Airbnb has done a number on Toronto’s real estate market for years: before the pandemic, thousands of short-term rentals made buying or renting downtown super-competitive and prohibitively expensive, putting life in the city out of many people’s reach.
But COVID-19 has changed all that.
By shutting down tourism, the virus brought Toronto's booming Airbnb industry to a grinding halt, causing a major shift in the condo market. Investors started listing their vacant units as long-term rentals, flooding the market at a time when fewer people could afford to rent. Take a look at the available rentals on condos.ca – there are hundreds of listings for new furnished condos in the downtown core. Hundreds of condos sitting empty.
The same virus that’s keeping the tourists away has also caused a drop in the number of people who are renting in the city, decreasing demand as supply peaks. Renters who have lost their jobs have moved in with family. The flow of immigrants into the city has stopped, taking a large part of our usual renter demographic out of the equation. And the post-secondary students are gone too – most of them are learning virtually this year, so there’s no need to be in the city.
That oversupply has had one positive effect: more affordable rents. September 2020 saw an 11% decline in rental prices over the same time last year, which is the biggest year-over-year decline on record. For a renter, that might mean a $2,000 condo can be had for less than $1,800 (a $2,400 annual savings...it’s like getting a free month).
All the factors impacting the rental market have had a domino effect: landlords unable to find tenants are putting their empty units up for sale. And as more people leave downtown for the square footage in the suburbs (and immigrant and student buyers remain absent), that has led to an oversupply of resale condos. A significant oversupply: September 2020 saw a 215% increase of available condo listings in the 416 over September 2019.
Lots of opportunities for renters and buyers
Rental supply is at an all-time high, while demand is at a record low. If you’re looking for a deal on a rental condo, this is a great time to make a move to your first place, to a nicer place, to upgrade from one bedroom to two or from a lower floor to a space with a killer view.
Related info: 6 things you need to know about the Toronto rental market right now
If you want to buy a condo – to live in or as an investor – you can land a great value right now. For buyers looking to buy a home for themselves, these prices, combined with the super-low mortgage rates we’re seeing right now, could be an opportunity to get into the market if they were priced out of it before COVID. And if you weren’t priced out completely, now is the time to get a bigger unit or one in a better location for what you would have paid for a more entry-level property in the first couple of months of 2020.
If you’re an investor, and you’re willing to take the risk of having a bit of a gap between buying your unit and finding renters, there’s a real opportunity to get value. Today’s low mortgage rates (which the Bank of Canada has said will be low for several years to come) mean you can afford to charge a lower rent and stay competitive in the current market.
Related info: Is this a good time to invest in a Toronto resale condo?
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A Condo Pro can show you recent comparable sales in specific buildings and neighbourhoods, and give you an in-depth overview of the building to help you get the best value. They will be happy to sit down and guide you towards the best decision for your situation.