Rents Going UP All Across Canada
According to Rentals.ca listings data, the average rent for Canadian properties in November of 2019 was $1,918 per month, a decrease of 1.1% monthly, but an increase of 9.4% annually. The median rental rate was $1,850 per month in November, up 15.6% from a year earlier ($1,600).
"Hamilton and Scarborough led the pack with year-over-year rent growth of 25% and 23%"
When comparing the change in rent monthly, quarterly or annually, it is important to understand if the composition of the sample of transactions is changing. A way to look at rent that controls for changes in the size of properties is to look at the rent per-square-foot (psf).
The average rent per-square-foot nationally for all property types has increased by 8.4% annually from $2.14 psf in November 2018 to $2.32 psf. However, the average rent per-square-foot has been fairly flat since July.
It must be kept in mind, landlords and property owners do not list (or know) the unit size for every property on Rentals.ca, and these figures represent a smaller sample size in comparison to the total listings, which is more heavily weighted with Ontario and British Columbia urban markets, where every square foot counts, and there are more new units where the unit size is known.
To add another caveat, landlords with very small units may not list the unit size even though they know it, because they it might prevent prospective tenants from calling or viewing the suite. This is important because the smallest units typically have the highest rent per-square-foot outside of penthouses and units with expansive balconies.
Across the country, two-bedroom units from 900 sf to 1,100 sf have been popular and experiencing strong rent growth nationally.
According to survey data from Statistics Canada, 27% of people who moved over the past five years did so to move to a larger or more high-quality dwelling. Tenants want more space, and two bedrooms have always been a very desirable suite among renters. In November, two-bedroom units made up 37.9% of listings on Rentals.ca, just edging out one-bedroom units at 37.8%.
On a provincial level, Ontario had the highest rental rates in November, with landlords seeking $2,339 per month on average (all property types), up from $2,334 in October, and 9.1% annually from $2,144 in November of 2018.
In November of 2018, the average rental rate was $2,385 for all property types listed on Rentals.ca, that rate increased to $2,591 for November 2019, an increase of 8.6% annually. Overall in 2019, the average rent in Toronto was $2,504 per month.
The linear forecast calls for average rent in 2020 to surpass $2,800, but Rentals.ca and Bullpen expect December 2020 rent to be $2,770 per month, a 7% annual increase. This forecast is a moderation from the 11% annual growth forecasted by Rentals.ca and Bullpen last year, which was a little too bullish, as condo rental rates have moderated more than expected (+4%), despite the more pronounced increase in rental rates for purpose-built apartments (+9%) and single-family homes (+11%).
City of Toronto to Build 40,000 Affordable Housing Units
The Toronto Star - Francine Kopun
Toronto city council approved a complex housing plan on Tuesday, aimed at providing more and better shelter for residents of all ages and at different rungs of the income ladder, including the homeless, young people looking for their first apartment and seniors.
“It’s going to require a very determined council ... in terms of producing what is being promised,” said Bob Rose, a Toronto housing advocate, although he believes the plan is a step in the right direction.
Rose pointed out that fulfilling the plan to create 40,000 more affordable housing units — which also includes plans for shelters and rental housing, and measures to help seniors remain in their homes — depends in part on contributions from the federal and provincial governments, which have not been secured.
The city is contributing $8.5 billion in the form of incentives and money. Roughly $15 billion is needed from the two other levels of government.
The only councillor to vote against the plan was Coun. Stephen Holyday (Ward 2 Etobicoke Centre), who pointed out that it is a long-term commitment that might prove difficult to keep.
Advocates have been calling on council to declare a state of emergency over the housing situation, in a city where an estimated 10,000 people sleep in the open and in shelters at night. A successful motion by Coun. Ana Bailao (Ward 9 Davenport) stopped short of that, while recognizing that homelessness in Toronto “is an ongoing critical and emergency issue requiring the provincial and federal governments to commit on an expedited basis to build on the initiatives the city has taken to date.”
The 10-year HousingTO 2020-2030 Action Plan is one of Mayor John Tory’s signature commitments.
He chastised those who said or implied that the plan is not aggressive enough.
CPI up 2.2% In Canada
The Consumer Price Index (CPI) rose 2.2% on a year-over-year basis in November, up from a 1.9% increase in each of the previous three months. Excluding gasoline, the CPI rose 2.3% in November, matching the increase from October.
On a seasonally adjusted monthly basis, the CPI rose 0.1% in November, following a 0.3% increase in October.
Energy prices rose 1.5% year over year in November after declining by 2.9% in October. Gasoline prices drove the CPI increase in November, growing 0.9% on a year-over-year basis following a 6.7% decline in October. This increase, the first since October 2018, was attributable to sharply lower prices in November 2018, when global oil prices fell amid a supply glut caused by reactions to emerging international political uncertainties. On a month-over-month basis, gasoline prices fell 2.0%, as the Organization of the Petroleum Exporting Countries enacted further cuts to oil production amid slowing global demand.
The purchase of passenger vehicles index grew 2.9% on a year-over-year basis in November. The price movement was largely attributable to the greater availability of higher-priced 2020 model-year vehicles compared with October.
Meat prices rose 5.2% year over year in November, marking five months of increases at or above 4.0%. Consumers paid 6.2% more for fresh or frozen beef, following disruptions to North American supply chains and strong international demand for Canadian beef during the first 10 months of 2019.
Following the end of foreign export restrictions on Canadian pork, consumers paid more on a year-over-year basis for ham and bacon (+9.1%) and fresh or frozen pork (+0.7%) in November compared with October. Price increases for pork products were concentrated in the Atlantic region.
The price of electricity in Ontario rose 2.6% on a month-over-month basis in November. The movement is attributable to an increase in the time-of-use pricing rates, which was partially offset by higher subsidies for consumers.
RECENT APARTMENT SALES
Q Residential Portfolio Sale – Toronto – SOLD $851,000,000 / $305,895 per suite / 2.75% Cap Rate
This was a sale of a much larger portfolio which included buildings outside the GTA as well. In total there were 27 buildings sold or about 6,270 suites for a total record breaking price of $1.732BB. In the GTA, there were 11 buildings sold with a total of 2,785 suites. All were concrete high rise rental apartment buildings with substantial rental upside still left in the assets. This was a direct deal between the buyer Starlight and the Seller Q Residential.
325 Sammon Avenue - East York – SOLD $5,700,000 / $219,230 per suite / 4.13% Cap Rate
This is a property located on a corner in East York and comprises a total of 26 rental suites in a 4 storey walk up building. The building was constructed in 1955 and features 6 surface parking spaces and 9 garages. The suite mix is 20 bachelors and 6 one bedrooms. This asset was fully marketed and was purchased by a private investor.
2333 Taunton Road – Oakville – SOLD $164,000,000 / $577,465 per suite / 3.00% Cap Rate
This is a mid rise rental apartment building located in the downtown and was purpose built in 2019. The site comprises of 284 rental apartment suites and are not condo titled. The asset sites on over 1.8 acres of land and comprises of surface and underground parking. This asset was not fully marketed and exposed. The buyer was RealStar Group.
3575 Bathurst Street – North York – SOLD $17,500,000 / $286,885 per suite
This asset comprises of a single 7 storey rental apartment building dating from 1962. The 0.90 acre site was developed with 61 suites and contains 40 surface parking spaces. There are balconies, elevators and heating is via a hot water radiant system. The property was owned by the existing seller from many years. This property was sold together with 7030 Netherbrea Road in Mississauga. The asset was purchased by Starlight Investments.
7030 Netherbrea Road – Mississauga – SOLD $13,500,000 / $293,500 per suite
This asset was sold with the one above and comprises of 46 rental townhouses dating from 1970. The 2.67 acre site includes 22 three bedrooms and 24 four bedrooms. The complex also includes a basketball court and playground. Some units have private driveways and garages and some have a shared surface parking area. The asset was purchased by Starlight Investments.
THE APARTMENT GROUP
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LORENZO DIGIANFELICE, AACI
Broker of Record, Owner