Owning or Renting Homes or Condo Apartments In Toronto
Max Seal, Broker’s Comments:
In Toronto as of now, we are in April, 2018. The question of “Owning or Renting Homes or Condo Apartments In Toronto” is a subjective one and the merits an demerits vary greatly between the prospective home buyers and the home or apartment renters and their individual family and financial circumstances.
Here are some of the facts in Toronto real estate market as of April, 2018:
For the Toronto Home or Condo Buyers:
Toronto Home Prices somewhat declined after close to 100% increase in 5 years:
The Toronto area house prices of detached homes jumped almost 100% in last five (5) years (between April, 2012 and April, 2017). Yet, the actual increase of earning of individual Toronto worker was close to 12% during the same five (5) year period (2012 to 2017).
After April, 2017, the house prices of detached homes are in somewhat mild decline and this trend continues till in April, 2018 because of less speculation, Foreign Buyer Tax and new stricter OSFI regulations of qualifying for mortgages of all home buyers.
As of April, 2018, the house prices have not declined to similar levels as of in April, 2016.
Buying single-family detached homes in Toronto area have been more challenging for the prospective buyers. In April, 2018, the home price tag is at least $1 million or more. The buyers need higher initial down payments and higher qualifying incomes. And still lower mortgage rates (as of April, 2018) may increase in 2018, 2019 or in 2020.
Owning Or Renting Condo Apartments In Toronto
Toronto Condo Prices:
Average Toronto Condo median prices jumped 34% from $335,950 in January, 2016 to $450,000 in January, 2018 as reported in an article in Better Dwelling and CREA
In April, 2018, the average price of 1 br or 1+1 br Condo Apartments in downtown Toronto is about $1,000 per square feet or more. So, a 500 square feet Apartment Condo will cost close to $500,000 or more. And the qualifying income of the buyer will be close to $97,000 per year.
The good news is that Toronto home buyers continue to buy detached homes in 2018. The buyer expect the lower mortgage interest rates to continue and detached home prices continue to decline in 2018.
Toronto home buyers consider that “buying a detached home” is a long-term investment and they need homes for their families to live, to grow and to enjoy their communities.
Toronto Condo buyers may consider buying older Condos at relatively lesser prices than the newer Condos.
And of course. the home buyers and Condo buyers need to have good downpayments and need to have family incomes to qualify for even larger mortgages as per OFSI rules of qualifying terms.
If the buyers obtain their mortgages from the Credit Unions, they may obtain better interests and better terms as the Credit Unions are regulated the provincial regulations and they can avoid more restrictive OFSI rules.
For the Toronto Renters:
For the existing older Apartments, the rents have been stable during 2012 and 2017 due to existing “Ontario Residential Tenant regulations”. The owners can ask for “market rents” for the Apartments that were built after 1990,
The “homeowners” and the “Apartment renters” have become two (2) distinct classes in Toronto. The majority of “Apartment renters” may not be able to buy their “starter homes” or “Condo Apartments”.
Update: My above observation is confirmed in the recently published article in the Toronto Star describing the ‘Crisis of affordability’ for Toronto renters where ‘nearly a quarter are spending more than 50 per cent of their household income on rent’.
The majority of Apartment owners are using legal ways to increase their rents. As reported, some Apartment owners are using “loopholes” of the “Ontario Residential Tenant regulations” and other illegal ways and are increasing annual Apartment rents by 20% to 30% or more. The existing older residential tenants have become more vulnerable.
The Apartment owners can rent their vacant apartments at the market rents. Please read the article titled The overall vacancy rate for the GTA was at 1.1 per cent in November, 2017, down from 1.4 per cent in 2016, as reported in the Toronto Star article. The owners can improve the vacant apartments and ask new market rents from the new tenants. And these new apartment rents can be similar or close to the market rents of Condo Apartments.
The hundreds of thousand Apartment renters are forewarned that nothing is safe and do not think that you can live in your rented apartments happily for several years. The Apartment owners are in “Apartment rental business” and they want to increase their yearly cash flows. The majority of the Apartments are 50 years or more old. Thousands of older Apartments are in worse conditions than before as the Apartment owners are neglecting required maintenance works.
Please read the recent article published in the Globe And Mail titled “Landlords using evictions, hikes to circumvent rent control, Toronto tenants say”. As per the article, a growing number of Toronto tenants say their landlords are forcing them out to charge higher rent, according to data from Ontario’s rental-dispute board.
Another article was published in the Vancouver Sun titled “Vancouver ‘renoviction’ tenant wins a round in battle against landlord“. Here the older tenant won her case in the B.C. Supreme Court after her new Apartment owner tried to evict her from her Apartment using “renovation” as an eviction tool.
Similarly, the market rents of “Condo Apartments” continue to increase rapidly because of the shortage of available rental units (vacancy rate. The vacancy rate in the 4th quarter of 2017 was among the lowest ever, at 0.3 per cent, according to Urbanation Inc. Please read the article about “The average monthly rent for a condominium rose by 9.1 per cent to $2,166 from a year earlier.”
Update to the blog: In Toronto area, in thousand of cases the low-income renters are already living in an alarming stage. For more information, please read the article as published in the Toronto star stating, “Almost half of Toronto tenants are paying too much in rent and are one health emergency or lost job away from losing their rented Apartment units”.
The demand of “Condo Apartment rentals” are very high. In downtown Toronto, the rents of 1 br “Condo Apartment” are close to $2,000 per month and the rents of 2 br “Condo Apartment” are close to $3,000 per month or more.
Owning a Condo Apartment In Toronto
So, for the “Apartment renters” and the “Condo renters”, the better alternative is to purchase your own starter home or starter Apartment Condo if you can manage to pay initial downpayment and on-going monthly payments. Both the house prices and the Condo prices may decline in coming several months or years. The interest rates are expected be stable or increase somewhat in the next 1 to 3 years. Please do your homework. Please accumulate the initial downpayment, become “pre-approved” for your mortgage from a bank or mortgage broker. When you feel confident about the market prices, please buy your own home or Apartment Condo.
If you are planning to sell your home or Condo Apartment in downtown Toronto or in Central Toronto areas, please call, text of email Max Seal, Broker at 647-294-1177. Please visit http://www.TorontoHomesMax.com for a FREE Home Evaluation“.
If you are planning to buy a home or a Condo Apartment in the Central Toronto areas, please call, text of email Max Seal, Broker at 647-294-1177. Please visit my website http://www.centraltorontorealestate.com/ to find out available homes and Condos for sale in Downtown Toronto and Central Toronto areas.
