Linda Mitchell Young on Toronto’s Rental Market

By Penny Munoz

According to Urbanation, the number of condo rentals is at an all-time high, showing no sign of slowing down with estimates reaching more than 20,000 by the end of 2013. A proven expert in the real estate market, Linda Mitchell Young, Vice-President, Sales & Marketing at Baker Real Estate commented on what this could mean for new home buyers in the future.

In the world of condo sales, it was common, particularly in previous years to see many people purchase units as investments for rentals, especially with the cost of luxury buildings driving unit prices up. What this meant with regards to affordability in the city, was that more people were renting because it was cheaper to do so. The surge in real estate demand also introduced the concept of micro-units to Toronto, with Smart House on Queen Street West featuring the City’s most compact floorplans. These space efficient condominiums are as small as 289 square feet, with starting prices at $250,000. While these units offer state-of-the-art technological features, cutting-edge architectural designs by some of the most acclaimed developers in the world, right in the most sought-after location in the city, the concept of adopting a micro-lifestyle in Toronto was definitely met with resistance from buyers and renters.

Young says that she expects sales to remain consistent for 2014, with a new wave of investors entering the market. “We’re seeing a new trend, a broader group of investors,” says Young. “We’ll see more people coming in that aren’t necessarily multiple-unit investors, just people diversifying investments.” This means that many investors will probably come from our neighbouring suburbs like Richmond Hill and Mississauga.

According to Young, what we’re seeing now is a tapering off in unit costs and stabilizing within the market. Emphasizing the positive influence this will have on the real estate market, Young believes this will give new home buyers the opportunity to afford units in future developments that will offer spacious living with more economical features and finishes. Although we’ll be sad to say goodbye to our beloved 9’ ceilings and stainless steel appliances, adopting a more aesthetically modest lifestyle opens up the market to new buyers and investors.

So why is renting so popular? Although Toronto real estate is a great investment, not everyone can afford it. Young says that with all costs considered from a monthly perspective (maintenance fees and taxes), most people are better off starting with a rental unit, but in terms of building equity in the long run, it’s wiser to put those pennies together for a down payment! Whether you’re looking to rent or buy, Young says that the fact that the market is “normalizing” offers sustainability all around.

“It’s nice that everyone is back to what they should be doing, buyers are no longer in a frenzy, they have more time to decide, things aren’t moving too quickly,” said Young, reminiscing about a couple years ago when the real estate market peaked. “It’s a more stable environment for buyers. We have to truly sell and convince buyers why these condos are better than others.”