CMHC defines condominium rentals as the secondary rental market. They include condominiums offered on rent as well as the following additional housing units that are rented, namely- single-detached houses; semi-detached; freehold row/town houses; duplex apartments; accessory apartments; apartments which are part of a commercial or other type of structure containing one or two dwelling units.
An increasing number of renters are choosing condominium units over purpose-built rentals despite higher rents charged for rental condominium
apartments. The average rent for a two-bedroom condominium apartment in the GTA was $1,487 in 2009, over $400 more than the average rent for the same unit type in a purpose-built rental. Greater quality and choice of amenities associated with modern condominium apartments often outweigh the benefits of paying lower rents in the primary rental market.
The GTA’s rental condominium apartment market is gaining importance in the secondary rental market and providing firm competition for the primary rental market. The total number of apartments that were registered under condominium corporations in the GTA rose by 20,500 units, or 9 per cent, to 254,807 in 2009 compared to last year.
Though still very low from a historical standpoint, the GTA vacancy rate rose to 0.8 per cent in 2009 compared to 0.4 per cent in 2008. As is the case in the purpose built rental market, low mortgage rates have prompted more households to switch from renting to owning. This is especially true for renters of more expensive units, such as those offered in condominium market, as the housing payment premium to own versus rent has thinned.The higher rents for condominium units in comparison to the primary market can be explained by their prime location,higher level of finishing, and greater amount of amenities. Furthermore, renters are able to afford higher rents for condominium units due to above average incomes in the city centre.
As per the CMHC report, projects with at least 300 units (e.g. typical high rise condos seen in Mississauga Square One or Downtown Toronto) have the highest amount of investor activity – 28 per cent of the units are rented out. In general, larger developments exhibit stronger demand from renters as they are located in the most densely populated areas of the city and provide a greater choice of amenities, such as pool/gym facilities and party room.
Average condominium apartment vacancy rates in Mississauga were lower than vacancy rates in the Downtown Toronto. Employment uncertainty and slower wage growth likely led more condominium apartment renters into less expensive areas of the GTA. Furthermore, growing business investment and enhanced job opportunities in areas such as York and Peel have attracted more residents to the 905 region.