Just How Tough has Toronto's Rental Market Gotten in 2017?
Very limited supply, super strong demand, with bad government policy thrown in equals madness.
Over the last couple years I've done a ton of rentals, all over the city but mainly in the downtown core. It's always been competitive for as long as I can remember and rental rates have been rising year over year consistently. But this year, especially this year, things have gotten very, very tough for renters.
If you read my blog, I think you know the biggest driving force behind the extreme tightening in the rental market. It's somewhat of an artificial tightening because it's been exponentially made worse by (bad) government policy, rather than simply supply and demand. That being said, demand is still far outstripping supply and rent control policies have just added unnecessary fuel to the fire over for the past 6 months.
So how competitive is it?
I think it's best illustrated in three real-life examples that I've experienced with clients over the past few weeks:
1 - Clients A & J: Great couple with good incomes and solid credit, looking for a place together in the King/Bathurst area. Max budget: $2800/mo, no parking needed.
In the span of a week we saw 7 different units, ranging anywhere from $2400/mo 1+den's to $3000/mo 2-bed/2-bath's. The worst part? By the time we walked out of half of the places, they were already leased.
I'm not kidding. I'd be standing with them in a unit and I'd get an email saying "LEASED - no more showings".
We finally found a place they absolutely loved. Listed as a 2-bed/2-bath at King and Bathurst for $2600/mo - with parking! By the time we arrived, there was already an agent inside and one waiting after me. The kicker here is that the unit was actually a large 1+den. The folks visiting the unit before us were clearly two guy roommates and I could see the disappointment in their eyes when they realized one of them would get the bedroom with no door. That's a bit of a lifestyle killer, no?
Anyway, we walked out and this is how the conversation went:
Me: "What do you think?" A&J: "We love it. What do you think we should offer? Over asking?" Me: "It's been on the market for 1 day. Let's offer $2600 today before anyone else. And, just in case, let's check out this other unit across the street right now as a back-up". A&J: "Deal".
Less than two hours later, I had an offer signed and submitted for $2600/mo. Then the agent calls:
Agent: "Adil, thanks for your offer. Just so you know, I have 3 other offers already". Me: *Sigh* "Hold on, let me call you back".
I called A&J and the conversation was super quick:
Me: "Three other offers. What's your max?" A&J: "$2800/mo. Do it" Me: "Done."
A&J ended up getting the unit for $2800/mo and the listing agent called and said:
"Dude, there were like 12 showings booked for the next day. The owner felt bad for the current tenants and just cancelled them all after your offer. Good thing you didn't wait".
1 day on the market, 3 offers, and probably 15 showings booked. Madness.
2 - Frank was referred to me looking for a simple studio, close to Union station, up to $1700/mo. He was being transferred to TO and just needed a place to crash for a year before he buys something. Sounds simple enough, right?
After pulling up MLS, I could only find 3 studios available within a reasonable walk to Union station. THREE! In a city full of towers you couldn't find more than a handful of studio condos to rent, anywhere. And by the time we had visited the two of them next day, one was already leased.
We put a full ask offer on the second, which was listed for $1650 and got a call from the listing agent the next day:
Agent: "Adil, we accepted another offer for $1700/mo" Me: "What other offer? You didn't tell me there was another offer" Agent: "We already accepted it. Sorry"
I was not amused.
That evening we saw a studio at the new Harbour Plaza Residences, listed for $1580/mo that very morning. When we arrived, there was already an agent in the unit, one agent waiting in the lobby, and another agent visiting another unit waiting as well.
By the time we got to the unit, there were literally 8 of us standing in a 350 sq ft studio condo. I looked at Frank and said "You want it? We offer $1700 today. Like now".
The next day, the owner accepted our offer and was clearly surprised with how many showings had been booked in the span of 12 hours.
3 - Just yesterday I was referred to a co-worker of my wife. Ellie had been living at home and commuting to Yonge and Bloor and it was becoming a big pain in the butt.
She called and said "my budget is $1500. I don't need much. Just a studio within a 40 mins walk to work".
My response: "What's your real budget? Because I promise you, we won't find anything for $1500". Ellie set her new budget at $1700 and the search began immediately.
The next day a Jr 1-bed came up for lease at 1 Scott St, right at Yonge and Front, for $1575/mo. The best part - zero pictures on the listing. Like not even of the building from the outside.
I emailed Ellie: "We have to go today. Like now. Trust me. I know the building and the layout."
We saw it that evening, and it was a mess. There was a couple living there and given how much stuff they had, I don't see how even one of them managed to survive in the space. And it was dirty. Really dirty.
We spent all of 3 minutes in the unit and Ellie looked at me and said:
"Adil, it's gross. I don't need more space than that but I can't get past the mess" I replied: "It's listed for $1575/mo. It will rent for $1700/mo. By the end of the night. Watch." Ellie: "There are bidding wars on rentals? Like when you buy? Really?"
The next day, the unit was leased (not by Ellie) for $1800/mo.
I have dozens of real-life examples with my own clients of just how difficult it is for renters today. In the past two months, I've probably gotten 5 or 6 renter referrals with $1500/mo budgets and I've had to turn them all away. My response is always the same:
"I don't want to sound negative but it's not going to happen with that budget".
Several of my clients have found roommates and opted to find 2-bedroom units for $3000/mo instead, which keeps their budgets intact. But not everyone wants a roommate and in those instances, unless you can afford $1700/mo for 400 sq ft, you may just be out of luck in Toronto for the foreseeable future.
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Your Toronto condo lover, Adil Dharssi Sales Representative iPro Realty Ltd, Brokerage Direct: 647-223-1679 (call/text) Email: Adil@AdilKnowsCondos.com