Half of Toronto Residents Can't Afford 1 Bedroom Rents
Young person looking to move to Toronto? Better line up a professional gig first, or expect to bunk up. Canadian Centre for Policy Alternatives (CCPA) crunched the numbers to find the wage needed to rent in Greater Toronto. Digging into the numbers, we can see how un-sustainably high prices have become.
Young person looking to move to Toronto? Better line up a professional gig first, or expect to bunk up. Canadian Centre for Policy Alternatives (CCPA) crunched the numbers to find the wage needed to rent in Greater Toronto. Digging into the numbers, we can see how unsustainably high prices have become. The average one-bedroom is unaffordable for over half of the city – even in distant suburbs.
"An income of almost $60,000 is needed to rent a one bedroom"
Just because you can make the payments and not go into arrears, does not mean your housing is affordable. The term “affordable” is thrown around a lot, but there’s an actual definition used by the government. For housing to be affordable, shelter expenses need to represent less than 30% of gross (a.k.a. pre-tax) income. Shelter expenses include, but are not limited to, rent, mortgage payments, utilities, taxes. This is the definition used by the CCPA to determine “affordable.”
Living in an unaffordable situation isn’t necessarily defined as poverty either. In Canada, the low-income measure (LIM) is often used to define poverty. LIM considers a household in poverty if their income is below 50% of the median Canadian household income. Even if you spend all of your income on rent, taxes, transport, and not enough food – you’re not in “poverty.” Even by the restrictive measure, over 4.9 million Canadians that fit this definition. That’s about one in seven people. Basically, not being able to put food on the table after expenses is not poverty by many measures.
The average one-bedroom rental requires quite a bit of cash in Greater Toronto. To afford a one-bedroom rental apartment in the GTA, you would have to earn $27.74/hr, according to the CCPA study. This works out to an income of $57,700 per year – not exactly chump change. Remember, that’s only for a one-bedroom rental, and we’re including far flung suburbs. Don’t even dare think of trying to start a family on that.
Make less than $20 per hour, or $41,600 per year? There’s only four neighborhoods where an average one-bedroom apartment is affordable. Malton has the cheapest one-bedroom average, requiring a wage of $19.11 per hour. Ajax Pickering followed with a required income $19.33 per hour. Rexdale-Kipling comes in fourth, with a required income of $19.47 per hour. Long Branch is the last neighborhood you can squeeze in for under $20, requiring an income of $19.66 per hour. If you’re not from Toronto, only two of those neighbourhoods are actually in the City of Toronto.
Got a little extra cash? The city’s most expensive average one-bedroom prices are all in downtown Toronto. The Bay Street corridor requires a wage of $45.64 per hour for an average rental – the most expensive in the city. Waterfront Communities (including the Island) follow with an average one-bedroom requiring $41.74 per hour in wage. Moore Park is third most expensive – with the average one-bedroom needing $41.08 per hour. Yes, you need an income of at least $85,447 to rent an average one-bedroom these three neighborhoods.
Average Rents Per Month Moving UP
The average monthly rents in Canada increased another 1.9 per cent in June after going up 4 per cent in May, according to the latest National Rent Report produced by Rentals.ca and Bullpen Research & Consulting.
“Rental rates continue to trend upward in Canada as the economy remains stable and growing, further boosting demand, while the supply being added to the market is well above the existing average rent levels,” said Matt Danison, CEO of Rentals.ca.
While June is a prime month for rental listings and demand, the average rental rate for all property types was $1,953 per month and the median asking rent of $1,875 was up from $1,800 in May. But the average rental rate for only apartments declined slightly month-over-month from $1,531 in May to $1,526 in June.
Toronto continues to lead all cities in average monthly rent for one-bedroom homes at $2,266, but Vancouver again took the lead away from Toronto for average monthly rent for a two-bedroom at $2,833. ($2,782 in Toronto).
Gatineau, ($825 and $1,101); Quebec City ($843 and $1,074) and Lethbridge ($925 and $1,074) continue to take the lowest spots on the monthly rental list for both one- and two-bedroom homes respectively.
On a quarterly basis, median rental rates for most major municipalities in Canada were the same or higher, except in Ottawa, Edmonton and Red Deer. Toronto and Mississauga lead the list for most expensive median rents in the second quarter for the cities listed.
On a provincial level, Ontario led the way for average monthly rent for apartments only in the second quarter at $1,830 — that’s almost $300 more per month than British Columbia (The premium in Ontario over British Columbia is smaller for one-bedroom and two-bedroom units at around $250 per month.)
Average monthly rents for all property types have steadily increased in Ontario from October 2018 to June to $2,279, again making the province the priciest for those listed.
Check the Elevators Before you BUY
A building inspection should be done before a buyer goes through with buying a building so they have a trained professional properly evaluate the asset they are purchasing. During these building inspections one of the most important parts of the building usually get over looked by building inspectors, this would be the elevators. Majority of building inspectors overlook elevators because they do not know enough about them to properly evaluate them. The elevator is one of the most used tool in a building besides utilities so it should be inspected by someone who can tell the quality of the equipment and let buyers understand what they should do to improve their elevators. Having a poor working elevator can cause issues with disgruntled tenants and building staff, it can decrease the value of the overall building, and it can even lead to law suits with leveling issues and other unsafe factors.
As well, costs to cure items not uncovered in an inspection could be astronomical. Replacing these items are very costly and add not benefit to the building generally. If the boilers are old and about to die - yes there is a cost to replace them but you will save money as the new boilers will be much more efficient and energy saving. Not so with elevators. As such it is very important to look at them before you buy.
Quality Allied Elevator believes in educating potential buyers on the state of their elevators so they fully understand what they are purchasing along with their building. We would be more then happy to provide a full on inspection report of how the elevator operate, the state of the equipment, and any potential upgrades the elevator is needing. To this end we have seminars on an ongoing basis to educate clients on elevators. The cost of this seminar is $145 per person. However if you mention Commercial Focus Realty, we will waive this fee.
Please contact us at 647-477-9456 - Jamie Sokoloff - email@example.com
RECENT APARTMENT SALES
383 Albert Street – Waterloo – SOLD $27,000,000 / $250,000 per suite / 4.57% Cap Rate
This property comprises 108 large apartment suites built in 1986 and will located in Waterloo. It is a 9 storey building with rents below market. The asset was well maintained and was sold through a bid process with multiple offers. The property was sold by Timbercreek Asset Management and was purchased by a private investor.
149 St. George Street - Toronto – SOLD $19,200,000 / $400,000 per suite / 2.58% Cap Rate
This sale comprised of a singe mid rise apartment building dated from the 1970's. The property contains a total of 48 apartment suites (one bedrooms and bachelors) and one elevator. There are surface and underground parking spaces. The building was owned by the same person for many years. The asset was fully marketed and exposed and was purchased by Hollyburn Properties Ltd.
2263 Weston Road – York – SOLD $8,390,000 / $246,765 per suite
This is a property located in the Lawrence and Weston Road area and comprises a 34 suite rental apartment built circa 1960. The 4 storey rental apartment building again has been under the same ownership for many years. This is a "B" class improving location and rents are considered to be far below market at the time of sale. Hydro is separately metered and tenants pay. This asset was not fully marketed and appears to have been purchased direct with the buyer being Starlight Investments Ltd.
30 Mountain Avenue North – Stoney Creek – SOLD $11,200,000 / $169,700 per suite / 3.89% Cap Rate
This is a 4 storey rental apartment building with elevator and is a well maintained and managed asset. There are a total of 66 suites of which most are two bedrooms. Rents are considered far below market. The building sits on a large site which is over one acre. This asset was fully marketed and was being sold by a private owner. The buyer was also a private investor.
159 Stephan Drive – Etobicoke – SOLD $6,700,000 / $279,170 per suite / 3.87% Cap Rate
This is a 3.5 storey rental apartment building is located in a great rental area in south Etobicoke. It is a large ravine site with a total of 24 rental apartments. Rents are considered far below market. Tenants pay their own hydro and there is surface and underground parking. There an even number of one and two bedrooms. This asset was fully marketed and was being sold by a private owner. The buyer was also a private investor.
THE APARTMENT GROUP
Together the team has completed over 1,000 transaction and has sold over $5 billion in apartments and development land. Put us to work for you and see the results. NO ONE has sold more buildings then your group. Experience, knowledge and professionalism will insure you get the right deal or the highest price if you are selling.
The Apartment Group is a dedicated team of professionals specializing in the sale of multi-residential investment properties. With over 40 years of combined experience, the team brings together their strengths including strong negotiation and sales skills along with highly technical market analysis and appraisal methods.
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LORENZO DIGIANFELICE, AACI
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