Condominium rentals are proving to be an increasingly popular option for Greater Toronto Area residents.
The Greater Toronto Area REALTORS reported in mid-October that 6,541 condos were rented in the third quarter of 2013 which has increased a remarkable 25 per cent from the same time period in 2012.
Condo owners were also able to charge more with third-quarter average rent increasing for one-bedroom and two-bedroom condo apartments by 1.8 and 3.6, respectively, over the course of the year. (See image of 300 Front St. W. a condo rental listed by DEL Condominium Rentals.)
In a statement, Toronto Real Estate Board president Dianne Usher also noted nearly one-third of GTA households now rent their home.
Jason Mercer, the senior manager of market analysis for TREB, said increased competition for available rental units in the third quarter is driving year-over-year growth.
New apartment construction not impacted by condo rental
Derek Lobo, CEO of Rock Advisors Inc. Brokerage, a company which focuses on the apartment sector and also does feasibility work with condo developers, said he thinks a large percentage of the condominiums being purchased go into the rental pool anyway.
“Apartment construction is in its infancy still,” Lobo said. “There have been less than 5,000 apartments built in the Greater Toronto Area since the turn of the century.
“So an uptick or downtick in the condo market won’t have any material impact on the purpose-built rental industry because it’s so small to start with.”
Lobo opined that if the condo bubble did burst or the market was to soften, many condo developers would merely switch their focus to building apartments instead.
Condo sales up in third quarter of 2013
Perhaps surprisingly, the GTA also experienced strong condominium sales with 5,307 sold in Q3 2013, up 18 per cent from 4,498 in the third quarter of 2012.
Within the City of Toronto proper, which accounted for 72 per cent of condo apartment transactions, sales jumped by 19.5 per cent according to a GTA REALTORS report.
“The Echo Generation wants to live where they work and play,” Usher said in her statement. “Despite the onset of stricter lending guidelines, buyers have found that home ownership remains affordable.”
Among other moves, Finance Minister Jim Flaherty had introduced measures in 2012 to reduce the length of mortgages from 30 to 25 years and to lower the amount consumers could borrow to refinance their homes.
The minister said he introduced the measures partly due to concern over a potential housing bubble and what he called the over-building of condos.
The average selling price for condos in Q3 2013 still rose to $340,069, up nearly two per cent compared to an average of $333,846 in the third quarter of 2012.
At the same time, listings decreased and if the trend continues, competition for condos could rise along with prices.