Rental housing is getting harder to find in the Greater Toronto Area, although for those that already live here, that’s not likely news. But a new report from the Canada Mortgage and Housing Corporation provides a statistical look at just how tight the rental market has become.

The vacancy rate of rental properties in the GTA — the number of rental options currently available on the market —reached 1.1 per cent this fall, the lowest in 16 years.

Average costs for all types of rental housing that the CMHC examined (bachelor, one bedroom, two bedroom and three or more bedrooms) hit $1,296 per month, an increase of 4.5 per cent from the previous sample year.

Record high home prices in Toronto, set during the late winter and early spring this year, as well as considerable migration of people to the GTA, likely contributed to a growing demand for rental accommodation.

Similarly, fewer people left rental homes, while construction of new rental housing supply was “insufficient” to offset that demand in any appreciable way, the CMHC found.

“Rising costs of home ownership and lack of new rental supply kept vacancy rates at historic lows,” CMHC market analyst Dana Senagama said Tuesday.

Combined, all these factors “allowed landlords to charge new tenants significantly higher rents, which led to the average rent growth to be above the provincial guideline” of 1.5 per cent, the report says.

For the second straight year, however, condos acted as the primary source of new rental supply, especially in Toronto proper.

While the CMHC revealed that the condo vacancy rate hit its lowest point in nine years, the ratio of rental condos to the total condo supply in the GTA stayed “virtually on par” with the previous year.

From May 2016 to May 2017, some 19,234 new condos were completed throughout the region.

Here are the average vacancy rates and monthly costs for each type of rental unit:

  • Bachelor: 1.2 per cent (down from 1.4 per cent); $1,011 per month (up from $957).
  • One bedroom: 1.2 per cent (down from 1.3 per cent); $1,191 per month (up from $1,132).
  • Two bedrooms: 1.0 per cent (down from 1.3 per cent); $1,392 per month (up from $1,327).
  • Three or more bedrooms: 1.0 per cent (down from 1.8 per cent); $1,563 per month (up from $1,515).

oronto area home sales rebounded by 12 per cent from September to October, pointing to a stronger fall market after a policy-driven pullback from a frenzied market that peaked earlier this year.

The Toronto Real Estate Board said Thursday that 7,118 homes were sold in October, up from the month before but down 27 per cent from the same month last year.

“Every year we generally see a jump in sales between September and October. However, this year that increase was more pronounced than usual compared to the previous ten years,” said board president Tim Syrianos.

“While the number of transactions was still down relative to last year’s record pace, it certainly does appear that sales momentum is picking up.”
The average selling price in October was $780,104, up less than one per cent from September but up 2.3 per cent compared with October 2016. Price growth was driven by appreciation in the townhouse and condo segments.

The average price of a townhouse in the GTA was up 7.4 per cent at $629,507, while the average condo price was $523,041 up 22 per cent year-over-year, the most of any housing type. Meanwhile, the average price of a detached home was down 2.5 per cent year-over-year at $1 million. Prices of semi-detached homes rose 6.3 per cent to $764.293.

Sales in the first 10 months of the year slipped to 80,198, down 19 per cent from the same period in 2016. Sales have dropped more than 10 per cent from the record set in March before Ontario announced its housing plan.

A spike in Toronto-area home prices earlier this year resulted in the provincial government’s imposition of a number of measures to cool the market after a shortage of detached home listings helped push up prices.

In addition, the Bank of Canada has raised interest rates twice in recent months to the current overnight rate of one per cent, signalling a clampdown on cheap borrowing and driving the big bank prime rates and the cost of variable-rate mortgages higher. The cost of new fixed-rate mortgages have also risen as yields on the bond market have also risen.

Meanwhile, the Office of the Superintendent of Financial Institutions will implement new lending guidelines at the beginning of next year. Among the changes being considered is a requirement that homebuyers who do not require mortgage insurance still have to show they can make their payments if interest rates rise.

The policy-driven changes in the Toronto market, which include a tax on foreign buyers, have followed the trajectory of the Vancouver market, with a pullback directly after new rules were introduced followed by a pick up after a relatively short time, said TREB’s director of market analysis Jason Mercer.

“It appears that the psychological impact of the Fair Housing Plan, including the tax on foreign buyers, is starting to unwind.”
Vancouver home sales data from October is expected later Thursday.

The CHMC warned last month that the country’s hottest housing markets remain “highly vulnerable” with evidence of moderate overvaluation and price acceleration in Toronto, Hamilton, Vancouver, Victoria and Saskatoon.