End-users flooding condo market to detriment of renters

End-users flooding condo market to detriment of renters -> LINK

The new mortgage rules have redirected Toronto’s would-be low-rise home buyers to the condo market, driving up prices and, in the process, deterring condo investors from purchasing units renters desperately rely on.

 

 

“The mortgage rules changed on January 1, so someone with a mortgage of over 20% down will have that additional stress and it’s kicked a lot of people out of the housing market and into the condo market,” she said. “The condo market is off the hook right now. For my real estate investor condo clients, it’s a bit of a challenge because the numbers need to work, and for the numbers to work they need a one-bedroom condo for under $500,000, but to stay cash flow-positive they need to put down more than 20%.”

While end-users battle through bidding wars in the condo market, renters are enduring them too because of high demand and low supply. Investor-owned condos were sustaining the rental market, but in having to compete with more buyers for their investment properties they’re charging higher rents.

“That’s one reason rents increased drastically last year, because now renters have to play a game of musical chairs to figure out when they’re going to find a place to rent—and there are so few places to rent—so landlords are increasing the prices on them,” said Morrison. “For my own rental property, I put it up in July charging $1,375 a month and thought I’d increase to $1,400, and I had seven applications within 36 and so I increased the rent to $1,500 because I could.”

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