A first quarter 15.1 per cent year-over-year hike in the cost of renting a one-bedroom condo in the GTA is setting the stage for a resurgence of buyers fed up with the high cost of paying a landlord, says the Toronto Regional Real Estate Board (TRREB).
“Tight market conditions are resulting in an unsustainable pace of rent growth,” said TRREB in a news release Thursday.
Competition among renters is growing despite a 10.2 per cent boost in the number of listings on the real estate industry’s Multiple Listings Service (MLS) in the first three months of the year. The number of units leased in that period rose 4 per cent over last year’s first quarter.
The quarterly average monthly rent of a one-bedroom unit climbed to $2,474. Two-bedroom units averaged $3,162 in the first quarter, a 9.2 per cent year over year increase.
“Despite increased interest rates, mortgage payments on a condo are now closer to the cost of renting for a lot of potential buyers. In addition, homeownership has the added benefits of equity growth and asset appreciation over the long term,” said TRREB President Paul Baron.
First quarter condo sales plunged 42.9 per cent compared to last year. Prices also tumbled 11.4 per cent to an average selling price of $700,566 across the GTA. In Toronto, where two-thirds of condo sales were transacted, the average price fell 10.3 per cent to $726,664.
“Over the same period, new listings were also down, but by a lesser annual rate of 19.9 per cent. This means that condo buyers did experience more choice compared to the first three months of 2022,” said the real estate board.
Baron said more rental supply is needed to balance out that side of the market and it should come in the form of purpose-built rental properties.
“The development of rental properties needs to be an explicit part of housing policy at all levels of government,” he said.
“Home sales and selling prices are expected to improve as we move through 2023,” said the real estate board’s chief market analyst Jason Mercer. “Based on the expectation that first-time buying activity will increase this year, look for the condominium apartment segment to be one of the recovery leaders in terms of sales and price growth.”
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