Vacancy rates are down in the entire GTA, thanks to rebound in employment, a high level of immigration, and the rising cost of renting units in the condominium market. The most influential underlying force was the slowdown in demand for buying homes. Fewer first time buyers relate into more number of renters.
CMHC's outlook of rental market sees a slower outflow of households from rental units to homeownership. This trend is likely to persist in 2011.
The average vacancy rate of condo apartments in the GTA increased to 1.6% in 2010.
Above is good news for investors looking to buy condos for the purpose of renting, in my opinion. Less expensive rentals in expanding Peel condo market (dominated by Mississauga Square One), maintained an average vacancy rate of less than half of a percentage point.
However, rents have increased in 2011; which also has encouraged some renters to buy instead of renting. The introduction of HST is likely a factor that contributed to the sizeable increase in condo rents. HST is applied to certain maintenance costs such as electricity, heating, lawn care, snow removal etc. which led to rise in condo fees. Rent increased also as a result of lower vacancy rates. Furthermore, the new units entering the rental pool over the past year were purchased for higher prices (some purchased at pre-construction stage) compared to previous years.
There is a trend amongst renters to move from older to newer building offering better amenities.
Despite the annual increase in condo vacancies and added rental listings over past few months, the market for condo rentals is tightening. During May to Aug period, the ratio of rented to listed condo apartments was 63 percent, up from 59 per cent the same period a year ago.
As per CMHC nearly 150,000 household were estimated to be living in secondary units at the time of the survey (single detached, semis, townhouses, duplex, accessory units)- three times the number living in condominium apartments, representing 30 percent of entire rental market universe in Toronto CMA.
Read full report: Rental Market Report– Greater Toronto Area: Fall 2010
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