In the past year alone, housing and real estate in Toronto have seen tremendous change. As the once buyer-dense seller’s market begins to balance out, 2022 has marked a new era of real estate in the city.
Today, higher-interest rates have priced many potential homebuyers out of the market, leaving a large portion of the population reliant on rental housing. This uptick in demand has had a drastic impact on rental prices across the Greater Toronto Area, and many landlords are seeing great returns. However, recently proposed restrictions and legislature may put a timeline on these conditions.
As a landlord, here’s what you should know about new trends in Toronto real estate.
Today’s Housing Landscape
Earlier this year, the Bank of Canada began to increase its target interest rate in an effort to offset rising inflation. These hikes, eventually lifting the rate from 0.25% to 2.5% suddenly made it much more expensive for Canadians to secure financing for a home. As a result, the number of homebuyers in today’s market is far lower than in past years. Now, as fewer Torontonians are able to buy property, the demand for rental units in the city is reaching record heights.
This demand has caused rents in Toronto to skyrocket as property owners capitalize on low vacancy rates. As of July, the average cost of rent in Toronto is up 17% compared to twelve months ago – an increase more than double the rate of inflation. This trend has led both real estate experts and economists to declare Toronto as a “landlord’s market”.
Looking for more information about the changing landscape of housing in Toronto and beyond? Explore these helpful resources.
- How Will The Shifting Market Impact Toronto Homebuyers?
- 2022 Federal Budget Actions on Housing and Real Estate
- Everything You Need to Know About the Bank of Canada Interest Rate Increases
Delays in New Developments
Both the city and provincial governments have promised to keep rental costs low by boosting the supply of available housing over the next decade. However, as inflation, interest rates and other costs are beginning to climb, a number of new housing projects have been delayed significantly. Some projects, like a 600-unit building in the downtown core, proposed by TMU have been scrapped altogether.
For most landlords, the limited housing supply as a result of these setbacks will be beneficial. However, if you’re looking to expand your portfolio of investment properties, these delays could give you less inventory to buy from. For full-scale insights about proposed or in-construction housing developments in the city, ask your real estate agent.
Incoming Restrictions
Despite the challenges many renters are facing as a result of climbing costs, city hall has long promoted a balanced dynamic between landlords and tenants. However, as rental averages begin eclipsing local records, new legislations are being proposed to prevent further escalation. These proposals primarily centre on limiting rent increases between tenants, both to taper rental rates and reduce bad faith evictions.
That being said, any potential restrictions on rent increases are just proposals for now, with no concrete changes on the horizon. Any future restrictions or controls that may impact you or your property will likely be very far down the line.
Looking for helpful information about real estate investment and property management? Check out these blog posts.
- Upsizing as an Investor: Why it Works
- What Makes a Good Investment Neighbourhood in Toronto?
- Everything You Need to Know About Buying an Investment Property
For New or Prospective Landlords
In Toronto, it’s a great time to be a landlord. With no signs of demand slowing down and steadily climbing rent averages, you can earn some impressive passive income with little labour input. Plus, if you’re considering purchasing an investment property in today’s market, current trends could help you get a strong start on your returns.
Or, if you are looking to upsize, keeping your current home as an investment property after you move can also be a strong financial asset too. If you’re interested in becoming a landlord in Ontario, there are a few things you should know first.
Want to buy an investment property in Toronto? We specialize in supporting local landlords. Contact us today.
