The landlords owning condominiums for rental purposes are quite happy these days as a surge has been observed in the Toronto condo market for condos on rent. A research consultancy, Urbanation reported a 31% increase in condo leases in the initial quarter of 2013 in comparison to last year. Marcus Arkan, CTO of Syndicate mortgages, provides significant reasons for the rise in rental activity of Toronto condominiums.
The demand for rental condos in Toronto has been on the rise since the middle of 2012, the time when the new mortgage rules had been introduced. The Toronto Real Estate Board said that the existing condos observed a 17% drop in sales in the first quarter of this year. However, the new condominium developments were hit even harder as Urbanation reported a staggering 55% drop in sales of newly built condominiums during the first quarter of 2013.
Mortgage expert, Mr. Arkan analyzed the situation and presented his views in the following words, “The new mortgage rules that were introduced last year to avoid the housing bubble and stabilize the mortgage market were stricter and more rigid. This and the recent financial crunch have discouraged many first time home buyers from purchasing homes on mortgage. Higher interest rates and shorter repayment periods have made it impossible for many to qualify for a decent mortgage.”
He also added that, “The new rules are harsh on first time buyers and hence, they prefer to live on rent rather than invest in real estate.” Mr. Arkan opines that the main reason for the increase in rental activity in the Toronto condo market is the hesitancy of first-time buyers to purchase real estate.
As a consequence of the response of first-time buyers to the new mortgage rules, the rental inventory of Toronto condominiums observed a surge of 19%. A total of 4,859 units are available for rent in Toronto, which is the second-highest total of a quarter since the last four years, reported Urbanation.