Baby, we got a bubble!?

[interested]

Sorry but vacancy condo rate in heart of Toronto is less than %1.2 and falling...by 2013 its going to below %1.0....

I was aware of the 1% quoted for condos(see post 6137 on this thread) but not that it was falling....do you have a source for info ducati?
There are supposedly 48000 condos coming on line now and end 2013 which suggests if 1/2 are rentals a further 24000 to hit the market. I don't know how many "new rental units" are being built but suspect it is not more than 2-3000. Perhaps you or someone can chime in if they have additional info.

 

[mrfizboh]

I've always found that a bit funny too. $750 to fill out forms. Ouch.

fill out your own forms and list on mls for $199

 

[kEiThZ]

I think it will be interesting to see how the rental market performs. Rental rates will increase because of this. Great for investors!

Not really. Rents are usually governed by the ability to pay. ie. incomes, inflation, etc.

Just look at previous crashes. Or the US real estate crash. Rents didn't move that much. Any time there has been a real estate correction, the price-to-rent ratio has corrected by housing prices moving down, not rents moving up.

 

[kEiThZ]

Sorry but vacancy condo rate in heart of Toronto is less than %1.2 and falling...by 2013 its going to below %1.0....

With a never-before-seen amount of stock coming online? Yeah right.

In any event, downtown will always have low vacancy rates compared to the rest of the city. But it's the city wide vacancy rates that matter...and drive rents. Let's say a 500 sq ft condo rents for $1500 downtown. But due to higher vacancies in mid-town that same condo rents for $1200 at Yonge/Eglinton. You'll start seeing renters migrate, forcing downtown rents lower. These kinds of trends don't show up right away. Real estate is pretty illiquid since it takes a while to sell a place or leases take a year to expire. By the end of 2013, we'll start having some idea if all this supply is being taken up by owner-occupiers, which should keep rents up. Or if it's largely going to speculators and investors, in which case, a lot of it is going to be dumped on the rental market. In that case, vacancies should be going up and rents staying flat or going down a tad.

 

[interested]

Not really. Rents are usually governed by the ability to pay. ie. incomes, inflation, etc.

Just look at previous crashes. Or the US real estate crash. Rents didn't move that much. Any time there has been a real estate correction, the price-to-rent ratio has corrected by housing prices moving down, not rents moving up.

Actually I can comment about the Florida coastal market and I believe it is true in other spots of the US, rents in fact have moved up (by about 15-20% in the past 2-3 years). This is happening because a lot of people do not qualify for new mortgages due to tight lending by the banks, therefore increasing the demand for rental housing. However, unless there is a corresponding difficulty in Canada for people to get mortgages, rents will not increase. I believe that the rents increases began in about 2010 though the bust occurred in 2006 onwards.

 

[interested]

With a never-before-seen amount of stock coming online? Yeah right.

In any event, downtown will always have low vacancy rates compared to the rest of the city. But it's the city wide vacancy rates that matter...and drive rents. Let's say a 500 sq ft condo rents for $1500 downtown. But due to higher vacancies in mid-town that same condo rents for $1200 at Yonge/Eglinton. You'll start seeing renters migrate, forcing downtown rents lower. These kinds of trends don't show up right away. Real estate is pretty illiquid since it takes a while to sell a place or leases take a year to expire. By the end of 2013, we'll start having some idea if all this supply is being taken up by owner-occupiers, which should keep rents up. Or if it's largely going to speculators and investors, in which case, a lot of it is going to be dumped on the rental market. In that case, vacancies should be going up and rents staying flat or going down a tad.

I agree with most of this. Another scenario would be that rents stay essentially the same in downtown and people decide they will spend $1400-1500 and leave Yonge/Eglinton to come downtown. In other words, if you work in downtown and are young, you would factor in TTC costs and if there is more volume of rentals in the core, people move to the core, especially if they can afford it. However, I am not so sure if a lot of the units that come available are 300-400 sq.ft. bachelors;400-500 sq.ft. 1 bedrooms and 650 sq.ft. 2 bedrooms people will really want these if they can get say 20% larger units at Yonge and Eglinton.

 

[kEiThZ]

I agree with most of this. Another scenario would be that rents stay essentially the same in downtown and people decide they will spend $1400-1500 and leave Yonge/Eglinton to come downtown. In other words, if you work in downtown and are young, you would factor in TTC costs and if there is more volume of rentals in the core, people move to the core, especially if they can afford it. However, I am not so sure if a lot of the units that come available are 300-400 sq.ft. bachelors;400-500 sq.ft. 1 bedrooms and 650 sq.ft. 2 bedrooms people will really want these if they can get say 20% larger units at Yonge and Eglinton.

Agreed. The space dimension is something lots of people ignore when talking about downtown. And the differences are probably becoming more dramatic. Not just space, it's also the views. Downtown with its condo jungles, is becoming a place where you look out your window and see another condo. Midtown hasn't reached that point yet.

I'd also point out that Yonge/Eg. And even Yonge/Sheppard and north are far more desirable than they were years ago. Yonge itself has a far more urban feel in the middle and northern parts. It's urban enough for most that it won't leave them clamouring for the core.

 

[kEiThZ]

Actually I can comment about the Florida coastal market and I believe it is true in other spots of the US, rents in fact have moved up (by about 15-20% in the past 2-3 years). This is happening because a lot of people do not qualify for new mortgages due to tight lending by the banks, therefore increasing the demand for rental housing. However, unless there is a corresponding difficulty in Canada for people to get mortgages, rents will not increase. I believe that the rents increases began in about 2010 though the bust occurred in 2006 onwards.

Rents do move up a tad. However, there's always a lag (as you point out) with rents going up, and the magnitude is never as much as property values coming down. But this is also predicated on supply. If the vacancy rate is high, it won't matter if property prices are declining, rents will go down too.

 

[drewp]

I have seen quite a spike already with the rental rates in the city this year. I would say it started last year slightly but this year I am seeing a significant jump in some units. Considering the condo re-sale market has slowed down this year over last. Yes supply and demand is a factor but with immigration in the GTA over 100000 yr, more and more people are looking to rent. So maybe supply is keeping up with demand. And lets say 5% who were approved for a 30 year mortgage decide to rent instead, then their will be more demand than usual for rental properties. The rental market is a very good indicator at what is going on in the city. I have been surprised at how many places have gone over asking at cityplace. I think the rental market indicates what will happen the following year, so my prediction is next year will be a stagante year in regards to the condo resale market.

If we are talking about incomes, remember that the rental rates have been flat for the last 15 years, so does that mean that their income has been the same.

 

[cdr108]

I have seen quite a spike already with the rental rates in the city this year. I would say it started last year slightly but this year I am seeing a significant jump in some units. Considering the condo re-sale market has slowed down this year over last. Yes supply and demand is a factor but with immigration in the GTA over 100000 yr, more and more people are looking to rent. So maybe supply is keeping up with demand. And lets say 5% who were approved for a 30 year mortgage decide to rent instead, then their will be more demand than usual for rental properties. The rental market is a very good indicator at what is going on in the city. I have been surprised at how many places have gone over asking at cityplace. I think the rental market indicates what will happen the following year, so my prediction is next year will be a stagante year in regards to the condo resale market.

If we are talking about incomes, remember that the rental rates have been flat for the last 15 years, so does that mean that their income has been the same.

incomes have been stagnate over the past decade ... maybe 15 years but i can't be certain.

perhaps ppl have finally come to realize that the numbers don't make any sense to buy in this current market, at least not pre-construction.
pre-con would cost 50-60% more than a rental.

 

[caehlan]

Looking at realtor.ca/MLS this morning for the Yonge/Sheppard, Yonge/Finch, Bayview/Sheppard, Bayview/Leslie area (Willowdale-ish)... the number of listings is crazy high. I've been checking somewhat regularly over the past decade and haven't seen anything like this. To think there are still so many new buildings in this area under construction and even in pre-sale... this is going to be u-g-l-y

 

[cdr108]

Looking at realtor.ca/MLS this morning for the Yonge/Sheppard, Yonge/Finch, Bayview/Sheppard, Bayview/Leslie area (Willowdale-ish)... the number of listings is crazy high. I've been checking somewhat regularly over the past decade and haven't seen anything like this. To think there are still so many new buildings in this area under construction and even in pre-sale... this is going to be u-g-l-y

were you looking at freeholds or condos?

i've seen alot of high priced freeholds.
could be mostly fueled by those recent newspaper articles of people paying $1+ million for the split bungalows, etc.
now many are taking the opportunity to cash out as they expect the same $$$

 

[caehlan]

No filters on the search... but the majority appear to be condos. Maybe the effect of last week's news from the Gov?

 

[dlam]

news from one week ago would hardly be felt on mls. the area you are searching has a lot of condos, but if you look carefully, a lot of them are the less desirable units (low level, bad view, possibly open to elevator). The yonge-finch/sheppard area is known for having good schools (mckee, earl haig, claude watson school for the arts). good 2, 2+, 3 bedroom units are gone quick.

 

[caehlan]

I'm not sure I understand your point.. it doesn't explain the sudden increase in listings. Whether they be "less desirable" units or not.