Rising interest rates and strict mortgage qualification resulted
in fewer Canadians seeking homeownership than rental accommodations
last year, and 2019 will bring more of the same.
“It’s going to continue,” said Marcus &Millichap’s Vice
President and Broker of Record Mark Paterson.“People will continue
renting rather than dealing with residential mortgages.The rental
market right now can barely keep up with the vacancy rate in
Toronto, for example, being around 1%.”
Competition for rentals will be even fiercer this year in urban
centres and that will push rents upward, creating a spillover
effect into satellite markets.
“The rental market will see an increase of 8-10% because of
demand,” said Paterson.“Unfortunately for people trying to find
affordable housing, they’re looking elsewhere in secondary
markets.They’re priced out of city centres, and that means the
talent pool for jobs will end up in secondary markets.”
The Marcus &Millichap’s 2019 Multifamily Investment Forecast
Report notes that apartment projects have become more financially
viable, as evidenced by 60,000 units in the pipeline
countrywide.However, that’s little relief given how few vacancies
there are.
“The number of occupied units grew by 50,000 last year,
outpacing supply growth nationally just as 37,000 new apartments
came online,” read the report.“The national vacancy rate declined
to 2.4%, the lowest reading since 2002.A shortage of construction
workers,
Rising interest rates and strict mortgage qualification resulted
in fewer Canadians seeking homeownership than rental accommodations
last year, and 2019 will bring more of the same.
“It’s going to continue,” said Marcus &Millichap’s Vice
President and Broker of Record Mark Paterson.“People will continue
renting rather than dealing with residential mortgages.The rental
market right now can barely keep up with the vacancy rate in
Toronto, for example, being around 1%.”
Competition for rentals will be even fiercer this year in urban
centres and that will push rents upward, creating a spillover
effect into satellite markets.
“The rental market will see an increase of 8-10% because of
demand,” said Paterson.“Unfortunately for people trying to find
affordable housing, they’re looking elsewhere in secondary
markets.They’re priced out of city centres, and that means the
talent pool for jobs will end up in secondary markets.”
The Marcus &Millichap’s 2019 Multifamily Investment Forecast
Report notes that apartment projects have become more financially
viable, as evidenced by 60,000 units in the pipeline
countrywide.However, that’s little relief given how few vacancies
there are.
“The number of occupied units grew by 50,000 last year,
outpacing supply growth nationally just as 37,000 new apartments
came online,” read the report.“The national vacancy rate declined
to 2.4%, the lowest reading since 2002.A shortage of construction
workers, a long approval process and higher development and
financing costs are slowing the delivery schedule this year,
curbing completions by roughly 2,000 units from last year’s
total.”
“Historically, Canada has been heavily reliant on condominium
owners to supply the rental market, filling the void that
purpose-built rentals have not been able to close.Prices have
climbed substantially for condo investors, though, slowing this
practice… and pushing more residents in search of housing to the
apartment market.”
While secondary markets will enjoy the dregs of Toronto’s renter
pool, the city will remain popular with renters.As the city has
matured into a leading North American tech hub, the vacancy rate is
under even more pressure.
“Microsoft, Intel, Uber and other companies have plans to
increase operations in the city and bring on new workers,”
continued the report.“Amid its solid reputation as a top innovator
in tech and a mature ecosystem that supports the industry, the GTA
will attract young professionals in greater numbers this year.Many
new residents choose to rent, not only due to barriers to
homeownership, but for greater mobility and to be near local
employers, restaurants and nightlife.”
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Read more https://www.canadianrealestatemagazine.ca/news/rental-market-braces-for-influx-of-tenants-253866.aspx