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Posts tagged ‘Toronto Real estate Board’

14
Feb

The New Danger to Toronto’s Rental Pool

condo-rentalsThere should be no surprise to anyone that we are seeing significant competition for rental suites in the city. Last week an agent in my office scoured MLS to find 21 condos that met the size, location and price for his client. He started calling to make appointments only to find that all but 4 had been rented out. Clearly a shortage exists in the rental pool across the city which is creating competing bids. In this situation the winner is not just the guy with the biggest amount of money. Today’s winning tenant is the one who has the best covenant, that is.. the best job (meaning long track record of employment) and the biggest salary, the least debt and highest credit score. Perhaps that doesn’t come as much of a surprise.

But the bigger concern should be the shrinking pool of rental units across the city. The double-digit price increases that condos are experiencing together with some of the highest numbers, in terms of millennial buyers, entering the market, should be cause for concern. Consider that in January 2014 the average condo in C01 cost $448k. That would typically be a 1 bedroom and den configuration of about 700 square feet +/-. For simplicity I will assume that a typical buyer would put down 20% (or $90k) and carry the balance on a mortgage at a cost of about $1694/month. ($358k at 3%, 5 yr term). Include a typical property tax of about $265 per month (Around $3200 annually) and maintenance fees around $385/month ( $.55/per sq ft). and you have a total operating cost of about $2345/ month. For that kind of money in C01 you are probably located on King West about a few blocks away from the Financial District and assuming the unit had parking, the monthly rent MIGHT cover your nut. Not a bad deal especially if you hope that the unit is appreciating year over year.
Jump ahead two years. That same unit is now, according to TREB stats, pushing $531k. Interest rates have not changed significantly so the monthly cost of your mortgage, with the same 20%down, is now $2016/mo ($531k-$105k deposit= $426k at 3%, 5 yr term). Assume maintenance and taxes are similar and your monthly carrying cost is now closing in on $2670/month. Rental rates have not kept pace, so if you are an investor, you would be running a loss, in fact you need to have nerves of steel to be ok with losing well over $300/ month. For investors, buying a condo to rent out just doesn’t make sense.
Now consider the investor who bought in 2012. Chances are they are covering their expenses nicely. Even with higher maintenance fees and taxes, they are still in the black by $200-$300/month. But at an average purchase price of $410K in January 2012, if that person sold today he would gross $121k. Hard to pass up on that considering it would take you roughly 40 years to earn that same income when you are collecting it $250 a month. Naturally, I am omitting commissions and capital gains out of the picture but the theme remains. Currently in the C01 there are nearly 400 active listings of which 122 are listed as having tenants. Many of the listings I examined contained vacant possession notes in the broker comments. If half of those tenants are forced to move to accommodate end users, Toronto could face a much more serious housing shortage. On a side note, two other factors will change the landscape of rental units in Toronto namely the tightening of speculative lending through the banks and AirBandB. Two things to keep an eye on.

Mark McLean is the Broker/Manager at the Bosley Real Estate Queen St W office, the Immediate Past President the Toronto Real Estate Board and a director at the Ontario Real estate Association. The opinions expressed here do not reflect the opinions of TREB, OREA or Bosley RE.

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8
Jan

January 2015 Real Estate Market Update


Now for something a little different. Many of you know me as the guy who talks about prospecting, running, and real estate best practises, but I’m also a guy with a lot of knowledge about the real estate market. Does that really come as a surprise to anyone? I run a pretty successful office with over 50 agents in Downtown Toronto. Needless to say every deal ends up on my desk at one point or another and I try to take a half hour every day to go to agent open houses. That helps me stay on top of what’s going on.
Well I don’t sell anymore and I have to say that I really miss that, but I still stay connected to the hundreds of people I sold to in the past. The good news is that Bosley Real Estate is a company with one of the most professional agents in the city. I can attest to the fact that they are truly connected to Toronto’s real estate market and go through some of the most vigorous training there is. So if you are thinking about buying, selling, investing, renting or whatever, start with me first. I will match you to the perfect agent.

mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.

5
Jan

The RealtyLab Top Five Posts of 2014

top 5 RL 2014Happy New Year everyone. I hope that you are as excited as I am to start 2015 off with a bang. I find myself in such a great place these days. In 2014 I ran 1300 kilometres including two half-marathons, and was elected to President Elect of Toronto Real Estate Board. In addition I took on the position of Creative Director of Bosley Real Estate and grew my office significantly. All and all, I would put 2014 in the “win” category. We will just have to wait to see how 2015 unfolds, but I have already laid out my goals, although they are more like hopes, dreams and aspirations.
With all the other “stuff” that I was doing, my blog took a bit of a beating. While I actually collected a few more followers last year, I recorded fewer views because I was writing less. Finding time is increasingly becoming a challenge. Still and all, I had a couple of successes, so without further ado, I present the top five posts of 2014.

5. In this post I posed a simple question. Would our lives as realtors be easier if the Seller paid the listing agent and the buyer paid the buyer’s agent. Kind of an interesting theory once you work out how to roll the buyer agent’s commission into the purchase price. it is certainly one revolving topic around our office.

4. Nearly a year ago we had an office meeting where we discussed the pain of losing a listing presentation. What emerged was a discussion on removing all the variables from the equation. Being prepared seemed to be the most important point of the exercise, but the office got a lot out of this shared experience.

3. No other post received as much discussion. It revolved around the multiple offer scenarios. In this case we played out a fake multiple offer where the listing agent held back the highest offer but then made counter offers to each of the lowest offers. Confusing? Only a lot. At the end of the day, this type of negotiating required nerves of steel. The ultimate response was just to set the ground rules early and negotiate in good faith.

2. Back in November 2013 I was lucky enough to attend the National Association of Realtor’s Convention in San Francisco. Although the conference has a distinctly U.S. feel, every Realtor should endeavour to attend one NAR in their lifetime. I made a ton of notes but it took me a few months to actually blog about predictive marketing. In a nut shell, predictive marketing was done by a company that could analyze a series of seller events to predict the likelihood of them selling their home. It’s not as crazy as it seems.

1. And, the number one post of 2014 was a story I wrote about the return of the real estate brand. In this early entry I theorized that commission was no longer a competitive advantage for Realtors entering the business. Today’s Realtors need to perform above and beyond the general real estate population if they were to survive and given the enormity of that task, a newer agent might want to consider working with a brand that did a lot of the heavy lifting.

So there you have it. RealtyLab’s top 5 blog posts of 2014. I’m looking forward to breaking new ground in 2015 and hope that you will check in to see what I will write about in 2015.

mark mclean is the Broker/Manager at the Bosley Real Estate Queen St W office and President-Elect for the Toronto Real Estate Board. The opinions expressed here do not reflect the opinions of TREB or Bosley RE.

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