In life, nothing stays the same. That couldn’t be more accurate when it comes to millennials and the state of the Toronto rental market. Now more than ever, market analysts are scratching their heads over what to anticipate or expect from this demographic that is edging more into the prime years of moving out and into their own place that they can call home. But as stats and sales have shown, more and more millennials are clearly interesting in forgoing the big lot and backyard for the convenience and location of condos and purpose-built rental apartments.
For those trying to comprehend the trends that are catching the eyes of millennials, here’s what to know:
Lifestyle over Property
As millennials enter the workforce, the importance of location and lifestyle appear to clearly take precedence over property. The condo and rental boom shows that being in close proximity to work, along with having quick and easy access to transit, are top priorities for this generation in their 20s and 30s.
Quality over Quantity
Young buyers entering the market are also keen on the concept of quality over quantity. That means they’re seeking amenities, communities, and even urban villages that they can feel connected to. Being a part of an active, urban community and having the ability to walk to parks, shops, pubs, and restaurants are all important factors that are influencing the current waves in the market. When it comes down to comparisons, the quality of lifestyle clearly takes precedence over the quantity of property (ie: square footage).
With the Toronto housing market placed well beyond the realistic reach of most young buyers, and with the realistic alternative for owning a house necessitating a long commute, it’s really no surprise why the rental market is thriving. For many millennials, the affordability factor has as much of an impact on their decision as the convenience factor. With the unpredictability of the workforce these days, combined with the soaring housing market prices, many millennials simply cannot afford the down payment for a home, let alone a hefty mortgage.
Times are changing, and that is clear to see when it comes to the trends of the Toronto rental market. As millennials reach the age of independent living, they are favouring the quality lifestyle, convenience, and affordability factors that condos and rentals can provide. And with the state of the housing market, many experts believe this trend will continue for the foreseeable future. In light of this fact, condo development and purpose-built rental apartment development will continue to thrive.
Exploring the latest in the Toronto Rental Market from Fall 2015 shows little change in vacancies rates, with an increase in rentals. Demand for rental accommodation remained consistent, with vacancy rates remaining at 1.6 percent, and availability rates remaining at 3.0 percent.
As the cost to purchase a home in the Toronto market continues to increase significantly, the market has showed that many residents are delaying the prospect of homeownership and remaining in a rental property for longer.
Condominium Rental Market
As the market has shown in previous years, condominiums are where the rental market has seen the highest amount of growth throughout Toronto, pushing the vacancy rate to 1.8 percent from 1.3 percent last year. Even despite the significant growth in the supply of units, the overall demand of condos continues to remain strong.
High Demand in Downtown Toronto
Significant amount of students moving into the city for school has helped uphold the rental demand in the downtown area, specifically. Additionally, the downtown area has accounted for much of the city’s job growth over the last few years. With this combination of the student population and downtown employment, there has been a natural growth in demand for private rental accommodation with close proximity to both work and school.
Increase in Average Rental Rates
With consistent and increased areas of demand for rental spaces, the average rental rates have naturally seen an increase. The average rent for a two-bedroom apartment increased by 3.3 percent in 2015 in the GTA, up from 2.7 in 2014.
With the additional increase of millennials looking to make their first move away from home, they too have kept the rental demand strong as they represent about 30 percent of the GTA population. But even aside from millennials, elder populations and young professionals who are looking for quality rental accommodation appears to be on the rise.
Purpose-Built Rental Properties Vs. Condominiums
Even as the idea of home ownership is drifting further from reality for many, people are still looking for quality rental accommodations. As a result, newer purpose-built rental properties are increasingly competing with the condominium market. The vacancy rate in 2015 for primary rental units commanding rents over $1,200 remained above the market average, suggesting that some rental households were using increased incomes to enter the condominium market instead.
Summary of the Rental Market in Toronto
So overall, the Toronto rental market has continued to remain strong and steady. With the ever-growing housing prices, demand for rental accommodation continues to see growth particularly within the downtown area. With these growing trends, there’s no sign of the rental market slowing down anytime soon.
Simplified Rentals is committed to providing expert advice to landlords and developers about the Toronto real estate market, with a particular emphasis on residential real estate, single family homes, duplexes, triplexes, condominiums, and apartment complexes. Contact our highly skilled and professional trained staff if you’d like to know more!
Some of the biggest real estate owners in Canada are showing more and more interest in the development of new rental apartment buildings in the Greater Toronto Area. This purpose-built rental apartment boom will change the way renters live and where real estate owners will invest their money. Read on to learn more about what is driving this purpose-built rental apartment boom in Toronto:
The Toronto-based condominium research firm Urbanation has indicated that the current development pipeline for rental units in Toronto is up 75% compared to the last ten years. The CMHC noted that the construction of new rental apartments in Ontario is at a 20-year high. And in 2015, two institutional buyers actually made offers to condo developers to purchase entire buildings. The boom is real!
A perfect storm has caused this apartment boom: financing for new construction is inexpensive because of low interest rates, rental demands are skyrocketing, the condo market is weakening and institutional real estate owners are looking for safe places to invest their money. Urbanation notes that the demand for apartment construction is being driven by demand from millennials who are not interested in home ownership. Prices in Toronto for single family homes have reached record levels recently. This is driving potential first-time home buyers away from home ownership and leading them towards renting.
What it means for you
Now is as good a time as any to begin investing in a rental apartment in the Greater Toronto Area. The interest rates have remained low for some time now, but they could begin to bounce back before the end of the year. It’s important to remember that you shouldn’t jump into investing in real estate without the support of a well-established property management company like Simplified Rentals.
Simplified Rentals’ staff members are highly skilled and professionally trained. Our team is more than capable of managing or advising you on all facets of your real estate investments. We manage all types of real estate, from single family home rentals and triplexes to condo developments and apartment complexes. We have extensive experience with all aspects of new development projects, renovation projects, and redevelopment.
You don’t want to miss the boat. Contact Simplified Rentals today to make your move and take advantage of the rental apartment boom in Toronto.