The Globe and Mail has recently reported that Toronto is seeing multiple offers on condominium rentals.
Kind of Old News
This is actually not news to All Points Relocation Canada, as we have seen problems with rentals for some time now, but it does bear mentioning to those that relocate employees into the Greater Golden Horseshoe area. We have previously written about rapid increases, but this time it is last year’s overheated purchase market that is also playing a role.
The hot home purchase market of last spring has moved over to the rental market. This is not surprising as those shut out of the high purchase prices in Toronto (over the last two years) have officially moved over to looking at rentals instead, thereby flooding the market with renters chasing too few properties. The real problem is a lack of inventory. In our experience, downtown Toronto has a lack of inventory compared with the demand, but suburban areas like Mississauga are even worse.
Multiple offers can trip up assignees coming into the country for the first time. Urbanation found that the average premium paid for a property that goes through a multiple offer process is $85 or 4% of a $2,000 rental. All Points Relocation Canada recommends that expatriates come prepared with their best offers, good employment letters, letters of recommendation from old landlords and expect to possibly pay more than the asking price, if there is an actual multiple offer situation. All Points Relocation Canada has seen people lose properties to competing bidders who pay for an entire year up front or to bidders that offer two year terms.
According to the Toronto Real Estate Board there have been significant price increases for Toronto rentals in the last year. The Board reports that the average bachelor apartment and one bedroom apartment increased 11% each to $1,670 and $1970 respectively, while the average two bedroom increased by 9% to $2,627 and the average three bedroom increased by 7.5% to $3,524.
Predicting a difficult summer
All Points Relocation Canada does not see any reason to believe that this trend will calm down. We believe that there are two simultaneous problems: a) supply is simply too low (and has been for a while) for rentals in the Greater Toronto Area; b) frustrated home purchasers have left the purchase market and have gone to the rental market.
We predict a wicked summer in terms of aggressive rental tactics and bidding wars raising rental prices. We would go as far as to say that if employers could bring up their assignment dates by one or two months, this would be wise to avoid the summer rush. For those on assignments with cost of housing assistance, we recommend that companies conduct an extra interview with the local destination service provider on housing costs, because cost of living studies are bound to be out of date, falling behind any rapid rise in rental prices.
The final frustration to report will be the inability to find properties at all within traditional 1-2 day rental home finding program. We suspect that this is more likely to be the case in the suburbs when it comes to single detached family homes. Due to the dearth of these types of properties on the market, it is likely that one may not be available when a family is ready to look for rentals, or that they will be snatched up quickly by competing renters. Companies should expect increased temporary accommodation periods for some of their assignees as a result.