Condo rental rates make 'scary' jump of more than 7 per cent in third quarter
Toronto Real Estate Board says average rent for a one-bedroom unit now $1,777
The cost of renting a one- or two-bedroom condominium in Toronto grew substantially in the third quarter of this year, compared with the same time in 2015, a new report shows.
New numbers from the Toronto Real Estate Board (TREB) show the average rent for a one-bedroom unit rose 7.2 percent to $1,777, while the average rent for a two-bedroom unit was up 7.9 per cent to $2,419.
CBC News spoke with several Toronto renters worried about being priced out of the downtown altogether. One renter, Kyle Shoniker, calls the recent increases simply "unacceptable."
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The findings come from TREB's third-quarter rental market report, which found that the number of condominium unit rentals on its multiple listing system were down by 4.8 per cent on a year-over-year basis to 9,164, compared to 9,629 at the same time last year.
TREB's director of market analysis Jason Mercer said in a release that rental market conditions around condominiums "tightened substantially" in the third quarter of this year. Mercer says the numbers indicate that competition between renters heated up, contributing to rent increases well above the inflation rate.
Supply and demand issue
The problem comes down to a classic supply and demand issue, according to real estate experts.
According to a report by Royal LePage earlier this month, home-price growth grew by a torrid pace of 12.1 per cent in Toronto in the third quarter of 2016. That's turning some home-buying hopefuls into renters and driving up demand.
On top of that is a new "stress test" for insured mortgages to make sure borrowers are still able to make their payments if interest rates climb in the big banks' five-year posted mortgage rates.
Meanwhile, the TREB report found fewer condo project were completed in the first three quarters of 2016 compared with 2015. John Pasalis, president of Realosophy Realty, says that contributes to a lack of inventory.
Not all properties subject to same rental control measures
Pasalis said rent increases are also more likely in new rental units because of provincial legislation that only controls rent at older properties.
Rent increases on units first occupied before Nov. 1st, 1991, are limited to just one increase per year and require 90 days written notice to tenants.
But new rental units first occupied after November 1, 1991 — including social housing and subsidized new affordable housing — are exempt from those rent controls.
The province has said the exemption is an incentive for private landlords to build and boost new rental supply while creating jobs in the Ontario's construction agency. As recently as August 2016, Ministry of Housing spokesperson Conrad Spezowka told CBC News that the government has no plans to change the exemption.
For many, the increase in prices come with increasingly difficult decisions.
'It's a problem'
Karlene Nation, in her 50s, is looking to move into a downtown rental just east of Yonge Street but says finding an affordable option is nearly impossible.
"It's all small, $1,800 and up month and in some units they don't even have washers and dryers," Nation says. "You could have rented something, say, two years ago or a year-and-a-half ago for $1,500 a month."
"If you're finding that 60 or 70 per cent of your income is going to rent, then you're cutting back in a lot of other areas. It's a problem," she says.
Britney Thompson, 28, says she's noticed prices jump by about $400 per month over the past couple of years.
"I'm a professional and I have a good job with a steady income but I don't think I'm anywhere near where my parents were when they were 28 and they were able to afford a three-bedroom house in the suburbs or even a nice condo in the city," Thompson said.
"It's kind of scary."