Due to COVID-19, everything closed and people were forced to work from home. From lockdowns to stay-at-home orders there was no longer a need for many to be in the city. Whether they lost their jobs due to the worldwide pandemic or were let go. The condo rental market has been down this past year for the first time in decades as renting was no longer an affordable option of living. Luckily, the vaccine rollout is currently underway in Ontario which will decrease COVID-19 numbers and allow people to return to offices and post-secondary education hopefully by Fall or Winter of 2021. There will be a demand for rental units and condo prices will again increase.
COVID-19 has had a significant impact on the Canadian economy and housing markets across Ontario. With interest rates at historic lows and rental unit prices dropping, right now is the perfect time to invest or buy a condo in Toronto.
When the Covid-19 was declared as a pandemic, the Government had to enforce lockdowns and stay-at-home orders. One of the many things that became illegal was short-term rentals. Although there are only a handful of condos that allow short-term rentals, banning them completely affected condo investors who relied on Airbnb and these short-term rental arrangements. Toronto is one of the most popular cities that immigrants look to live in. immigration restrictions this past year have also led to a major decrease in the condo rental market in 2021.
As COVID-19 starts to recover and immigration rates return there will be a higher demand for rental properties in Toronto. As the government plans to bring over 1.2 million immigrants over to Canada within the next three years, this will significantly boost the market.
Historically low-interest rates
Mortgage rates across the country are experiencing an all-time low. HSBC has lowered its five-year fixed mortgage rate to 1.99% cracking the 2% barrier in Canada making history. These low rates could mean huge savings depending on your situation. The Canadian economy is beginning to recover as restrictions start to lift.
The Bank of Canada announced that it would keep rates at a historic low to support the economic recovery which is a good sign for those who are looking to buy a home or refinance their mortgage. When it comes to the COVID-19 pandemic, there is light at the end of the tunnel in Ontario. New case numbers seem to be declining, more people are getting vaccinated, and the economy is starting to reopen.
Decrease in rentals
During the multiple lockdown periods and stay-at-home orders in Ontario, short-term rentals at all buildings have been temporarily banned. Students and employees have left the city over the past year due to unemployment and many can no longer afford to live in the city without a steady income. On September 17, 2020, it was announced that rental prices will not increase from January 2021 to December 2021 to help unemployed tenants to pay their rent. This past year students have been learning online which caused thousands of students to forgo renting in the city.
The Toronto Real Estate market is constantly growing steadily and has proven to be a solid investment. We are already starting to see rental prices climb, and it is expected that rents will rise even more this year in the Fall as the vaccine rollout is underway and many people are expected to return to city life as Toronto begins to reopen. As COVID-19 numbers decrease, and offices and post-secondary institutions open, demand will increase and you will see a significant increase in renters and prices.
The increasing price of single detached homes
According to the MLS graph, in 2019, the benchmark price of a home in the Greater Toronto Area was just over $763,000 compared to January last year, where the average price was just over $927,000. This means the price has increased by 21% in 12 months. As many people can no longer afford such high housing prices, they are forced to rent. Over the past year, housing markets in Canada have experienced record growth in both home prices and sales activity.
During the pandemic, we experienced high vacancy rates, low rent prices, and move-in incentives. There are finally signs in the condo rental market that demand is starting to increase along with rental prices. Although the pandemic caused people to flee from the city, affecting the condo rental market the most, it does look like there will be a full recovery. The condo rental market is already starting to bounce back. As students are expected to make a full return to post-secondary school in the fall, we will see a large increase in prices at the end of summer. If you are interested in Toronto Real Estate book a call with us today!