Rentals Rentals Rentals in the best possible Location Location Location!

I recently had the pleasure of attending the ULI Toronto Symposium where the much anticipated Emerging Trends in Real Estate 2016 study was released and presented by a panel of the heaviest hitters in Real Estate not just in Canada but globally. We were treated to a presentation by Blake Hutcheson, CEO of Oxford Properties Group, Ben Myers, SVP Market Research & Analytics with Fortress Real Developments moderated by Lori-Ann Beausoleil, National Real Estate Consulting & Deals Leader with PWC.

As the prices of Toronto Real Estate continue to increase many active Buyers are forced to the sidelines to save more money to be able to dive into the market. What our smart Buyers are doing however, is adjusting their expectations and jumping onto the property ladder a few steps lower than anticipated. We’re also seeing the rise of the sharing economy where the World’s younger consumers don’t want to be attached to material things. To be free, and to live simpler lives. They’re making renting a lifestyle decision not because they can’t afford the property they want, but because they prefer to be liquid, to be able to do what they want when they want. They’re not buying as many cars either but that’s another topic (enter UBER and eventually driver-less cars).

This creates an opportunity for investors here in Toronto. The Rental market has been on a sharp incline for nearly a decade with vacancy rates at their lowest, bidding wars on prime rentals, and rents per square foot that we have never seen before. This new demand for residential rental units has caught the eye of mammoth pension funds (think OPTrust) and REITs around the world who are going all-in on some massive purpose built residential rentals right here in Toronto. They’re buying up entire condo buildings, using the built-in escape clause in the original agreements of purchase and sale to buy out purchasers by simply returning their deposits with interest. Another reason buying pre-construction condos is even more risky now.

“It is likely that we will see more condominium developments convert to rentals in the face of market demand” – ETRE2016

Ben Myers of Fortress Real Developments said, “Affordability is an issue but it’s also about desirability” and that’s what I was referring to earlier where some people are forced to rent while others choose to rent (and that demographic is booming).

Some of you may have read the recent CMHC study that identified 11 Canadian markets that are overvalued and specifically in Toronto by 11-30%. Well, that’s a huge gap and when you dig deeper into this CMHC study they state that they haven’t accounted for supply. Haven’t accounted for supply? What was it they taught us in grade 9 economics class? We can pretty much toss that study into the garbage now.

To keep this relatively short I’ll end it right here but I’ve read the entire 100 page study and there’s a lot more to talk about. Perhaps I’ll write about it some more down the road but would rather chat with you in person. Contact us or live chat bottom right if you’d like. Want a copy of the entire 100 page report? I’ll send it to you, just ask me.

Oh, and if you can afford a single unit condo to buy and hold as a rental, do it. If you can afford a purpose built multi-residential property, do it.