I’ve worked with some clients this year on the rental side of housing – both landlords renting out their properties as well as tenants looking for a place to rent.
A few things struck me in my interactions.
- Some people who can buy are choosing not to buy.
- Certain types of places rent fast. Like…crazy fast.
- We’re in a bit of a self-reinforcing cycle.
Here’s what I noticed in particular.
Some people who can buy are choosing not to buy.
People typically rent for three reasons.
- They don’t have a downpayment to put down on a purchase.
- They don’t have the income or credit score to qualify for a mortgage.
- They want the flexibility of a rental.
In recent times, I might add a fourth reason – they are worried about overpaying at the height of the market.
While no one has a crystal ball, this has proven to be an expensive tactic recently, as those who waited to buy a couple of years ago have seen prices jump across the GTA.
Certain types of places rent fast. Like…crazy fast.
In certain areas of the GTA, properties go for rent and within a day are rented at asking price or even more. Landlords are getting choosy as well as pretty demanding. I’ve had agents tell me that their client wanted a quicker closer than the 18 days I was offering for my client.
There are certain condo buildings where there is a frenzy whenever a rental unit comes up.
Interestingly enough, these units are also often available for sale as well as rent. The rentals get snapped up right away but purchase options stick around for quite a while.
There is a real opportunity for investors to buy units in these hot buildings and then rent them out, quickly and for a good buck.
We’re in a bit of a self-reinforcing cycle.
The higher home prices go, the more people decide to hold off on buying and decide to rent. The more renters there are, the higher rental rates are driven and this makes renting harder for some types of tenants.
Some tenants get pushed out of their preferred areas due to lack of available or reasonably priced rental units, and the increased demand in these other areas, pushes rent up there.
As investors are able to get good rental returns on units, they purchase properties as investments, keeping the prices of places for sale steady or increasing. Which causes rents to rise because more people can’t buy a place to actually own and live in.
So, the question is, what to do?
British Columbia has introduced a 15 percent Land Transfer Tax for foreign owned purchases of real estate in metro Vancouver. They are trying to curb the flow of investment money that is pushing prices higher and preventing people from buying AND living in their own homes in Vancouver.
Some applaud the idea and some question whether it will be effective. Here’s an interesting article from Huffington Post on the impact.
There is another approach that has recently been raised as an option for cities in the States that might work here in Canada as well.
The lesson is from Tokyo, where despite a population boom, they have managed to keep housing costs under control.
The answer? Matching housing supply with housing demand by easy permitting for new housing. By severely restricting the ability of neighbours and neighbourhood associations to prevent new housing, Toyko gets new housing as it needs it. Very interesting and not without some controversy. Here’s an article from Vox.com about this approach that I found fascinating.
Regardless of what is going on in the real estate market, a good agent can help you get what you want. If you or someone you know wants to buy, sell or invest in real estate, I’d love to be responsible for what comes next.
Dressing and undressing, storing clothes, having clothes lying around, have no reason to be part of any larger complex of activities.
I once had a client who refused to consider a home without space for a walk-in closet with a space for dressing. She had experienced homes with such a feature and ones without, and she’d be damned if she was going to go back to not having one.
When renovating, it is well worth considering a layout for the master bedroom that allows a walk-in closet that also has a space for dressing, with appropriate seating, flat spaces and mirrors. It is often overlooked, but very appealing.