. If you’re going into the downtown core of Toronto, you’re paying even more, with the average rent hitting $3.13 for each square foot — or $2,134 a month.
If there’s a silver lining, it’s that a lot of new condo projects are expected to be completed and ready to have their tenants move in this year. That might help slow the price growth. But probably not by much, because all the pressures keeping rents high — owners selling, renters unwilling to move, a rapidly growing population — are still affecting the market.
“While less pressure on rent growth may arrive in 2017 due to a temporary rise in new apartment completions, it’s become clear that more attention needs to be paid to building rentals over the longer-term,” said Shaun Hildebrand, Urbanation’s senior vice president.