FEELING THE SQUEEZE
Average rent has surpassed $2,000 a month as vacancies have declined, report finds
Toronto tenants on the hunt for apartment face surging rents and dwindling supply,
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.
President Shaun Hildebrand links the increase to the government’s new housing policies announced April 20. Those include extending rent controls to buildings occupied after 1991 and a foreign-buyers’ tax that is believed to be a key psychological factor in the subsequent cooling of the housing market.
The number of resale home trans- actions dropped 37 per cent in June. The Toronto Real Estate Board has said many first-time buyers are delaying a purchase, looking at more listings and waiting to see what happens with prices that are still rising year-over-year but declined monthto-month in May and June.
“The decline in housing sales has been pretty swift. As fewer people enter the ownership market — all other factors remaining equal, population growth continues, the job market is very strong — you’re going to see that demand filter in somewhere. If they’re not buying, they’re renting,” Hildebrand said.
The number of units that rented on MLS rose 12 per cent year over year in the same period. The 8,328 units that were leased in that quarter surpassed the previous high in the second quarter of 2015 of 8,202.
The number of active listings fell 13 per cent from a year ago to 1,125 apartments. That’s equal to only two weeks’ supply, according to Urbanation, which has been tracking rents since 2011 but doesn’t measure rent- als let through online listings sites such as Kijiji or other means.
“For the first time since we’ve been tracking that market, the rents are starting to jump. Usually they grew at sort of a modest pace and that 11-percent growth we saw was really out of the ordinary,” Hildebrand said.
Landlords are also pushing rents higher in an effort to offset what they see as lost future rent growth, he said.
“One of the unintended consequences of the rent control extension is the fact that the rents in new buildings that are coming up for occupancy, which aren’t rent controlled because they are on the open market, are going to come up at increasingly higher rates,” he said.
Because the vacancy rate is so low — under 1 per cent — tenants are going to face fierce competition to rent those places, Hildebrand said.
“The overall cost of renting, if you’re (looking) to move or coming into the rental market for the first time, is only going to continue to increase much higher than the rent controlled guidelines,” he said.