Weakening rental picture latest condo market worry
There are signs that rents in Toronto’s condo market are on the verge of decreasing, at a time when new landlords are already dealing with low returns, a new report says.
The idea that the condo rental market might be tipping in favour of renters runs counter to the general belief among economists and industry experts that the condo rental market is strong, and that rents are rising.
“We believe the rental market may be at an inflection point,” says the report by Veritas Investment Research analyst Ohad Lederer. “Our weekly review of condo ‘for rent’ postings on craigslist.org indicate an approximate doubling of the number of condo listings in late 2013 versus late 2012.”
Toronto’s condo market, with its abundance of cranes and construction sites, has long been a concern for policy makers in Ottawa. If it is indeed at an inflection point, that could have serious implications for the market.
“We believe recent claims of robust rental market increases should be taken with a grain of salt,” the report says. “We looked at 47 buildings for which we were able to compare current ‘for rent’ postings to the data we collected as part of our October 2012 data sample. Within those 47 like-to-like buildings, controlling for unit size where possible, per square foot rents declined 1.6 per cent.”
This comes at a time when someone buying a condo in Toronto as an investment stands a one-in-two chance of enduring negative cash flows each month of more than $200, according to the report.
“New condo landlords in Toronto today can expect going-in unlevered cap rates around, and often below, the dividend yield on a typical bank stock or residential REIT,” it says. “Investor owners are accepting returns below available REIT yields despite the illiquidity, lack of diversification, and operational risks of owning a unit directly.”
The report illustrates the potential implications of these factors in one worrisome chain of events: “In one possible scenario, the Toronto rental market may no longer absorb supply as it comes on-stream, resulting in lower rents and increasing cash outflows for landlords, who then decide to sell, at first in a trickle and then in a thunderous herd.
“In this scenario, condo prices could drop dramatically, given relatively small unit sizes that do not attract a wide segment of potential buyers and the already weak underlying fundamentals.”
Veritas suggests that such a scenario would have implications for Canada’s banks. “Banks with large relative exposures could endure higher loan losses,” the report says. “[Bank of Nova Scotia], for instance, and [Canadian Imperial Bank of Commerce] have slightly larger uninsured condo balances relative to common equity.
“Concurrently, or independently, buyers of unfinished condos may have trouble closing, for a variety of reasons,” the report adds. “Depending on market conditions, private developers may absorb significant losses, and banks that lend at high [loan-to-values] can be expected to share in those losses.”
The researchers found that mortgage pre-approvals were not needed to buy condos, adding to the risk that some buyers who have bought condos that have not yet been built will not close on the deal.
A number of economists and industry experts suggest that the potential scenario Veritas spells out is a highly unlikely extreme, but they concur with the notion that the condo rental market in Canada’s most populous city will likely weaken to some degree over the next two years.
“I agree that the rental market will not be as strong in 2014, 2015,” said Canadian Imperial Bank of Commerce economist Benjamin Tal. That’s because the number of new condos coming on stream is forecast to be very high in the coming years.
“This is a market that hasn’t been tested yet,” he said. “And the test will be when we get extra supply in the next year or two, that’s when you will test the willingness of investors to be in this market given that rents probably won’t be rising at today’s pace.“
But he does not believe that there will be a crash in the rental market, and that’s because he thinks young people will increasingly have to rent rather than buy.
“Young people now cannot afford to buy a house,“ Mr. Tal said. “Even young married couples. They will be renting more than buying. I think Canada’s homeownership rate of 70 per cent has peaked.“
For many OECD countries, however, “the ratio of house prices to rents—a typical measure of house price valuation—remains above historical averages, leaving room for price corrections down the road.”
Take a look at Canada in the chart below. The country’s ratio is 85% above the average.
Listings for Thu Nov 28
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C2762494 – M1C – 104 DREWRY AVE Toronto, Ontario – $ 869,000
Price Change. Oct 16: $ 789,000 Nov 28: $ 869,000 Oct 25: $ 889,000
Well Maintained Detached Bungalow Close To Yonge St, Large Lot With Very Private Backyard. Walking Distant To Finch Subway Station, Shoppings, Restaurants …
C2767671 – M3J – 20 ANETA CIRC Toronto, Ontario – $ 1,099,000
Price Change. Nov 28: $ 1,099,000 Nov 19: $ 1,149,000 Oct 30: $ 1,230,000 Oct 22: $ 999,000
Location,Location,Location!This Immaculate Lot 60 X 115 In The Heart Of Willowdale Is Ready To Be Given A New Breath Of Life.Builders/Renovators …
C2781139 – M4S – 315 SOUDAN AVE Toronto, Ontario – $ 819,000
Price Change. Nov 28: $ 819,000 Nov 12: $ 829,900 Nov 9: $ 899,900
Wonderful Location. A Close Walk To Great Restaurants, Shops, Doctors, Bars, And A One Major Street From Yonge And Eglinton …
C2784880 – M2K – 17 BRUCEDALE CRES Toronto, Ontario – $ 1,198,000
Price Change. Nov 28: $ 1,198,000 Nov 15: $ 1,250,000
Stunningly Smart Reno Top-To-Bottom >>> Professionally Landscaped Frontyard >>> Hi-End Finishes + Jenn-Air Appliances >>> …
C2787367 – M3A – 272 ROYWOOD DR Toronto, Ontario – $ 468,800
Price Change. Nov 20: $ 459,900 Nov 28: $ 468,800
Fabulous 4 Bdrm Backsplit With 3 Full Baths In A High Demand Neighbourhood. Beautifully Maintained Home, Spacious ,Clean & Bright!! …
C2791954 – M4P – 36 ROWLEY AVE Toronto, Ontario – $ 1,949,000
Absolutely Stunning 4 Bdrm Custom Home Built W/Outstanding Quality, Taste & Workmanship. Aprx 4000 Sqft Living Space Above Ground. 10 Ceiling, Main & …
C2791959 – – $ 1,879,000
Rarely Available, Bright & Sunny Lot On Coveted South Side Of Roxborough Backing Onto Ramsden Park; Spacious 3-Storey Century Home W/ Many Charming …
C2792042 – M2H – 96 FRESHMEADOW DR Toronto, Ontario – $ 500,000
Location! Location! Location! Walking Distance To Ttc/Shops/School/Parksouth Facing …
C2792134 – M6J – 144 BEACONSFIELD AVE Toronto, Ontario – $ 799,900
*Victorian Beauty* * Pride Of Ownership* Double Block Garage With Lane*Parquet Floors Thru-Out* Professionally Finished Bsmt With Walk-Out * 2 New …
C2792222 – M2R – 31 FLOOK LANE Toronto, Ontario – $ 709,000
Show 10+++! Luxury Aspen Ridge 3 Storey Townhouse Loaded W/Over $ 35,000 In Upgrades Including Gourmet Kitchen, Centre Island W/Granite, New Hardwood …
C2792282 – M3H – 68 CLANTON PARK RD Toronto, Ontario – $ 885,000
Fantastic Opportunity And Great Value In This Desirable Growing Neighbourhood. Beautiful Family Home. Spacious Sunfilled Kitchen W/New S/S Appliances & …
C2792301 – M2P – 11 DANVILLE DR Toronto, Ontario – $ 1,329,000
Fantastic St. Andrews Raised Bungalow On Large Lot. Perfect 4+1 Bedroom Family Home. Updated Thruout In And Out, Renovated Kitchen & Bathrooms, Walk-Out …
C2792341 – M5M – 248 YONGE BLVD Toronto, Ontario – $ 1,425,000
Warm, Family, Centre Hall Residence On Mature Landscaped Lot On Low Traffic Street In Prime “”Cricket Club”” Area. 4 Bedrms Up (One More In Lower …
C2792357 – M6J – 56 NORTHCOTE AVE Toronto, Ontario – $ 599,900
Charming Renovated 2 Bedroom Row House – Perfect Condo Alternative! Main Floor With Open Concept Living And Dining Areas With Coffered Ceiling. Eat-In …
C2792425 – M5M – 375 BROOKE AVE Toronto, Ontario – $ 1,989,000
Fantastic Opportunity In The Neighbourhood! This Custom Built Beauty Sits On One Of The Most Desired Streets In The Area & Showcases The Finest Of …
C2792444 – M6P – 50 MERCHANT LANE Toronto, Ontario – $ 439,000
Extensively Renovated Junction Triangle Townhouse – This Stylish 2 Bedroom Home + Den W/ Loft Features A Rooftop Patio W/ Gas Bbq, Underground Parking …
C2792530 – M5A – 336 CARLTON ST Toronto, Ontario – $ 999,990
Live On A Quiet Stretch Of Carlton In Toronto s Historically-Rich & Vibrant Cabbagetown! Bright & Contemporary 3-Storey Home W/Tons Of Modern Essentials, …
C2792580 – M4N – 80 ROSLIN AVE Toronto, Ontario – $ 899,000
Throw Away Your Car Keys! One Block To Yonge St, 5 Minute Walk To Lawrence Subway Station, Excellent Local Shopping, Eclectic Restaurants, Schools, …
E2774340 – M4L – 3 HARTFORD AVE Toronto, Ontario – $ 819,900
Price Change. Nov 28: $ 819,900 Oct 31: $ 839,000
This Charming Three Bedroom Home Represents The Finest Of Opportunities In The Beaches. Large Two Storey On A Quiet Street With An Updated Eat-In …
E2788875 – M1C – 28 MCGRATH CRT Toronto, Ontario – $ 609,900
Price Change. Nov 22: $ 589,900 Nov 28: $ 609,900
Stunningly Renovated, 4 Bdr Home In The Sought After West Rouge/ Centennial Community.This Home Has Almost Everything New In The Last 2 Years. Gourmet …
E2791939 – M1W – 3085 BRIDLETOWNE CIRC Toronto, Ontario – $ 299,900
Prime Location Directly Across From Bridletowne Mall, Spacious 4 Bedrooms Unit, Mostly Newer Windows,37Newer Furnace And Cac Unit, Updated Electrical …
E2791965 – M1E – 5 MCMILLAN AVE Toronto, Ontario – $ 1,149,900
Brand New Customize Home, Looks Rich & Royal ! Home In Desired Neighbourhood. Designed For Elegant Living, Spacious Layout, Unique Design & Quality …
E2791982 – M1B – 205 MAMMOTH HALL TR Toronto, Ontario – $ 315,000
Perfect Home For A First Time Buyer. Bright And Spacious 4 Bedrooms Home, Located Near To All Amenities, Including Ttc, Shopping, Mall, 401 & School. Car …
E2792038 – M4L – 113 HIAWATHA RD Toronto, Ontario – $ 699,000
Absolute Amazing Property At This Price!! One Of The Largest Property In This Neighbourhood. Need Tlc, Investors/Renovators …
E2792062 – M1B – 48 APPLEMORE RD Toronto, Ontario – $ 510,000
“”Location ! Location”” Neutral Decor, Lots Of Sunshine, Well Maintained Home, Just Move Right In. Close To …
E2792068 – M1B – 9 WINSTANLY CRES Toronto, Ontario – $ 379,900
Cllarge Pie Shaped Lot! Oversized Workshop Garage! …
E2792081 – M1C – 35 HAVILAND DR Toronto, Ontario – $ 635,000
Welcome Home! Spectacular – Demand Centennial/West Rouge! Spacious & Bright! Fabulous Layout! Gleaming Hardwood! Interlocking Stone! Private Treed Fenced …
E2792096 – M1G – 246 CONFEDERATION DR Toronto, Ontario – $ 399,000
Gorgeous, Solid, Spacious 3 Bdrms + 2 Washrooms Bungalow Recently Updated. Home Built And Maintained With Pride! Located In A Quiet Family Neighborhood …
E2792099 – M1N – 3 SOUTH BONNINGTON AVE Toronto, Ontario – $ 459,900
Beautiful, Well Maintained, Birchcliffe 2 Storey Brick Home, Gorgeous Japanese Inspired Landscaped Back Yard With Pond. Huge Eat In Kitchen On Main …
E2792104 – – $ 389,900
Built In 1962 Original Owner Is Retiring. Not A Lot Of Updates But This Home Is Immaculate, No Clutter & Has Always Been Well Maintained. Roof …
E2792116 – M1C – 10 ELKWOOD DR Toronto, Ontario – $ 499,900
Your Search Is Over! Pride Of Ownership Beams Through This Spotless 3 Bdrm 2 Bath Home In Gorgeous Centennial! Original Owners Have Cherished This Beauty …
E2792119 – M1E – 11 CULTRA SQ Toronto, Ontario – $ 280,000
Renovate To Suit, The Home Needs Tlc, It Has Newer Windows, Newer Roof And Newer Siding But The Inside Needs Help, The …
E2792131 – M4M – 208 PAPE AVE Toronto, Ontario – $ 1,049,900
South Riverdale W/Studio! Contemporary Fluid Space Defined By Custom Finishes. Stunning Kitchen Reno W/Corian Counters & Mosaic Backsplash, Main Flr …
E2792152 – M1M – 78 SCARBOROUGH HEIG BLVD Toronto, Ontario – $ 539,000
Bluffs Home South Of Kingston Rd With Updated Kitchen, Updated Bathrooms, Updated Windows, Newly Refinished Hardwood Floors And Freshly Painted. Basement …
E2792182 – M1E – 63 GLORY CRES Toronto, Ontario – $ 365,000
Gorgeous Bungalow On Oversized Corner Lot, Updated Kitchen, Immaculate Finished Basement With 3 Pc Bath And …
E2792203 – M1E – 31 WOODGROVE DR Toronto, Ontario – $ 489,900
Ravine Lot With A Beautifully Renovated Bungalow Featuring A New Kitchen(2013) Granite Counters, Travertine Tile Floor, Updated Bathrooms, Hardwood …
E2792223 – M4B – 190 PARKVIEW HILL CRES Toronto, Ontario – $ 995,000
Parkview Hill Ravine All Brick Home, 3 Plus One Bedroom, 2 Gas Fireplaces, Updated Kitchen With Granite Counters And Backsplash. Hardwood Floors, …
E2792231 – M4K – 9 BROWNING AVE Toronto, Ontario – $ 989,000
Fantastic Opportunity To Own This Meticulously Maintained Detached Home In Playter Estates, Jackman School District. Large 5 Bed, 2 Bath Family Home. …
E2792249 – M4J – 238 LINSMORE CRES Toronto, Ontario – $ 649,000
Backing Onto Dieppe Park. Newly Renovated Detached Home On A Deep Lot. This Home Offers 3 Generous Sized Bedrooms, Large New Windows, His/Her Closets In …
E2792256 – M4E – 31 GLENMOUNT PARK RD Toronto, Ontario – $ 699,000
A Lovely Family Home In A Secluded, Park-Like Setting Near Love Cres Parkette. Dramatic, Renovated Kitchen. Ample Storage. Walkout To Private Deck …
E2792279 – M1J – 1495 DANFORTH RD Toronto, Ontario – $ 399,000
Detached Bungalow! Danforth Ave/Lawrence. 3+2 Bedroom, 2 Washrooms, 2 Kitchen. Furnace 2009, Air Condition 2008. Near …
E2792310 – M1H – 77 PANDORA CIRC Toronto, Ontario – $ 489,000
Location!!! Location!! **Excellent Opportunity To Own Absolutely Gorgeous & Upgraded ($ 85000)Executive 3 Bedroom Bungalow House With Newer Finished …
E2792320 – M4C – 353 LUMSDEN AVE Toronto, Ontario – $ 499,000
Beautiful Home! Over $ 100,000 Spent On Renovations. Gorgeous Gourmet Kitchen With Granite Countertops. Gleaming Hardwood Floors. Fantastic Home To …
E2792359 – M1H – 6 EASTPARK BLVD Toronto, Ontario – $ 459,900
A Fabulous Bedrooms Home On A Premium Lot In A High Demand Neighborhood! *Amazing Hardwood Floors Throughout* Kitchen With Oak Cabinetry, Ceramic …
E2792373 – M4L – 74 KINGSMOUNT PARK RD Toronto, Ontario – $ 599,900
…
E2792414 – M4M – 1185 QUEEN ST E Toronto, Ontario – $ 688,000
New Custom Townhouse, Never Lived In, Stylish And Contemporary In The Leslieville Film District. Prime End Unit Featuring Luxurious Living Space, …
E2792417 – M4L – 52 COLUMBINE AVE Toronto, Ontario – $ 949,900
Client Remks:Stunning 4 Bed, 4 Bath, 3 Story Home W/Exposed Brick Running Up Entire 3 Floors! Meticulously Renovated Home W/Top Of The Line Fixtures And …
E2792428 – M1K – 45 CHIPPER CRES Toronto, Ontario – $ 549,000
Fabulous Scar. Bungalow With Two Kitchens 5 Bedrooms And An Inground Swimming Pool. The Fully Renovated Kitchens And Bathrooms Make This A Great Single …
E2792491 – M4L – 2 OLIVER MEWS Toronto, Ontario – $ 625,000
Incredibly Rare Opportunity To Finish This Brand New Luxury Townhome To Your Taste & Style!! Approx 3800 Sf On 4 Levels. Tucked Away In A Wonderfully …
E2792498 – M4L – 12 OLIVER MEWS Toronto, Ontario – $ 725,000
Wow! Wait Until You See This Brand New Upper Beaches Luxury Townhome! Approx 2260 Sf Of Superbly Finished Living Space On 4 Finished Levels. Tucked …
E2792527 – M4L – 24 OLIVER MEWS Toronto, Ontario – $ 600,000
Incredibly Rare Opportunity To Finish This Brand New Luxury Townhome To Your Taste & Style! Aprox 1930 Sf On 4 Levels. Tucked Away In A Wonderfully …
E2792532 – M4L – 36 OLIVER MEWS Toronto, Ontario – $ 775,000
This Premium End Unit At Oliver Mew Is Fabulous! Tucked Away In A Wonderfully Private Courtyard Setting Of Only 18 Luxury Townhomes. Approx 2690 Sf Of …
E2792560 – M4K – 163 LANGLEY AVE Toronto, Ontario – $ 799,000
Fab 2.5 Storey Solid Brick Semi On Neighbour Friendly Street. Reno d…Top To Bottom. Great Mix Of Contemporary Style & Functional Living. Bright …
E2792566 – M1N – 48 QUEENSBURY AVE Toronto, Ontario – $ 579,900
Full Of Light & Sparkle For The Season And Ready To Welcome A New Family Home For The Holidays – This Fabulous Detached Home Is On One Of Birchcliff s …
E2792586 – M4C – 45 DUNKIRK RD Toronto, Ontario – $ 989,000
Huge Custom Finished Home In Prime East York Location. 4 Bedrooms, 5 Bathrooms. Unique Feature: Has Two Master Bedrooms Complete With Ensuites And …
W2764163 – M6E – 305 BOON AVE Toronto, Ontario – $ 499,000
Price Change. Oct 17: $ 474,000 Nov 28: $ 499,000
To All Renovators Look No Further Detached Home In The Heart Of Corso Italia With Great Opportunities …
W2769370 – M9P – 127 SUN ROW DR Toronto, Ontario – $ 695,000
Price Change. Nov 28: $ 695,000 Nov 16: $ 705,000 Oct 30: $ 715,000 Oct 25: $ 727,500
Enjoy This Absolute Impecable Well Maintained Home, Premium Lot 48X115,6/3 Rooms Detached, Bright & Sunny, Eat-In Kitchen Plus Combine Working Area …
W2781682 – M3L – 36 LONEY AVE Toronto, Ontario – $ 695,000
Price Change. Nov 28: $ 695,000 Nov 10: $ 725,000
Architecturally Designed + Fully Renovated From Top To Bottom. 3 Bedroom + 2 Full Bathrooms On Main Floor. Gorgeous 2nd Master W/ Own Bathroom On 2nd …
W2784002 – M9B – 366 THE EAST MALL Toronto, Ontario – $ 281,900
Price Change. Nov 28: $ 281,900 Nov 15: $ 285,900 Nov 14: $ 288,900
This Ground Level Formerly 3 Bedroom Plus Den Where The Bedroom On The Main Level Was Opened Towards The Living Room Creating A More That 13 By 19 Feet …
W2784249 – M8W – 31 FOCH AVE Toronto, Ontario – $ 544,900
Price Change. Nov 28: $ 544,900 Nov 14: $ 558,800
Large, Bright,3 Bdrm Carpet Free Home In Prime Alderwood Location!Custom Kit.W/Granite Counters,4 S/S Appliances, Glass Tile Backsplash,Det.2 Car …
W2787555 – M9V – 2901 KIPLING AVE Toronto, Ontario – $ 119,900
Price Change. Nov 28: $ 119,900 Nov 26: $ 124,900 Nov 23: $ 129,000 Nov 20: $ 131,900
Great Value: Truly Gorgeous & Spacious Unit In A Luxury Building. Renovated. New Ceramic …
W2791945 – M9A – 11 NORTH DR Toronto, Ontario – $ 3,500,000
Build Your Dream Home On This Prestigious Street That Has Million Dollar Homes. Design/Build Services Available With Prince Bay Luxury Homes. A Fantastic …
W2792066 – M6H – 331 WESTMORELAND AVE Toronto, Ontario – $ 735,000
Remarks For Clients: Spacious,Beautiful Detached Home! In A Great Location! Midtown Toronto! Ideal For 1 Or 2 Families!Large Front Yard For A Garden And …
W2792091 – M8X – 7 HIGHGATE RD Toronto, Ontario – $ 999,000
Amazing Entree Into The Highly Desirable Kingsway Community. Renovated Kitchen And Baths. Spacious Principle Rooms. Gorgeous Wall Of Built-Ins In The …
W2792154 – M9B – 8 BLAKETON RD Toronto, Ontario – $ 639,000
First Time Offered Since 1956. This Central Etobicoke Burnhamthorpe Gardens Neighbourhood Is Offering A 3 Bedroom Brick Bungalow On An Exceptional 60 …
W2792166 – M8Z – 50 EDGECROFT RD Toronto, Ontario – $ 599,000
Charming Detached Brick Bungalow In Queensway Village. Huge 41 X 133 Ft Fully Fenced Lot With Large Detached Garage. Tastefully Renovated Ready To Move …
W2792170 – M9V – 25 BATAWA CRES Toronto, Ontario – $ 474,868
Great Location- Large Detached Bungalow With Good Size Rooms. Original Hardwood Under Carpet. Basement With …
W2792179 – M8V – 130 TENTH ST Toronto, Ontario – $ 459,900
Gorgeous Daniels Built Townhome! Gleaming Hardwood Floors Throughout! Open Concept Kitchen With Island And Walk-Out To Sunny South Facing Deck. Large …
W2792219 – M6M – 222 AILEEN AVE Toronto, Ontario – $ 399,000
Great Family Home That Features 2+1 Bedrooms. 2 Bathrooms, Crown Mouldings, Upgraded Casing And Trim. Wainscotting, Pot …
W2792305 – M3N – 44 WILMONT DR Toronto, Ontario – $ 450,000
Spacious, Well Maintained Detached 4-Bedroom Home With Single Attached Garage On A Large 60 Foot Lot. This Home Features A Family Sized Kitchen, Hardwood …
W2792325 – M3N – 55 LASKAY CRES Toronto, Ontario – $ 375,000
Spacious And Lovingly Maintained Family Home With Potential For Inlaw Apt. Features Include: Professionally Finished Basement; Gleaming Hardwood Floors …
W2792346 – M6R – 50 MACDONELL AVE Toronto, Ontario – $ 650,000
2 Storey Home On Macdonell Ave. Tree Lined Community In Roncesvalles Village. Some Original Charm. High …
W2792396 – M9C – 74 OLD BURNHAMTHORP RD Toronto, Ontario – $ 699,900
Newly Renovated Bungalow On Prestigious Markland Wood Area!! Excellent Location!! Large Lot,Safe & Quiet Neighborhood.Clean ,Spacious & Sun Filled Warm …
W2792410 – M3M – 6 SENTINEL RD Toronto, Ontario – $ 289,900
** Spacious End Unit Home ** Near Keele And Sheppard ** New Subway Line Coming! ** Great Future Investment! ** Newly …
W2792576 – M3L – 120 DOLORES RD Toronto, Ontario – $ 509,900
Outstanding Spacious And Comfortable Home With A Great Layout. Fully Fenced For Privacy. Freshly Painted With A Completely Fin Bsmt Along With A Sep Ent. …
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