More and more consumers are recognizing that at least for right now they are
better of financially renting than buying in Toronto. This is certainly a
departure from the past when most consumers realized that the best financial
option would be to buy rather than rent so that their money would go toward
creating equity in a home.
Today that is no longer the case; however. While rents have continued to rise in
many locations in Toronto, consumers are still finding they are often able to
rent for less money than what they would pay for a monthly mortgage payment on a
comparable property. In some cases, renters are able to save between 40% and 50%
by renting instead of buying.
One of the reasons for this is that in some locations in Toronto, property
values rose quite steeply. Today, buyers who snatched up those homes without
blinking have discovered they must now sell. The problem? They need to sell the
homes at the prices at which they purchased them two years ago to recoup the
balance they owe on the mortgage. Renters just are not willing to pay more money
than a home is worth.
Even renters who are able to qualify for mortgages just do not feel as though
they are getting enough home for their money, especially when they can often
rent a comparable or even larger home for less money.
As a result of the shifting market, many experts are quick to point out that
today the Toronto real estate
market is no longer a seller’s market and it is not really a buyer’s market
either. Instead, it has become more of a renter’s market.
Other renters are holding off on the idea of buying because they are concerned
that prices in Toronto real estate have not yet hit the lowest point. They are
primarily concerned that if they purchase a home today it may not be worth the
same amount just six months from now. They feel it is far more prudent to wait
and see exactly where the housing market will land before they consider buying a
home. Other renters are concerned about the upcoming hurricane season. Few have
forgotten the hurricane season of just two years ago that devastated many areas.
Homeowners in those areas, especially those without insurance, have yet to
recover.
While some areas in Toronto are experiencing a deficit in supply of rental
properties, in other areas homeowners have recognized the wisdom of holding off
on selling their homes. They, too, are reluctant to sell their homes now when it
seems more prudent to wait and see when the market will stabilize. To help make
ends meet, many of these homeowners are willing to rent out their homes to the
scores of renters lining up to take advantage of the opportunity. Even homes
that are on the market for sale are also available for rent. While renters must
accept the reality that the home in which they are living must be available for
showings, they still feel the trade-off is quite worth it.
Would-be investors who attempted to get in on the quick profit potential of
flipping homes have also discovered that it makes more sense to rent out their
properties right now instead of trying to selling them. In some cases, investors
are discovering they simply do not have any other options when they must meet
mortgage payments every month and are unable to sell their properties. In some
cases, this means renting the properties at a loss, creating a negative cash
flow.
In fact, this situation has become so much of a problem that landlords in
certain niche markets are finding they must cut rents in order to create even a
small amount of cash flow. These investors have quickly discovered that it is
far better to rent right away at a loss than wait several months to try and
attain the amount of rent they really need. Although landlords are often upside
down on most of these properties, renting them out has proven to be the safest
method; at least for now.