Although COVID-19 restrictions are slowly easing across the province and the economy opens up, the decline in travel and tourism to the City of Toronto as a result of the pandemic may have had a ripple effect on the real estate sector, particularly on condo investors in the region.
Despite the temporary two-month ban on short-term rentals lifting on June 5 across Ontario, a significantly slower tourism industry is forcing many short-term rental investors to consider recalibrating their income strategy to either seek long-term tenants or consider offloading their investment entirely.
To understand the extent to which COVID-19 and short-term rental bylaws may have impacted condo investors and renters thus far, Zoocasa reviewed the number of new listings for rental and sale properties in a selection of 10 condo buildings in downtown Toronto that currently or until recently permitted short-term rentals, or those that are known to be popular for short-term rentals on platforms such as Airbnb, Kijiji, or VRBO among others.
Our findings show that the growth in new listings for condo apartments available for rent and sale in June in buildings where short-term rentals are popular far exceeded new listings growth across the Niagara and Waterfront Communities 1 neighbourhoods (where these condo buildings are located), and the City of Toronto as a whole.
The buildings in our analysis were sourced from Zoocasa real estate agents and new listings data was sourced from the Toronto Regional Real Estate Board. In cases where a property was newly listed for rent and for sale during the month of June, the unit was counted under both categories. If a newly listed property was updated or relisted during the month of June, the property was only counted once. As such, the numbers in our analysis are close estimates designed to provide an overview of listing trends for each building. Prospective buyers, sellers, and renters may benefit from reviewing individual listings that match the specs that are most relevant to them.
With City of Toronto condo rental vacancy rates recently below 1.0%, according to the Canada Mortgage and Housing Corporation, the recent increase in rental listings means renters are now seeing more opportunities open up as a result. Note: vacancy rates of under 3.0% are considered “unhealthy.”
Rental New Listings in Condos Popular for Short-Term Rentals Grow 257% Annually, Compared to 83% in the City of Toronto
New listings in June 2020 for City of Toronto condo apartment rentals grew 83% year-over-year (y-o-y) with 6,845 units added to the market in June. Comparatively, rental new listings for the buildings included in our analysis grew a staggering 257% annually, with 350 units listed in June compared to 98 last year.
Among the buildings reviewed, Ice Condos I & II on York Street had a 547% increase in new rental listings y-o-y, with 97 units coming on to the market in June compared to 15 new listings during the same time last year. Based on the estimated 1,340 units in the building, the 97 rental new listings represents about 7% of the total units.
According to Andrew Kim, a Zoocasa agent in the downtown Toronto area who frequently works with renters and landlords, COVID-19 created a steep increase in inventory and a drop in rental prices due to lower demand. In the early days of the pandemic, students were among the first to give up their leases, followed by those who saw their employment impacted by the pandemic, and others that no longer felt the need to live close to work due to remote-working options.
Kim notes that since travel to the city remains limited due to the pandemic, the demand for short-term rentals is still comparatively low despite related restrictions lifting on June 5th. However, as the city opens up and COVID-19 cases decrease, he notices that the demand for long-term rentals is beginning to pick back up again.
“If you are a renter looking to move to the downtown area, now is the best time to take the leap if you can,” says Kim. He highlights that the influx in inventory gives renters more options to choose from at a better price, which is a very different picture from last year when rental vacancies were at an all time low. With prices below market value and landlords willing to make compromises, now is a good time for interested renters to lock in a downtown condo in a prime location.
For landlords, Kim suggests that if they are able to, they should strongly consider deferred payment plans for good tenants who need it, if a rent reduction is not an option. It is also recommended that landlords keep a close eye on evolving provincial government rules and programs in place for tenants and landlords.
New Listings for Sale in Condo Buildings Popular for Short-Term Rentals Double in June 2020 From Last Year
New listings for sale across the 10 buildings included in our analysis grew 108% y-o-y, with 131 units listed in June 2020 compared to 63 last year. This increase was noticeably higher than the overall increase across the Niagara and Waterfront Communities 1 neighbourhoods in which these buildings are located in; in these neighbourhoods combined, the increase in new listings for sale was up 65% y-o-y to 711 units. For the City of Toronto as a whole, 3,315 condo apartments were listed in June, up 36% annually.
Emma Pace, a Zoocasa agent in downtown Toronto who works with buyers, notes that this is an interesting trend to keep an eye on, as the price per square foot to live in this neighborhood in buildings like Maple Leaf Square on Bremner Blvd for example, is typically quite high. In that condo building, 15 new listings were added in June, compared to just 3 new listings last year.
“As a growing number of workplaces allow remote-working options despite COVID-19 restrictions easing, more prospective buyers are considering living along the perimeter of the downtown area instead, in an effort to get a better price per square foot, and potentially more space,” says Pace.
Pace notes that there are definitely opportunities for buyers in these buildings, particularly if they are purchasing from a motivated seller – likely someone who is looking to sell a vacant investor unit due to limited income. However, she also reminds sellers in the buildings noted in the study, or others like it, it takes multiple data points to see a trend in pricing. “If there is a motivated seller in your building, it does not mean you have to give away the farm. Real estate reacts slowly, so it’s important to keep an eye on all recent sales trends and adjust your approach accordingly. ”
Check out the infographic below, highlighting rental and sales new listing growth in a selection of 10 downtown Toronto buildings that allow, until recently allowed, or are popular for short-term rentals. Further, find a list of the buildings with the highest number of new rental listings in June 2020.
Downtown Toronto Condo Buildings Popular For Short-Term Rentals With The Highest Number of New Rental Listings in June 2020
1. ICE CONDOS I & II – 12 & 14 York Street
- Approx. units in building: 1340
- Rental new listings, June 2020: 97 listings (+82 listings or +547%)
- Rental new listings as approx. % of total units in building: 7%
- Sale new listings, June 2020: 32 (+15 listings or +88%)
2. QUARTZ | SPECTRA CONDOS- 75 & 85 Queens Wharf Blvd
- Approx. units in building: 940
- Rental new listings, June 2020: 51 listings (+40 listings or +364%)
- Rental new listings as approx. % of total units in building: 5%
- Sale new listings, June 2020: 24 (+14 listings or +140%)
3. PARADE – 15 Iceboat Terr & 10 Capreol Crt
- Approx. units in building: 840
- Rental new listings, June 2020: 35 listings (+30 listings or +133%)
- Rental new listings as approx. % of total units in building: 4%
- Sale new listings, June 2020: 8 (+3 listings or +60%)
4. PARADE II – 151 Dan Leckie Way & 21 Iceboat Terr
- Approx. units in building: 920
- Rental new listings, June 2020: 34 listings (+15 listings or +79%)
- Rental new listings as approx. % of total units in building: 4%
- Sale new listings, June 2020: 18 (+9 listings or +100%)
5. 300 FRONT ST WEST
- Approx. units in building: 680
- Rental new listings, June 2020: 33 listings (+30 listings or +1,000%)
- Rental new listings as approx. % of total units in building: 5%
- Sale new listings, June 2020: 12 (+5 listings or +71%)
NOTE: This article was updated on July 27, 2020 to reference the short-term rental sector as a whole instead of highlighting any individual short-term rental platforms. No data, findings, or commentary was updated.
Methodology
The selection of downtown Toronto buildings that permit, or recently permitted, short-term rentals were sourced from Zoocasa real estate agents.
The number of new listings for individual condo buildings, the Niagara and Waterfront Communities 1 neighbourhoods, and the City of Toronto was sourced from the Toronto Regional Real Estate Board on July 21, 2020.
The combined boundaries of the Niagara and Waterfront Communities 1 neighbourhoods are approximately Queen St W in the north, Dufferin St in the west, University/Yonge in the east and Lake Ontario in the south.
In cases where a property was newly listed for rent and for sale during the month of June, the unit was counted under both categories. If a newly listed property was updated or relisted during the month of June, the property was only counted once.
Contact
For more information about this report or to set up a media interview, please contact [email protected]
