If you have been thinking of putting a condo up for lease, now is your best time for action.
According to Canadian Mortgage Trends, condo re-sales for smaller units have been decreasing about 5% – 10% over the past year and condo rents have been increasing due to the new mortgage rules that have been put in place as of last July. The tighter rules affected first-time homebuyers the most since a high percentage of first-time buyers put down less than 20% and now can only qualify using a maximum 25-year amortization. For a $400,000 condo purchase this increases the monthly mortgage servicing costs by about $300.
This has stopped many would be first-time buyers from buying and many have chosen to either stay in their rental or choose to rent instead of buy. This has been a profitable trend for those who lease condos. We have been helping some of our client’s lease their condos for about 5% to 10% more in the last year due to the increase in demand for condo rentals. Condo rentals are also in very short supply in some areas of Toronto like in Midtown Toronto where many of the condo buildings have a high percentage of ownership and very few condos come up for rent. This has resulted in multiple offers for many condo listings for rent.
I see condo prices leveling off at their current price levels and no going down further as the new mortgage rules have already had their main impact. Let’s see if the rules continue to be tightened or possibly even loosened as the new rules have maybe impacted condos more than what was expected.