Rental Prices Are On The Rise
Written by: Remington Joseph
Many have taken notice that the real estate market is beginning to face a cooling off period. With the recent interest rate increase, we’ve already begun to see the volume of competition lessened for buyers, and at the same time, it helped in allowing for a targeted focus on keeping homes affordable. Overall, the real estate market is continuing to thrive as it shifts, much to the benefit of homeowners, buyers, and investors. In the rental market world however, things are looking much less rosey.
By the end of 2020, rental prices were at an all time low in the GTA as a result of the pandemic’s impact. As its control over the city has become less prevalent however, rental prices have slowly been rising once again. Now, average rental prices have nearly returned to their pre-pandemic peak at $2,023. The number one cause behind this spike has been reported to largely be due to the fact that rental listings have dropped by a large annual rate, similar to what we’ve seen within the home buyers market.
It’s believed that over the next two years, immigration will reach record breaking numbers. With many of these immigrants being international students, many will inevitably end up looking to the rental market. This is likely where investors who have bought into condominiums will thrive, as condominiums will play a vital role when it comes to rental supply.
As investors, rental prices increasing can help us in a number of ways. For starters, we can use the recorded rental income to recognize if a property is worth investing into or not. With inflation, you’ll want to be that much more certain that the property you’re going to purchase will be worth the return on investment. Another benefit is that as rates increase across the board, it helps to ensure that your tenants are going to stick around for as long as possible. Increasing rental prices are generally a sign for investors that our own cash flow will increase as well.
We’d like to share a glimmer of hope for long term renters, by pointing out that the average price could level out one day if enough rental properties become available. Keep in mind however, that won’t be any time soon. It’s for this reason, and may more, that we strongly suggest moving towards home ownership as opposed to renting. Invest as soon as you can in order to save money while securing a future.